Amtech Systems (ASYS) Q2 2025 Earnings Call May 12, 2025 05:00 PM ET Company Participants Erica Mannion - Investor Relations, SapphireRobert Daigle - Chairman & CEOWade Jenke - Chief Financial Officer Conference Call Participants Craig Irwin - Managing Director, Senior Research AnalystMark Miller - Equity Research Analyst Operator Good day, and welcome to Amtech Systems Fiscal Second Quarter twenty twenty five Conference Call. Please note that this event is being recorded. I would now like to turn the call ...

Amtech Systems (ASYS) Q2 2025 Earnings Call May 12, 2025 05:00 PM ET Speaker0 Good day, and welcome to Amtech Systems Fiscal Second Quarter twenty twenty five Conference Call. Please note that this event is being recorded. I would now like to turn the call over to Erica Mannion of Saphyr Investor Relations. Please go ahead. Speaker1 Good afternoon, and thank you for joining us for Amtech Systems' fiscal second quarter twenty twenty five conference call. With me today on the call are Bob Daigle, Chairman and ...

Financial Guidance - Amtech Systems, Inc. updated its financial guidance for Q2 fiscal 2025 on April 9, 2025[6] Company Information - The company is listed on the Nasdaq Global Select Market under the symbol ASYS[5] - The press release regarding the financial update is included as Exhibit 99.1[9]

Financial Performance - Total net revenue for the three months ended March 31, 2025, was $15.6 million, a decrease of approximately $9.9 million or 39% compared to $25.4 million in the same period of 2024[96] - Gross margin for the three months ended March 31, 2025, was negative $0.3 million, representing (2)% of net revenue, a decrease from $8.5 million or 33% of net revenue in the same period of 2024[99] - New orders for the three months ended March 31, 2025, totaled $15.7 million, a decrease of $4.1 million or 21% from $19.8 million in the same period of 2024[98] - Cash provided by operating activities for the six months ended March 31, 2025, was $3.1 million, down from $5.3 million in the same period of 2024[116] - Cash used in investing activities was $0.2 million for the six months ended March 31, 2025, compared to $0.7 million provided in the same period of 2024[117] - Cash provided by financing activities was $0.1 million for the six months ended March 31, 2025, primarily from stock option exercises, contrasting with $6.4 million used in the same period of 2024[118] Backlog and Working Capital - The backlog as of March 31, 2025, was $19.1 million, a decrease of $25.2 million or 57% compared to $44.3 million in 2024[98] - Working capital decreased to $37.4 million as of March 31, 2025, from $44.8 million as of September 30, 2024[114] - Unrecorded purchase obligations decreased to $5.2 million as of March 31, 2025, from $12.1 million as of September 30, 2024[120] Expenses - Research and development expenses for the three months ended March 31, 2025, were 5% of net revenue, compared to 4% in the same period of 2024[94] - Selling, general and administrative expenses for the three months ended March 31, 2025, were $7.1 million, a decrease from $8.3 million in the same period of 2024[102] - RD&E expenses for the six months ended March 31, 2025, decreased to $1.7 million from $2.5 million in the same period of 2024, reflecting a reduction in strategic-development project expenditures[104] Impairments - Goodwill impairment recognized during the six months ended March 31, 2025, totaled $20.4 million, with $15.4 million from the Semiconductor Fabrication Solutions segment and $5.0 million from the Thermal Processing Solutions segment[105] - Intangible asset impairment for the six months ended March 31, 2025, amounted to $2.6 million, recorded within operating expenses[107] Cash and Cash Equivalents - Cash and cash equivalents increased to $13.4 million as of March 31, 2025, from $11.1 million at the beginning of the period[113] Tax Rate - The effective tax rate for the six months ended March 31, 2025, was (2.3%), compared to (3.5%) for the same period in 2024, influenced by foreign income taxation and non-deductible expenses[111] Strategic Initiatives - The acquisition of Entrepix in 2023 enhanced the company's offerings in the CMP technology space and integrated wafer cleaning into existing product lines[90] - The company plans to continue pursuing organic growth alongside acquisitions to bolster its market position[92] - The introduction of the next-generation reflow platform, Aurora, is part of the company's ongoing investment in research and development[90] - The company is focusing on supply chain resiliency by expanding operations outside of mainland China, which is expected to create demand for new equipment and services[91]

