Amtech Systems, Inc. (NASDAQ:ASYS) Q2 2024 Earnings Conference Call May 8, 2024 5:00 PM ET Company Participants Erica Mannion - Sapphire Investor Relations Bob Daigle - Chairman & Chief Executive Officer Lisa Gibbs - Chief Financial Officer Conference Call Participants Mark Miller - Benchmark Kevin Garrigan - WestPark Capital. Craig Irwin - ROTH MKM Operator Good day, and welcome to the Amtech Systems Fiscal Second Quarter 2024 Earnings Call. Please note that this event is being recorded. I would now like t ...

Group 1 - Amtech Systems reported a quarterly loss of $0.01 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.11, and compared to earnings of $0.19 per share a year ago, indicating an earnings surprise of 90.91% [1] - The company posted revenues of $25.43 million for the quarter ended March 2024, exceeding the Zacks Consensus Estimate by 10.58%, although this represents a decline from year-ago revenues of $33.31 million [1] - Over the last four quarters, Amtech has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [1] Group 2 - Amtech shares have increased by approximately 13.1% since the beginning of the year, outperforming the S&P 500's gain of 8.8% [2] - The future performance of Amtech's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [2] Group 3 - The current consensus EPS estimate for the upcoming quarter is breakeven on $26 million in revenues, while for the current fiscal year, it is projected at -$0.17 on $105 million in revenues [4] - The Semiconductor - General industry, to which Amtech belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, indicating potential challenges ahead [4]

Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements identified by specific terminology such as 'may,' 'plan,' 'anticipate,' 'seek,' 'will,' 'expect,' 'intend,' 'estimate,' 'believe,' 'continue,' 'predict,' 'potential,' 'project,' 'should,' 'would,' 'could,' 'likely,' 'future,' 'target,' 'forecast,' 'goal,' 'observe,' and 'strategy'[10](index=10&type=chunk) - Actual results may differ materially from expectations due to various risks and uncertainties, including economic conditions, changes in demand, execution difficulties, competition, industry cyclicality, pricing pressures, new technologies, regulatory developments, litigation, business interruptions, cybersecurity incidents, financial institution issues, and compliance with credit agreements[10](index=10&type=chunk) - The Company disclaims any obligation to update or publicly revise forward-looking statements and advises investors to consult further disclosures in subsequent SEC filings and 'Item 1A. Risk Factors'[12](index=12&type=chunk) PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, along with their accompanying notes, providing a snapshot of the company's financial position and performance for the periods ended March 31, 2024 and September 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | March 31, 2024 (Unaudited) (in thousands) | September 30, 2023 (in thousands) | Change (in thousands) | % Change | | :----- | :---------------------------------------- | :-------------------------------- | :-------------------- | :------- | | **Assets** | | | | | | Total current assets | $70,299 | $81,189 | $(10,890) | -13.4% | | Property, Plant and Equipment - Net | $9,476 | $9,695 | $(219) | -2.3% | | Intangible Assets - Net | $4,352 | $6,114 | $(1,762) | -28.8% | | Goodwill | $21,261 | $27,631 | $(6,370) | -23.1% | | Total Assets | $116,474 | $137,021 | $(20,547) | -15.0% | | **Liabilities** | | | | | | Total current liabilities | $25,914 | $29,718 | $(3,804) | -12.8% | | Finance Lease Liabilities and Long-Term Debt | $65 | $8,422 | $(8,357) | -99.2% | | Total Liabilities | $35,583 | $48,656 | $(13,073) | -26.9% | | **Shareholders' Equity** | | | | | | Total Shareholders' Equity | $80,891 | $88,365 | $(7,474) | -8.5% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :-------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Revenues, net | $25,433 | $33,310 | $(7,877) | -23.6% | | Gross profit | $8,451 | $13,470 | $(5,019) | -37.3% | | Operating income (loss) | $1,363 | $519 | $844 | 162.6% | | Net income (loss) | $970 | $3,204 | $(2,234) | -69.7% | | Net income (loss) per basic share | $0.07 | $0.23 | $(0.16) | -69.6% | | Net income (loss) per diluted share | $0.07 | $0.23 | $(0.16) | -69.6% | | Metric (in thousands) | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | Change | % Change | | :-------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Revenues, net | $50,353 | $54,868 | $(4,515) | -8.2% | | Gross profit | $16,670 | $21,773 | $(5,103) | -23.4% | | Operating income (loss) | $(7,571) | $(2,161) | $(5,410) | -250.3% | | Net income (loss) | $(8,388) | $460 | $(8,848) | -1923.5% | | Net income (loss) per basic share | $(0.59) | $0.03 | $(0.62) | -2066.7% | | Net income (loss) per diluted share | $(0.59) | $0.03 | $(0.62) | -2066.7% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Metric (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :-------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Net income (loss) | $970 | $3,204 | $(2,234) | -69.7% | | Foreign currency translation adjustment | $(50) | $384 | $(434) | -113.0% | | Comprehensive income (loss) | $920 | $3,588 | $(2,668) | -74.4% | | Metric (in thousands) | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | Change | % Change | | :-------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Net income (loss) | $(8,388) | $460 | $(8,848) | -1923.5% | | Foreign currency translation adjustment | $219 | $800 | $(581) | -72.6% | | Comprehensive income (loss) | $(8,169) | $1,260 | $(9,429) | -748.3% | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) | Metric (in thousands) | Balance at September 30, 2023 | Balance at March 31, 2024 | Change | % Change | | :-------------------- | :---------------------------- | :------------------------ | :----- | :------- | | Common Stock Par Value | $142 | $142 | $0 | 0.0% | | Additional Paid-In Capital | $126,963 | $127,658 | $695 | 0.5% | | Accumulated Other Comprehensive Loss | $(1,695) | $(1,476) | $219 | -12.9% | | Retained Deficit | $(37,045) | $(45,433) | $(8,388) | 22.6% | | Total Shareholders' Equity | $88,365 | $80,891 | $(7,474) | -8.5% | - The **retained deficit increased** by **$8.388 million** from September 30, 2023, to March 31, 2024, primarily due to the **net loss** incurred during the period[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (in thousands) | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | Change | | :-------------------------------- | :------------------------------ | :------------------------------ | :----- | | Net cash provided by (used in) operating activities | $5,307 | $(5,327) | $10,634 | | Net cash provided by (used in) investing activities | $724 | $(36,474) | $37,198 | | Net cash (used in) provided by financing activities | $(6,385) | $11,919 | $(18,304) | | Net Decrease in Cash and Cash Equivalents | $(133) | $(29,141) | $29,008 | | Cash and Cash Equivalents, End of Period | $13,000 | $17,733 | $(4,733) | - **Operating activities generated** **$5.3 million** in cash for the six months ended March 31, 2024, a **significant improvement** from the **$5.3 million** cash used in the prior year, driven by improved accounts receivable collections and increased customer down payments[29](index=29&type=chunk)[147](index=147&type=chunk) - **Investing activities provided** **$0.7 million**, a **substantial shift** from **$36.5 million** used in the prior year, primarily due to proceeds from the sale of real property in Arizona, partially offset by capital expenditures[29](index=29&type=chunk)[148](index=148&type=chunk) - **Financing activities used** **$6.4 million**, mainly for long-term debt payments, contrasting with **$11.9 million** provided in the prior year from debt borrowings[29](index=29&type=chunk)[149](index=149&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=1.