Core Viewpoint - Amtech Systems (ASYS) has experienced a significant decline in share price, down 16.9% over the past six months, underperforming both the broader technology sector and its industry peers, raising questions about whether it is a time to exit or a buying opportunity [1][2]. Company Performance - The underperformance of ASYS is attributed to broader market weaknesses and specific company challenges, including a sell-off in tech stocks due to trade tensions and economic slowdown [3]. - Company-specific issues include a prolonged downturn in the automotive market affecting equipment sales and muted demand in the mature node semiconductor production market, leading to a 2% year-over-year revenue decline to $24.4 million in Q1 of fiscal 2025 [4]. Macroeconomic Challenges - ASYS faces macroeconomic pressures such as persistent inflation and high interest rates, which are causing enterprise customers to delay orders, negatively impacting investor sentiment [5]. Strategic Initiatives - Amtech is undertaking restructuring and cost optimization initiatives, achieving over $8 million in annualized cost savings, with a target of $9 million by the end of Q2 fiscal 2025 [10]. - The company is focusing on advanced packaging opportunities, particularly in AI infrastructure, which is expected to drive demand for its reflow equipment [8]. Market Outlook - The advanced semiconductor packaging market is projected to grow from $34.8 billion in 2025 to $47.98 billion by 2030, with a CAGR of 6.63%, providing a favorable backdrop for ASYS [7]. - Amtech anticipates revenues of $21-$23 million for Q2 fiscal 2025, reflecting confidence in growth driven by investments in AI-related packaging [9]. Profitability Enhancements - Ongoing pricing actions are being implemented to counter inflation and improve product margins, with expectations of significant margin improvements in subsequent quarters [13]. - The company is also optimizing its supply chain and operational footprint to reduce costs and enhance efficiency [12]. Investment Recommendation - Given the strong fundamentals, favorable industry trends, and strategic initiatives, ASYS is viewed as a compelling buying opportunity for investors [15][16].

Group 1: Amtech Systems (ASYS) - Amtech Systems shares increased by 5.5% to close at $5.17, following notable trading volume, despite a 13.9% loss over the past four weeks [1] - The company is benefiting from restructuring initiatives, cost optimization, and increasing demand for advanced packaging and AI infrastructure applications [1] - The consensus EPS estimate for the upcoming quarter remains unchanged, with expectations of a quarterly loss of $0.02 per share, reflecting a year-over-year change of -100% and projected revenues of $21.5 million, down 15.5% from the previous year [2][4] Group 2: STMicroelectronics (STM) - STMicroelectronics closed the last trading session at $24.01, down 1.6%, and has experienced a -13.5% return over the past month [4] - The consensus EPS estimate for STM has remained unchanged at $0.05, representing a -90.7% change from the previous year [5] - STMicroelectronics currently holds a Zacks Rank of 5 (Strong Sell) [5]

Industry Overview - The semiconductor industry is experiencing an uptrend driven by the AI revolution, with applications across various sectors including finance, automotive, healthcare, and cybersecurity [1] - The global semiconductor market is showing strong growth, with a 17.9% year-over-year increase in sales in January 2025, reaching $56.5 billion [4] - The global semiconductor market size is projected to reach $707 billion in 2025, reflecting a year-over-year increase of 12.5% [5] Company Insights - Marvell Technology provides a wide range of solutions for data centers, including PAM chips and digital signal processors, which are essential for AI applications [8] - Amtech Systems manufactures specialized equipment for semiconductor manufacturing, with a growing demand for advanced semiconductors driving the need for its products [10][11] - NVIDIA is a leader in the AI space with its GPUs based on Hopper and Blackwell architectures, which are increasingly adopted across various industries [13][14] - Taiwan Semiconductor is crucial for the AI revolution, supplying advanced chips and supporting cutting-edge fabrication technologies [16][17] Stock Performance - Marvell Technology has a Zacks Rank 1 and a Growth Score of A, with an expected EPS growth rate of 42.9% [10] - Amtech Systems also holds a Zacks Rank 1 and a Growth Score of A, with an EPS estimate of 17 cents for fiscal 2025 [12] - NVIDIA has a Zacks Rank 2 and a Growth Score of A, with an expected EPS growth rate of 25.7% [15] - Taiwan Semiconductor carries a Zacks Rank 2 and a Growth Score of B, with an expected EPS growth rate of 33.1% [18]