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) - Amtech is a global manufacturer of capital equipment, including thermal processing, wafer polishing and cleaning, and related consumables used in fabricating semiconductor devices (e.g., SiC, silicon power, analog, discrete, electronic assemblies, LEDs), serving markets worldwide[31](index=31&type=chunk) - The unaudited condensed consolidated financial statements are prepared under SEC rules and GAAP, with certain disclosures condensed or omitted, and should be read with the 2023 Form 10-K[32](index=32&type=chunk) - In the first quarter of fiscal year 2024, the company recorded **impairment** of definite-lived intangible assets and goodwill in its Material and Substrate segment due to a **decline** in stock price[38](index=38&type=chunk)[40](index=40&type=chunk) | Contract Liabilities Activity (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | | :----------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Beginning balance | $9,518 | $6,955 | $8,018 | $7,231 | | New deposits | $724 | $3,552 | $3,547 | $4,279 | | Revenue recognized | $(1,218) | $(846) | $(2,544) | $(1,414) | | Ending balance | $9,015 | $9,661 | $9,015 | $9,661 | - Remaining performance obligations totaled approximately **$44.3 million** as of March 31, 2024, **down** from **$51.8 million** at September 30, 2023, with orders expected to ship within the next twelve months[41](index=41&type=chunk) | Accrued Warranty Expense (in thousands) | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Beginning balance | $965 | $871 | | Additions for warranties issued | $97 | $342 | | Costs incurred | $(19) | $9 | | Changes in estimate | $(280) | $(139) | | Ending balance | $763 | $1,083 | - Shipping expense **decreased** to **$0.5 million** for the three months ended March 31, 2024 (from **$0.8 million** in 2023) and to **$1.1 million** for the six months ended March 31, 2024 (from **$1.4 million** in 2023)[43](index=43&type=chunk) - Two Semiconductor segment customers each represented **14%** of accounts receivable as of March 31, 2024[44](index=44&type=chunk) - The company's **cash and cash equivalents exceeded** federally insured limits by approximately **$8.2 million** at March 31, 2024[45](index=45&type=chunk) - The carrying value of the company's **total debt was** **$4.2 million** at March 31, 2024, approximating fair value and classified as Level 2 in the fair value hierarchy[49](index=49&type=chunk) - The company is evaluating ASU 2023-07 (Segment Reporting) for its impact on consolidated financial statements, effective for fiscal years beginning after December 15, 2023[51](index=51&type=chunk) [Long-Term Debt](index=13&type=section&id=2.%20Long-Term%20Debt) | Debt Component (in thousands) | 2024 | 2023 | | :---------------------------- | :--- | :--- | | Term loan | $4,202 | $10,573 | | Finance leases | $106 | $114 | | Total | $4,308 | $10,687 | | Less: current portion | $(4,243) | $(2,265) | | Finance Lease Liabilities and Long-Term Debt | $65 | $8,422 | - Interest expense on finance lease liabilities and long-term debt was **$0.2 million** for the three months ended March 31, 2024 and 2023, and **$0.4 million** and **$0.2 million** for the six months ended March 31, 2024 and 2023, respectively[54](index=54&type=chunk) - The company entered into a Forbearance & Modification Agreement with UMB Bank on December 5, 2023, due to non-compliance with Debt to EBITDA and Fixed Charge Coverage Ratio covenants. The forbearance period extends through January 17, 2025[58](index=58&type=chunk)[151](index=151&type=chunk) - The Forbearance Agreement **increased** the revolving credit facility to **$14.0 million** (from **$8.0 million**) and **reduced** the term loan commitment to **$4.4 million** (from **$12.0 million**). Both maturities were extended by one year[59](index=59&type=chunk)[152](index=152&type=chunk) - As of March 31, 2024, **$4.2 million** was outstanding on the Term Loan, no amounts were borrowed against the Revolver, and there was a **$0.3 million** outstanding letter of credit. All outstanding debt was classified as current due to the lender's ability to call amounts at the end of the forbearance period[60](index=60&type=chunk)[61](index=61&type=chunk)[152](index=152&type=chunk)[156](index=156&type=chunk) - The company was in compliance with the Minimum **EBITDA** Covenant for the six-month period ended March 31, 2024, with actual positive **EBITDA** of **$1.0 million** (covenant not less than negative **$800,000**)[60](index=60&type=chunk)[153](index=153&type=chunk) [Acquisition](index=16&type=section&id=3.%20Acquisition) - On January 17, 2023, Amtech acquired **100%** of Entrepix, Inc., a manufacturer of chemical mechanical polishing (CMP) technology, for a total consideration of **$39.2 million** (**$35.2 million** cash to sellers, **$4.0 million** for debt and transaction costs)[64](index=64&type=chunk)[65](index=65&type=chunk) - The acquisition was partially funded by a **$12.0 million** term loan from UMB Bank[65](index=65&type=chunk) - Goodwill of **$16.463 million** was recognized, representing estimated future economic benefits from synergies like deeper customer penetration, complementary product offerings, and cost reductions[66](index=66&type=chunk)[69](index=69&type=chunk) | Acquired Intangible Asset | Amortization Period | Amount (in thousands) | Classification of Amortization | | :------------------------ | :------------------ | :-------------------- | :----------------------------- | | Developed technology | 5.0 years | $6,700 | Cost of sales | | Customer relationships | 10.0 years | $2,800 | Selling, general and administrative | | Backlog | 1.0 year | $2,100 | Selling, general and administrative | | Trade names | 10.0 years | $1,800 | Selling, general and administrative | | Noncompetition agreements | 5.0 years | $200 | Selling, general and administrative | | Total intangible assets | 6.1 years (weighted-average) | $13,600 | | | Pro Forma Financial Information (in thousands) | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2023 | | :------------------------------------------- | :---------------------------- | :---------------------------- | | Revenues, Net | $34,623 | $63,778 | | Net Income | $4,285 | $1,149 | [Earnings Per Share](index=19&type=section&id=4.%20Earnings%20Per%20Share) | EPS Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | | :--------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net income (loss) per basic share | $0.07 | $0.23 | $(0.59) | $0.03 | | Net income (loss) per diluted share | $0.07 | $0.23 | $(0.59) | $0.03 | - For the six months ended March 31, 2024, the company reported a **net loss** per basic and diluted share of **$(0.59)**, a **significant decline** from **$0.03** in the prior year, primarily due to the overall **net loss**[81](index=81&type=chunk) - Options for **817,191** and **645,244** weighted average shares were excluded from diluted EPS calculations for the three and six months ended March 31, 2024, respectively, as they were anti-dilutive[78](index=78&type=chunk) [Inventories](index=20&type=section&id=5.%20Inventories) | Inventory Component (in thousands) | March 31, 2024 | September 30, 2023 | Change | % Change | | :--------------------------------- | :------------- | :----------------- | :----- | :------- | | Purchased parts and raw materials | $21,558 | $22,627 | $(1,069) | -4.7% | | Work-in-process | $7,058 | $7,774 | $(716) | -9.2% | | Finished goods | $2,692 | $4,444 | $(1,752) | -39.4% | | Total | $31,308 | $34,845 | $(3,537) | -10.1% | - Total inventories **decreased** by **10.1%** from September 30, 2023, to March 31, 2024, with finished goods experiencing the largest percentage **decrease** of **39.4%**[82](index=82&type=chunk) [Leases](index=20&type=section&id=6.%20Leases) | Lease Balance (in thousands) | March 31, 2024 | September 30, 2023 | Change | % Change | | :--------------------------- | :------------- | :----------------- | :----- | :------- | | Total right-of-use assets | $9,890 | $11,340 | $(1,450) | -12.8% | | Total lease liabilities | $10,235 | $11,631 | $(1,396) | -12.0% | | Lease Cost (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | | :------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Total lease cost | $863 | $922 | $1,836 | $1,590 | - The weighted average remaining lease term for operating leases was **7.72 years** (vs **7.31 years** in 2023) and for finance leases was **4.88 years** (vs **2.54 years** in 2023) as of March 31, 2024[89](index=89&type=chunk) - The company expects to record **$8.6 million** of ROU assets and lease liabilities upon the commencement of new leases in the third quarter of fiscal 2024[89](index=89&type=chunk) [Goodwill and Intangible Assets](index=22&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) | Intangible Assets (in thousands) | March 31, 2024 | September 30, 2023 | Change | % Change | | :------------------------------- | :------------- | :----------------- | :----- | :------- | | Intangible assets, net | $4,352 | $6,114 | $(1,762) | -28.8% | - The company recorded a total **impairment charge** for intangible assets in its Material and Substrate segment of **$1.3 million** during the quarter ended December 31, 2023, related to developed technology, trade name, customer relationships, and non-competition agreements at Entrepix[94](index=94&type=chunk)[95](index=95&type=chunk) | Goodwill (in thousands) | Semiconductor | Material and Substrate | Total Goodwill | | :---------------------- | :------------ | :--------------------- | :------------- | | Balance at September 30, 2023 | $5,905 | $21,726 | $27,631 | | Impairment of goodwill | — | $(6,370) | $(6,370) | | Balance at March 31, 2024 | $5,905 | $15,356 | $21,261 | - A **goodwill impairment charge** of **$6.37 million** was recognized in the Material and Substrate segment during the six months ended March 31, 2024, due to the reporting unit's book value exceeding its fair value, triggered by a **decline** in stock price[97](index=97&type=chunk) - The fair value measurements for goodwill and intangible assets fall under Level 3 of the fair value hierarchy, involving significant estimates and assumptions[98](index=98&type=chunk) [Income Taxes](index=26&type=section&id=8.%20Income%20Taxes) | Income Tax Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | | :---------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Income tax provision (benefit) (in thousands) | $223 | $(2,946) | $281 | $(2,950) | | Effective tax rate | N/A | N/A | (3.5%) | 118.0% | - The effective tax rate for the six months ended March 31, 2024, was **(3.5%)**, differing from the U.S. statutory rate of **21%** primarily due to losses for which no tax benefit could be recognized[100](index=100&type=chunk) - The effective tax rate for the six months ended March 31, 2023, was **118.0%**, primarily due to the release of a valuation allowance related to the Entrepix acquisition[100](index=100&type=chunk) [Equity and Stock-Based Compensation](index=26&type=section&id=9.%20Equity%20and%20Stock-Based%20Compensation) | Stock-Based Compensation Expense (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | | :-------------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Expense | $300 | $200 | $700 | $300 | | Stock Option Activity | Options Outstanding at Sep 30, 2023 | Options Outstanding at Mar 31, 2024 | | :-------------------- | :---------------------------------- | :---------------------------------- | | Number of Options | 672,924 | 1,181,433 | | Weighted Average Exercise Price | $8.76 | $7.28 | | Options Granted (6 months) | N/A | 557,500 | | Options Exercised (6 months) | N/A | (5,000) | - The company's stock repurchase program, approved on February 7, 2023, for up to **$5 million** of common stock, expired during the quarter ended March 31, 2024, with no repurchases made during that quarter[106](index=106&type=chunk) [Commitments and Contingencies](index=27&type=section&id=10.%20Commitments%20and%20Contingencies) - As of March 31, 2024, the company had unrecorded purchase obligations of **$16.3 million**, consisting of outstanding purchase orders for goods and services[107](index=107&type=chunk) - The company is involved in various legal proceedings and claims, for which it believes it has adequate provisions for probable and estimable losses, though outcomes are inherently unpredictable[108](index=108&type=chunk) - Employment contracts and severance plans for certain officers and management employees could result in severance payments ranging from six to twelve months of salary under specified termination circumstances[109](index=109&type=chunk) [Reportable Segments](index=28&type=section&id=11.%20Reportable%20Segments) - Amtech operates in two reportable segments: Semiconductor (thermal processing equipment) and Material and Substrate (consumables and machinery for lapping, polishing, and cleaning materials)[110](index=110&type=chunk) | Segment Net Revenues (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :---------------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Semiconductor | $17,441 | $22,047 | $(4,606) | -20.9% | | Material and Substrate | $7,992 | $11,263 | $(3,271) | -29.0% | | Total | $25,433 | $33,310 | $(7,877) | -23.6% | | Segment Operating Income (Loss) (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :--------------------------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Semiconductor | $896 | $2,950 | $(2,054) | -69.6% | | Material and Substrate | $900 | $297 | $603 | 203.0% | | Non-segment related | $(433) | $(2,728) | $2,295 | -84.1% | | Total | $1,363 | $519 | $844 | 162.6% | | Segment Identifiable Assets (in thousands) | March 31, 2024 | September 30, 2023 | Change | % Change | | :----------------------------------------- | :------------- | :----------------- | :----- | :------- | | Semiconductor | $63,986 | $72,466 | $(8,480) | -11.7% | | Material and Substrate | $50,579 | $61,576 | $(10,997) | -17.9% | | Non-segment related | $1,909 | $2,979 | $(1,070) | -35.9% | | Total | $116,474 | $137,021 | $(20,547) | -15.0% | [Major Customers and Foreign Sales](index=29&type=section&id=12.%20Major%20Customers%20and%20Foreign%20Sales) - One Semiconductor segment customer accounted for **12%** of net revenues for the six months ended March 31, 2024[112](index=112&type=chunk) | Geographic Region | Six Months Ended March 31, 2024 (% of Net Revenues) | Six Months Ended March 31, 2023 (% of Net Revenues) | | :---------------- | :-------------------------------------------------- | :-------------------------------------------------- | | United States | 43% | 33% | | Total Americas | 45% | 46% | | China | 23% | 13% | | Total Asia | 39% | 36% | | Germany | 8% | 2% | | Total Europe | 16% | 18% | - Sales to the United States **increased significantly** from **33%** to **43%** of net revenues, while China's contribution **rose** from **13%** to **23%** for the six months ended March 31, 2024, compared to the prior year[113](index=113&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and cash flows for the periods presented, highlighting key trends, strategic initiatives, and significant financial events [Overview](index=26&type=section&id=Overview) - Amtech is a global manufacturer of capital equipment (thermal processing, wafer polishing, consumables) for semiconductor devices, including silicon carbide (SiC) and silicon power devices, analog, discrete, electronic assemblies, and light-emitting diodes (LEDs)[116](index=116&type=chunk) - The company operates in two reportable segments: Semiconductor (thermal processing equipment) and Material and Substrate (wafer cleaning equipment, substrate consumables)[117](index=117&type=chunk) - The semiconductor industry is cyclical, and these broad industry trends impact the company's revenue[118](index=118&type=chunk) [Strategy](index=30&type=section&id=Strategy) - The company's strategic **growth** plan focuses on Power Semiconductor, leveraging existing experience, products, and capabilities for **growth**, profitability, and