Core Viewpoint - Amtech Systems (ASYS) has reached a significant support level and shows potential for investors from a technical perspective, with a recent breakthrough of the 20-day moving average indicating a short-term bullish trend [1]. Technical Analysis - The 20-day simple moving average (SMA) is a popular trading tool that reflects a stock's price over a 20-day period, smoothing out short-term price trends and providing trend reversal signals [2]. - A stock price above the 20-day SMA indicates a positive trend, while a price below suggests a downward trend [2]. Performance Metrics - Over the past four weeks, ASYS has gained 11.2%, and it currently holds a Zacks Rank 1 (Strong Buy), suggesting further upward movement potential [3]. - Positive earnings estimate revisions support the bullish case for ASYS, with no estimates decreasing in the past two months and one estimate increasing, alongside a rise in the consensus estimate [3]. Investment Outlook - Given the key technical level and positive earnings estimate revisions, ASYS is positioned for potential gains in the near future [4].

Group 1 - Amtech Systems (ASYS) has surpassed resistance at the 50-day moving average, indicating a short-term bullish trend [1] - ASYS shares have increased by 11.2% over the past four weeks, and the company holds a Zacks Rank 1 (Strong Buy) [2] - Positive earnings estimate revisions support the bullish outlook, with one estimate increasing and none decreasing in the past two months [2][3] Group 2 - The combination of earnings estimate revisions and technical indicators suggests that ASYS may continue to see gains in the near future [3]

Financial Data and Key Metrics Changes - For fiscal Q1 2025, revenue was $24.4 million, with adjusted EBITDA of $1.9 million, showing a year-over-year adjusted EBITDA increase of $1.8 million despite muted revenue growth [7][19] - GAAP net income for Q1 2025 was $0.3 million, or $0.02 per share, compared to a GAAP net loss of $9.4 million, or $0.60 per share for Q1 2024 [23] - Unrestricted cash and cash equivalents increased to $13.2 million from $11.1 million due to improved accounts receivable collection and inventory management [24] Business Line Data and Key Metrics Changes - The Semiconductor Fabrication Solutions business aims to drive sustainable growth by expanding recurring revenue streams such as consumables, parts, and services [14] - The Thermal Process Solutions business focuses on reflow equipment for advanced chip packaging and surface-mount assembly applications [14] Market Data and Key Metrics Changes - Demand for equipment and consumables in mature node semiconductor production remains muted, particularly in industrial equipment and automotive sectors [11] - Strengthening demand for reflow equipment in leading-edge applications, such as AI infrastructure, has been noted [12] Company Strategy and Development Direction - The company is focused on operational excellence and cost optimization, with restructuring initiatives yielding over $8 million in annualized cost savings [9] - A semi-fabless model has been adopted to enhance operating leverage and reduce fixed costs [9] - The company is investing in growth initiatives for 2025 while refining business segments for greater clarity and focus [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a soft near-term macro environment but expresses confidence in long-term growth drivers, particularly in AI-related infrastructure and supply chain diversification [16][17] - The company anticipates double-digit growth in the electric vehicle segment, which will continue to drive demand for silicon carbide-related consumables [17] Other Important Information - The company is actively pursuing opportunities to introduce more products to new customers and broaden its footprint with existing customers [15] - The outlook for Q2 2025 is expected to be in the range of $21 million to $23 million, with adjusted EBITDA projected to be nominally positive [24] Q&A Session Summary Question: Are there still additional costs that can be taken out of the business? - Management indicated ongoing efforts in supply chain management and footprint utilization to identify further cost-saving opportunities [29][31] Question: What is the current outlook for the automotive market? - Management noted continued softness in the automotive segment, particularly in equipment sales, with no sharp recovery expected in the near term [34][36] Question: What is the activity level in the advanced packaging space? - Management reported strengthening activity in advanced packaging, particularly for AI data centers, and anticipates increased volume as AI hardware proliferates [38][40]