sustainability[119](index=119&type=chunk) - Core focus areas include Advanced Mobility (electric vehicles, ADAS), Supply Chain Resiliency (expanding operations outside mainland China), and Artificial Intelligence (reflow oven systems for advanced packaging of AI chips)[119](index=119&type=chunk) - Future investments are anticipated in R&D and capital expenditures to meet demand, including a move to a smaller Massachusetts facility and the sale of corporate headquarters real property in Arizona for **$2.5 million** net cash inflow[120](index=120&type=chunk)[121](index=121&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) [Net Revenue](index=31&type=section&id=Net%20Revenue) | Segment Net Revenues (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :---------------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Semiconductor | $17,441 | $22,047 | $(4,606) | -20.9% | | Material and Substrate | $7,992 | $11,263 | $(3,271) | -29.0% | | Total net revenue | $25,433 | $33,310 | $(7,877) | -23.6% | - **Total net revenue decreased** by **24%** for the three months ended March 31, 2024, primarily due to decreased shipments of belt furnaces, SMT, and packaging equipment in the Semiconductor segment, and lower sales of wafer cleaning equipment and spare parts in the Material and Substrate segment[125](index=125&type=chunk)[126](index=126&type=chunk) | Segment Net Revenues (in thousands) | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | Change | % Change | | :---------------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Semiconductor | $34,968 | $38,934 | $(3,966) | -10.2% | | Material and Substrate | $15,385 | $15,934 | $(549) | -3.4% | | Total net revenue | $50,353 | $54,868 | $(4,515) | -8.2% | - For the six months ended March 31, 2024, **total net revenue decreased** by **8%**, driven by fewer shipments of horizontal diffusion furnaces, SMT, and packaging equipment in the Semiconductor segment, and decreased consumables shipments in the Material and Substrate segment[126](index=126&type=chunk) [Orders and Backlog](index=33&type=section&id=Orders%20and%20Backlog) | New Orders Booked (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :------------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Semiconductor | $12,061 | $24,606 | $(12,545) | -51.0% | | Material and Substrate | $7,710 | $9,660 | $(1,950) | -20.2% | | Total new orders | $19,771 | $34,266 | $(14,495) | -42.3% | | Backlog (in thousands) | March 31, 2024 | March 31, 2023 | Change | % Change | | :--------------------- | :------------- | :------------- | :----- | :------- | | Semiconductor | $39,455 | $54,767 | $(15,312) | -27.9% | | Material and Substrate | $4,861 | $11,071 | $(6,210) | -56.1% | | Total backlog | $44,316 | $65,838 | $(21,522) | -32.7% | - **Total new orders decreased** by **42%** for the three months ended March 31, 2024, and **total backlog decreased** by **33%** to **$44.3 million** as of March 31, 2024, compared to the prior year[128](index=128&type=chunk)[129](index=129&type=chunk) - One Semiconductor segment customer accounted for **29%** of the backlog, and another customer (across both segments) accounted for **23%** as of March 31, 2024[129](index=129&type=chunk) [Gross Profit and Gross Margin](index=33&type=section&id=Gross%20Profit%20and%20Gross%20Margin) | Gross Profit (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :-------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Semiconductor | $5,040 | $8,931 | $(3,891) | -43.6% | | Material and Substrate | $3,411 | $4,539 | $(1,128) | -24.9% | | Total gross profit | $8,451 | $13,470 | $(5,019) | -37.3% | | Gross Margin | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change (pp) | | :----------- | :---------------------------- | :---------------------------- | :---------- | | Semiconductor | 29% | 41% | -12 pp | | Material and Substrate | 43% | 40% | +3 pp | | Total gross margin | 33% | 40% | -7 pp | - Overall **gross profit decreased** by **$5.0 million** (**37.3%**) for the three months ended March 31, 2024, with Semiconductor segment **gross margin declining** due to product mix, higher material costs, and lower Shanghai facility utilization. Material and Substrate segment **gross margin increased** due to a favorable product mix with increased consumable sales[131](index=131&type=chunk)[132](index=132&type=chunk) - For the six months ended March 31, 2024, total **gross profit decreased** by **$5.1 million** (**23.4%**), with Material and Substrate **gross margin** impacted by an **$0.8 million** intangible asset **impairment charge**[131](index=131&type=chunk)[133](index=133&type=chunk) - The company is experiencing **increased** material costs across all segments and is exploring partnerships with contract manufacturers and making targeted labor reductions[132](index=132&type=chunk) [Selling, General and Administrative](index=35&type=section&id=Selling,%20General%20and%20Administrative) | SG&A Expenses (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :--------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | SG&A expenses | $8,252 | $11,434 | $(3,182) | -27.8% | - **SG&A expenses decreased** by **$3.2 million** (**27.8%**) for the three months ended March 31, 2024, primarily due to lower shipping expenses, reduced labor and employee-related costs from staff reductions, and the absence of **$1.5 million** in Entrepix acquisition transaction expenses from the prior year[134](index=134&type=chunk) | SG&A Expenses (in thousands) | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | Change | % Change | | :--------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | SG&A expenses | $16,819 | $20,624 | $(3,805) | -18.4% | - For the six months ended March 31, 2024, **SG&A expenses decreased** by **$3.8 million** (**18.4%**), driven by similar factors including lower shipping, labor, consulting fees, and the absence of **$3.0 million** in Entrepix acquisition transaction expenses from the prior year[135](index=135&type=chunk) [Research, Development and Engineering](index=35&type=section&id=Research,%20Development%20and%20Engineering) | RD&E Expenses (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Change | % Change | | :--------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | RD&E expense | $921 | $1,517 | $(596) | -39.3% | | RD&E Expenses (in thousands) | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | Change | % Change | | :--------------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | RD&E expense | $2,509 | $2,910 | $(401) | -13.8% | - **RD&E expenses decreased** by **$0.6 million** (**39.3%**) for the three months and **$0.4 million** (**13.8%**) for the six months ended March 31, 2024, primarily due to the timing of purchases related to specific strategic-development projects in the Semiconductor segment[137](index=137&type=chunk) [Goodwill Impairment](index=35&type=section&id=Goodwill%20Impairment) - A **goodwill impairment charge** of **$6.4 million** was recognized in the Material and Substrate segment during the six months ended March 31, 2024, triggered by a **decline** in the company's stock price causing book value to materially exceed market value[138](index=138&type=chunk)[97](index=97&type=chunk) [Intangible Asset Impairment](index=36&type=section&id=Intangible%20Asset%20Impairment) - An **impairment** of definite-lived intangible assets totaling **$1.3 million** was recognized in the Material and Substrate segment during the six months ended March 31, 2024[139](index=139&type=chunk) - Of this **$1.3 million impairment**, **$0.8 million** was recorded in cost of goods sold, and the remainder in operating expenses[139](index=139&type=chunk) [Severance Expense](index=36&type=section&id=Severance%20Expense) | Severance Expense (in thousands) | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | | :------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Expense | $112 | $0 | $310 | $400 | - Severance expense for the three and six months ended March 31, 2024, was **$0.1 million** and **$0.3 million**, respectively, primarily due to staff reductions across all divisions[140](index=140&type=chunk) [Income Taxes](index=36&type=section&id=Income%20Taxes) | Income Tax Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | 6 Months Ended March 31, 2024 | 6 Months Ended March 31, 2023 | | :---------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Income tax provision (benefit) (in thousands) | $223 | $(2,946) | $281 | $(2,950) | | Effective tax rate | N/A | N/A | (3.5%) | 118.0% | - The effective tax rate for the six months ended March 31, 2024, was **(3.5%)**, primarily due to losses for which no tax benefit could be recognized, contrasting with **118.0%** in the prior year due to the release of a valuation allowance from the Entrepix acquisition[141](index=141&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash and Cash Flow](index=36&type=section&id=Cash%20and%20Cash%20Flow) | Cash Flow Metric (in thousands) | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | Change | | :------------------------------ | :------------------------------ | :------------------------------ | :----- | | Net cash provided by (used in) operating activities | $5,307 | $(5,327) | $10,634 | | Net cash provided by (used in) investing activities | $724 | $(36,474) | $37,198 | | Net cash (used in) provided by financing activities | $(6,385) | $11,919 | $(18,304) | | Net decrease in cash and cash equivalents | $(133) | $(29,141) | $29,008 | | Cash and cash equivalents, end of period | $13,000 | $17,733 | $(4,733) | | Liquidity Metric (in thousands) | March 31, 2024 | September 30, 2023 | Change | | :------------------------------ | :------------- | :----------------- | :----- | | Cash and cash equivalents | $13,000 | $13,133 | $(133) | | Working capital | $44,385 | $51,471 | $(7,086) | | Current ratio | 2.7:1 | 2.7:1 | 0.0 | - The **decrease** in cash and cash equivalents by **$0.1 million** from September 30, 2023, was primarily due to long-term debt payments and fixed asset purchases, partially offset by customer down payments, collections, and proceeds from the Arizona real property sale[145](index=145&type=chunk) - **Working capital decreased** by **$7.1 million**, mainly due to **decreases** in accounts receivable and inventories[145](index=145&type=chunk) [Cash Flows from Operating Activities](index=37&type=section&id=Cash%20Flows%20from%20Operating%20Activities) - **Operating activities generated** **$5.3 million** in cash for the six months ended March 31, 2024, a **significant improvement** from **$5.3 million** used in the prior year, driven by stronger accounts receivable collections and **increased** customer down payments[147](index=147&type=chunk) [Cash Flows from Investing Activities](index=37&type=section&id=Cash%20Flows%20from%20Investing%20Activities) - **Investing activities provided** **$0.7 million** for the six months ended March 31, 2024, primarily from **$2.7 million** in proceeds from the sale of Arizona real property, partially offset by capital expenditures. This contrasts with **$36.5 million** used in the prior year, mainly for the Entrepix acquisition[148](index=148&type=chunk) - Capital expenditures are expected to **increase** in the third quarter of fiscal 2024 due to the relocation of Massachusetts operations[148](index=148&type=chunk) [Cash Flows from Financing Activities](index=37&type=section&id=Cash%20Flows%20from%20Financing%20Activities) - **Financing activities used** **$6.4 million** for the six months ended March 31, 2024, primarily for **$6.4 million** in long-term debt payments[149](index=149&type=chunk) - In the prior year, **financing activities provided** **$11.9 million**, mainly from **$12.0 million** in debt borrowings, partially offset by **$0.4 million** in debt payments[149](index=149&type=chunk) [Financing Facilities](index=37&type=section&id=Financing%20Facilities) - The company's debt balance was **$4.3 million** as of March 31, 2024, including finance lease obligations[150](index=150&type=chunk) - A Forbearance & Modification Agreement was entered into with UMB Bank on December 5, 2023, due to non-compliance with Debt to EBITDA and Fixed Charge Coverage Ratio covenants, with the forbearance period extending through January 17, 2025[151](index=151&type=chunk) - The agreement **increased** the revolving credit facility to **$14.0 million** and **reduced** the term loan to **$4.4 million**, extending both maturities by one year[152](index=152&type=chunk) - As of March 31, 2024, **$4.2 million** was outstanding on the Term Loan, no amounts on the Revolver, and a **$0.3 million** letter of credit. All debt is classified as current due to the lender's discretion to call it at the end of the forbearance period[152](index=152&type=chunk)[156](index=156&type=chunk) - The company was in compliance with the Minimum **EBITDA** Covenant as of March 31, 2024, with actual positive **EBITDA** of **$1.0 million** for the six-month period (covenant not less than negative **$800,000**)[153](index=153&type=chunk) [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) - As of March 31, 2024, the company had no material off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K[158](index=158&type=chunk) [Contractual Obligations](index=33&type=section&id=Contractual%20Obligations) - Unrecorded purchase obligations **decreased** by **$8.0 million** to **$16.3 million** as of March 31, 2024, from **$24.3 million** at September 30, 2023[159](index=159&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) - The preparation of financial statements requires management to make estimates and assumptions, particularly concerning revenue recognition, income taxes, inventory valuation, business combinations, goodwill, and long-lived asset impairment[160](index=160&type=chunk)[161](index=161&type=chunk) - There have been no material changes in critical accounting estimates during the six months ended March 31, 2024[163](index=163&type=chunk) [Impact of Recently Issued Accounting Pronouncements](index=34&type=section&id=Impact%20of%20Recently%20Issued%20Accounting%20Pronouncements) - The company is evaluating ASU 2023-07, 'Segment Reporting,' which improves reportable segment disclosure requirements, effective for fiscal years beginning after December 15, 2023[51](index=51&type=chunk)[164](index=164&type=chunk) - ASU 2023-09, 'Income Taxes,' effective for fiscal years beginning on or after December 15, 2024, is not expected to materially affect financial condition or results of operations[50](index=50&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Amtech Systems, Inc. is electing scaled disclosure reporting obligations and is not required to provide the information requested by this Item - As a smaller reporting company, Amtech Systems, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[165](index=165&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, identifies material weaknesses, and outlines the remediation plan to strengthen internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=34&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to previously identified material weaknesses[167](index=167&type=chunk) - A material weakness is defined as a reasonable possibility that a material misstatement of financial statements will not be prevented or detected timely[167](index=167&type=chunk) [Changes in Internal Control over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No other material changes to internal control over financial reporting occurred during the six months ended March 31, 2024, beyond the integration of Entrepix's controls[168](index=168&type=chunk) [Remediation Plan for Existing Material Weaknesses](index=34&type=section&id=Remediation%20Plan%20for%20Existing%20Material%20Weaknesses) - The company is actively designing and implementing measures to strengthen internal control over financial reporting (ICFR) and remediate material weaknesses[169](index=169&type=chunk) - Remediation efforts for goodwill and intangible assets include evaluating internal controls over non-routine transactions and engaging a new valuation firm for impairment assessments[169](index=169&type=chunk) - For general information technology controls, remediation includes formalizing IT policies, developing monitoring controls, strengthening user access reviews, enhancing program change management, and assessing segregation of duties[170](index=170&type=chunk) - Remediation of material weaknesses is anticipated to be completed during fiscal year 2024, pending sufficient operation and testing of controls[171](index=171&type=chunk) PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and actions arising from business operations, for which it maintains adequate provisions for probable and estimable losses, as detailed in Note 10 to the financial statements - The company is periodically involved in legal proceedings and claims, for which it evaluates the status and makes accruals for probable and estimable losses[173](index=173&type=chunk)[108](index=108&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the comprehensive risk factors detailed in the company's 2023 Form 10-K and the cautionary statements regarding forward-looking information, noting no material changes to these risks during the reporting period - Investors are referred to 'Item 1A. Risk Factors' in the 2023 Form 10-K and the 'Cautionary Statements Regarding Forward-Looking Statements' for a full understanding of risks[174](index=174&type=chunk) - There have been no material changes to the risk factors previously disclosed in the 2023 Form 10-K and the Form 10-Q for the quarter ended December 31, 2023[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's $5 million stock repurchase program, approved in February 2023, expired during the quarter ended March 31, 2024, with no repurchases made during that quarter and no unregistered sales of equity securities - The **$5 million** stock repurchase program, approved on February 7, 2023, expired during the quarter ended March 31, 2024[175](index=175&type=chunk) - No repurchases were made under the program during the quarter ended March 31, 2024[175](index=175&type=chunk) - No equity securities were sold that were not registered under the Securities Act of 1933 during the six months ended March 31, 2024[176](index=176&type=chunk) [Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[176](index=176&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[176](index=176&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2024 - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2024[176](index=176&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and Inline XBRL documents - The report includes certifications pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350, as well as Inline XBRL documents[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) [SIGNATURES](index=38&type=section&id=SIGNATURES) The report is duly signed on behalf of Amtech Systems, Inc. by Lisa D. Gibbs, Vice President and Chief Financial Officer, on May 8, 2024 - The report was signed by Lisa D. Gibbs, Vice President and Chief Financial Officer, on May 8, 2024[185](index=185&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) Amtech reported strong Q2 FY2024 results with increased net revenue, positive GAAP operating income, and a significant reduction in debt, positioning for future growth [Q2 FY2024 Financial and Operational Highlights](index=1&type=section&id=Q2%20FY2024%20Financial%20and%20Operational%20Highlights) Amtech reported Q2 FY2024 results with net revenue of $25.4 million, GAAP operating income of $1.4 million, and GAAP net income of $1.0 million, also generating $2.5 million in net proceeds from the sale of its corporate headquarters and reducing debt by $6.4 million, ending the quarter with a net cash position of $8.8 million | Metric | Q2 FY2024 | | :----- | :-------- | | Net revenue | $25.4 million | | GAAP operating income | $1.4 million | | GAAP net income | $1.0 million | | Non-GAAP operating income | $0.2 million | | Non-GAAP net loss | $0.2 million | | Customer orders | $19.8 million | | Backlog | $44.3 million | - Net proceeds of **$2.5 million** from the sale of corporate headquarters building[2](index=2&type=chunk) - Debt payments of **$6.4 million**, resulting in a net cash position of **$8.8 million**[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Bob Daigle highlighted improved cost structure and operational effectiveness, exceeding revenue guidance despite soft market demand, noting the company's adjusted EBITDA of $0.8 million and strategic alignment of the organization size to current market demand, positioning Amtech for strong operating results upon semiconductor market recovery - Exceeded revenue guidance with **$25.4 million**, driven by improved cost structure and operational effectiveness[3](index=3&type=chunk) - Delivered adjusted EBITDA of **$0.8 million** despite continued softness in overall market demand[3](index=3&type=chunk) - Company is positioned to deliver strong operating results as the broader semiconductor market recovers, following organizational alignment to current market demand[3](index=3&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) This section analyzes Amtech's Q2 FY2024 net revenues, gross profit, operating expenses, and net income, highlighting sequential and year-over-year changes [Net Revenues Analysis](index=2&type=section&id=Net%20Revenues%20Analysis) Net revenues for Q2 FY2024 were $25.4 million, a 2% sequential increase primarily due to increased consumable sales in the Material and Substrate segment, but a 24% decrease year-over-year due to a slowdown in the broader semiconductor market | Metric | Q2 FY2024 (in millions) | Q1 FY2024 (in millions) | Q2 FY2023 (in millions) | Sequential Change | YoY Change | | :----- | :---------------------- | :---------------------- | :---------------------- | :---------------- | :--------- | | Net Revenues | $25.4M | $24.9M | $33.3M | +2% | -24% | - Sequential increase primarily due to increased consumable sales in the Material and Substrate segment as customers update their buying patterns and adjust inventory levels[5](index=5&type=chunk) - Decrease from prior year primarily attributable to lower sales across most of the product portfolio due to a slow-down in the broader semiconductor market[5](index=5&type=chunk) [Gross Profit and Margin Analysis](index=2&type=section&id=Gross%20Profit%20and%20Margin%20Analysis) GAAP gross margin was flat sequentially at 33.2% but decreased from 40.4% in Q2 FY2023, with the Semiconductor segment's GAAP gross margin negatively affected by product mix and increased material costs, while the Material and Substrate segment saw sequential and YoY increases due to a more favorable product mix and increased consumable sales, and Non-GAAP gross margin decreased sequentially and YoY due to less favorable product mix and increased material costs | Metric | Q2 FY2024 (in millions) | Q1 FY2024 (in millions) | Q2 FY2023 (in millions) | | :----- | :---------------------- | :---------------------- | :---------------------- | | GAAP Gross Profit | $8.5M | $8.2M | $13.5M | | GAAP Gross Margin | 33.2% | 33.0% | 40.4% | | Non-GAAP Gross Profit | $8.6M | $9.3M | $13.5M | | Non-GAAP Gross Margin | 33.9% | 37.5% | 40.4% | - Semiconductor segment GAAP gross margin negatively affected by product mix and increased material costs, both primarily attributed to shipments of horizontal diffusion furnaces[6](index=6&type=chunk) - Material and Substrate segment GAAP gross margin increased sequentially and compared to the same prior year period due primarily to a more favorable product mix, with increased consumable sales partially offset by lower equipment sales[6](index=6&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Selling, General & Administrative (SG&A) expenses decreased by $0.3 million sequentially and $3.2 million YoY, driven by reductions in labor, commissions, shipping, and lower acquisition and amortization expenses, while Research, Development and Engineering (R&D) expenses decreased by $0.7 million sequentially and $0.6 million YoY, mainly due to timing of purchases for specific projects in the Semiconductor segment - SG&A expenses decreased **$0.3 million** sequentially due primarily to reductions in labor expenses and lower commissions and shipping expenses[7](index=7&type=chunk) - SG&A expenses decreased **$3.2 million** YoY, primarily due to **$1.5 million** of lower acquisition expenses, **$0.6 million** of lower amortization expense, and reductions in labor, commissions and shipping expenses[7](index=7&type=chunk) - Research, Development and Engineering expenses decreased **$0.7 million** sequentially and **$0.6 million** YoY due primarily to the timing of purchases related to specific projects in the Semiconductor segment[7](index=7&type=chunk) [Operating Income (Loss)](index=2&type=section&id=Operating%20Income%20%28Loss%29) Amtech reported GAAP operating income of $1.4 million in Q2 FY2024, a significant improvement from a GAAP operating loss of $8.9 million in the prior quarter and an increase from $0.5 million in Q2 FY2023, while Non-GAAP operating income was $0.2 million, turning positive from a $0.2 million loss sequentially but down from $3.2 million in Q2 FY2023 | Metric | Q2 FY2024 (in millions) | Q1 FY2024 (in millions) | Q2 FY2023 (in millions) | | :----- | :---------------------- | :---------------------- | :---------------------- | | GAAP Operating Income (Loss) | $1.4M | ($8.9M) | $0.5M | | Non-GAAP Operating Income (Loss) | $0.2M | ($0.2M) | $3.2M | [Net Income (Loss) and EPS](index=2&type=section&id=Net%20Income%20%28Loss%29%20and%20EPS) GAAP net income for Q2 FY2024 was $1.0 million ($0.07 per diluted share), a substantial improvement from a GAAP net loss of $9.4 million ($0.66 per diluted share) for the preceding quarter, but lower than $3.2 million ($0.23 per diluted share) for Q2 FY2023, while Non-GAAP net loss was $0.2 million ($0.01 per diluted share), an improvement from a $0.6 million loss sequentially, but a decline from $2.7 million net income ($0.19 per diluted share) in Q2 FY2023 | Metric | Q2 FY2024 (in millions) | Q1 FY2024 (in millions) | Q2 FY2023 (in millions) | | :----- | :---------------------- | :---------------------- | :---------------------- | | GAAP Net Income (Loss) | $1.0M | ($9.4M) | $3.2M | | GAAP Net Income (Loss) per Diluted Share | $0.07 | ($0.66) | $0.23 | | Non-GAAP Net (Loss) Income | ($0.2M) | ($0.6M) | $2.7M | | Non-GAAP Net (Loss) Income per Diluted Share | ($0.01) | ($0.04) | $0.19 | [Segment Performance](index=6&type=section&id=Segment%20Performance) This section details the Q2 FY2024 financial performance of Amtech's Semiconductor and Material and Substrate segments, including revenues, gross margins, and operating income [Semiconductor Segment](index=6&type=section&id=Semiconductor%20Segment) The Semiconductor segment reported net revenues of $17.4 million in Q2 FY2024, a slight decrease from $17.5 million sequentially and a notable decrease from $22.0 million YoY, with GAAP gross margin at 29%, down from 35% sequentially and 41% YoY, and GAAP operating income of $0.9 million | Metric (in thousands) | Q2 FY2024 | Q1 FY2024 | Q2 FY2023 | | :----- | :-------- | :-------- | :-------- | | Revenues, net | $17,441 | $17,527 | $22,047 | | GAAP Gross Profit | $5,040 | $6,159 | $8,931 | | GAAP Gross Margin | 29% | 35% | 41% | | GAAP Operating Income | $896 | $1,081 | $2,950 | | New orders | $12,061 | $17,129 | $24,606 | | Backlog | $39,455 | $44,835 | $54,767 | [Material and Substrate Segment](index=6&type=section&id=Material%20and%20Substrate%20Segment) The Material and Substrate segment's net revenues increased to $8.0 million in Q2 FY2024 from $7.4 million sequentially, though down from $11.3 million YoY, with GAAP gross margin significantly improving to 43% from 28% sequentially, and comparable to 40% YoY, and GAAP operating income of $0.9 million, a substantial recovery from a $7.8 million loss in the prior quarter | Metric (in thousands) | Q2 FY2024 | Q1 FY2024 | Q2 FY2023 | | :----- | :-------- | :-------- | :-------- | | Revenues, net | $7,992 | $7,393 | $11,263 | | GAAP Gross Profit | $3,411 | $2,060 | $4,539 | | GAAP Gross Margin | 43% | 28% | 40% | | GAAP Operating Income (Loss) | $900 | ($7,844) | $297 | | New orders | $7,710 | $5,976 | $9,660 | | Backlog | $4,861 | $5,144 | $11,071 | [Financial Position and Cash Flow](index=8&type=section&id=Financial%20Position%20and%20Cash%20Flow) This section reviews Amtech's balance sheet as of March 31, 2024, and analyzes cash flow activities for the six months ended March 31, 2024 [Balance Sheet Highlights](index=8&type=section&id=Balance%20Sheet%20Highlights) As of March 31, 2024, total assets decreased to $116.5 million from $137.0 million at September 30, 2023, with current assets, accounts receivable, and inventories seeing reductions, while total liabilities decreased to $35.6 million from $48.7 million, primarily due to a significant reduction in finance lease liabilities and long-term debt, and shareholders' equity decreased to $80.9 million from $88.4 million | Metric (in thousands) | March 31, 2024 | September 30, 2023 | Change | | :----- | :------------- | :----------------- | :----- | | Total Assets | $116,474 | $137,021 | -$20,547 | | Cash and cash equivalents | $13,000 | $13,133 | -$133 | | Accounts receivable | $21,230 | $26,474 | -$5,244 | | Inventories | $31,308 | $34,845 | -$3,537 | | Total Liabilities | $35,583 | $48,656 | -$13,073 | | Finance Lease Liabilities and Long-Term Debt | $65 | $8,422 | -$8,357 | | Total Shareholders' Equity | $80,891 | $88,365 | -$7,474 | [Cash Flow Activities](index=9&type=section&id=Cash%20Flow%20Activities) For the six months ended March 31, 2024, net cash provided by operating activities was $5.3 million, a significant improvement from a $5.3 million use in the prior year, with investing activities providing $0.7 million, primarily from the sale of property, plant, and equipment, and financing activities using $6.4 million, mainly due to debt payments | Cash Flow Activity (in thousands) | Six Months 2024 | Six Months 2023 | | :-------------------------------- | :-------------- | :-------------- | | Net cash provided by (used in) operating activities | $5,307 | ($5,327) | | Net provided by (used in) investing activities | $724 | ($36,474) | | Net cash (used in) provided by financing activities | ($6,385) | $11,919 | | Cash and Cash Equivalents, End of Period | $13,000 | $17,733 | - Unrestricted cash and cash equivalents at March 31, 2024, were **$13.0 million**, compared to **$13.1 million** at September 30, 2023[9](index=9&type=chunk) - Debt payments during the three months ended March 31, 2024, were **$6.4 million**, resulting in a net cash position of **$8.8 million** as of March 31, 2024, compared to **$7.0 million** as of December 31, 2023[9](index=9&type=chunk) [Business Outlook and Strategic Actions](index=3&type=section&id=Business%20Outlook%20and%20Strategic%20Actions) This section outlines Amtech's Q3 FY2024 guidance, strategic initiatives to reduce costs, and market factors influencing future operating results [Q3 FY2024 Guidance](index=3&type=section&id=Q3%20FY2024%20Guidance) For the third fiscal quarter ending June 30, 2024, Amtech expects revenues in the range of $22 million to $25 million, with adjusted EBITDA projected to be nominally positive, including some expenses and production downtime related to the BTU facility move - Expected revenues for the third fiscal quarter ending June 30, 2024, are in the range of **$22 million - $25 million**[12](index=12&type=chunk) - Adjusted EBITDA for Q3 FY2024 is expected to be nominally positive, which includes some expenses and production downtime with the BTU facility move[12](index=12&type=chunk) [Strategic Initiatives and Market Factors](index=3&type=section&id=Strategic%20Initiatives%20and%20Market%20Factors) Amtech remains confident in the future prospects for its consumables and equipment serving advanced mobility and advanced packaging applications, having implemented actions in Q1 and Q2 FY2024 to reduce structural costs by approximately $6 million annually and align product pricing, aiming to significantly improve results and enhance profitability through market cycles, though operating results are subject to timing of orders, shipments, logistical challenges, semiconductor market cycles, and Renminbi exchange rate fluctuations - Confidence in strong future prospects for both consumables and equipment serving advanced mobility and advanced packaging applications[12](index=12&type=chunk) - Actions taken during Q1 and Q2 FY2024 will reduce Amtech's structural costs by approximately **$6 million** annually and better align product pricing with value, expected to significantly improve results and enhance profitability[12](index=12&type=chunk) - Operating results can be significantly impacted by the timing of orders, system shipments, logistical challenges, financial results of semiconductor manufacturers, and cyclical changes in market demand. Changes in the value of the Renminbi could also cause actual results to differ from expectations[11](index=11&type=chunk)[13](index=13&type=chunk) [Corporate Information](index=4&type=section&id=Corporate%20Information) This section provides an overview of Amtech Systems, Inc., details regarding its Q2 fiscal results conference call, and a cautionary note on forward-looking statements [About Amtech Systems, Inc.](index=4&type=section&id=About%20Amtech%20Systems%2C%20Inc.) Amtech Systems, Inc. is a global manufacturer of thermal processing, wafer cleaning, and chemical mechanical polishing (CMP) capital equipment and related consumables, serving semiconductor, advanced mobility, and renewable energy manufacturing applications, with a strategic focus on growth opportunities in thermal and substrate processing, under key brands including BTU International, Entrepix, Inc., PR Hoffman™, and Intersurface Dynamics, Inc. - Amtech Systems, Inc. is a leading, global manufacturer of thermal processing, wafer cleaning and chemical mechanical polishing (CMP) capital equipment and related consumables[15](index=15&type=chunk) - Products are used in semiconductor, advanced mobility and renewable energy manufacturing applications[15](index=15&type=chunk) - Strategic focus is on growth opportunities which leverage strengths in thermal and substrate processing, recognized under brand names BTU International, Entrepix, Inc., PR Hoffman™ and Intersurface Dynamics, Inc.[15](index=15&type=chunk) [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) Amtech Systems hosted a conference call on May 8, 2024, at 5:00 pm ET to discuss Q2 fiscal results, with details for dialing in and accessing the live webcast and replay provided - Amtech Systems hosted a conference call on Wednesday, May 8, 2024, at 5:00 pm ET to discuss fiscal second quarter financial results[14](index=14&type=chunk) - A live webcast of the conference call was available in the Investor Relations section of Amtech's website[14](index=14&type=chunk) - A replay of the webcast will be available for approximately 30 calendar days[14](index=14&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The press release contains forward-looking statements regarding future financial results, business strategies, and operational objectives, which are not guarantees of future performance and involve risks, uncertainties, and assumptions, as detailed in the company's SEC filings (Form 10-K and 10-Qs), with the company undertaking no obligation to update these statements - All statements in this press release, other than statements of historical fact, are identified as 'forward-looking statements'[16](index=16&type=chunk) - Examples include statements regarding Amtech's future financial results, operating results, business strategies, and efforts to improve operational efficiencies[16](index=16&type=chunk) - These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict, as detailed in the Company's Form 10-K and subsequently filed Quarterly Reports on Form 10-Qs[16](index=16&type=chunk)[17](index=17&type=chunk) [Detailed Financial Schedules](index=6&type=section&id=Detailed%20Financial%20Schedules) This section provides comprehensive unaudited consolidated financial statements, including statements of operations, balance sheets, cash flows, and GAAP to Non-GAAP reconciliations [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the unaudited consolidated statements of operations for the three and six months ended March 31, 2024, and 2023, detailing revenues, cost of sales, gross profit, operating expenses, and net income (loss) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Revenues, net | $25,433 | $33,310 | $50,353 | $54,868 | | Cost of sales | $16,982 | $19,840 | $32,834 | $33,095 | | Gross profit | $8,451 | $13,470 | $16,670 | $21,773 | | Selling, general and administrative | $8,252 | $11,434 | $16,819 | $20,624 | | Research, development and engineering | $921 | $1,517 | $2,509 | $2,910 | | Operating income (loss) | $1,363 | $519 | ($7,571) | ($2,161) | | Net income (loss) | $970 | $3,204 | ($8,388) | $460 | | Net income (loss) per diluted share | $0.07 | $0.23 | ($0.59) | $0.03 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) This section provides the unaudited consolidated balance sheets as of March 31, 2024, and September 30, 2023, outlining assets, liabilities, and shareholders' equity | Metric (in thousands) | March 31, 2024 | September 30, 2023 | | :-------------------- | :------------- | :----------------- | | Total Current Assets | $70,299 | $81,189 | | Property, Plant and Equipment - Net | $9,476 | $9,695 | | Intangible Assets - Net | $4,352 | $6,114 | | Goodwill | $21,261 | $27,631 | | Total Assets | $116,474 | $137,021 | | Total Current Liabilities | $25,914 | $29,718 | | Finance Lease Liabilities and Long-Term Debt | $65 | $8,422 | | Total Liabilities | $35,583 | $48,656 | | Total Shareholders' Equity | $80,891 | $88,365 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited consolidated statements of cash flows for the six months ended March 31, 2024, and 2023, detailing cash flows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six Months 2024 | Six Months 2023 | | :-------------------------------- | :-------------- | :-------------- | | Net cash provided by (used in) operating activities | $5,307 | ($5,327) | | Net provided by (used in) investing activities | $724 | ($36,474) | | Net cash (used in) provided by financing activities | ($6,385) | $11,919 | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | $221 | $741 | | Net Decrease in Cash and Cash Equivalents | ($133) | ($29,141) | | Cash and Cash Equivalents, End of Period | $13,000 | $17,733 | [GAAP to Non-GAAP Reconciliations](index=10&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP to Non-GAAP financial measures for gross profit, operating income (loss), and net income (loss) for Amtech Systems, Inc. and its segments, with Non-GAAP adjustments excluding items such as stock compensation, severance, acquisition expenses, intangible asset impairment, and gain on sale of assets GAAP Gross Profit Reconciliation | Metric (in thousands) | Q2 FY2024 | Q1 FY2024 | Q2 FY2023 | | :-------------------- | :-------- | :-------- | :-------- | | GAAP gross profit | $8,451 | $8,219 | $13,470 | | Write-down of inventory related to polishing equipment | $175 | $273 | - | | Intangible asset impairment | - | $849 | - | | Non-GAAP gross profit | $8,626 | $9,341 | $13,470 | GAAP Operating Income (Loss) Reconciliation | Metric (in thousands) | Q2 FY2024 | Q1 FY2024 | Q2 FY2023 | | :-------------------- | :-------- | :-------- | :-------- | | GAAP operating income (loss) | $1,363 | ($8,934) | $519 | | Gain on sale of fixed assets | ($2,197) | - | - | | Goodwill impairment | - | $6,370 | - | | Non-GAAP operating income (loss) | $188 | ($210) | $3,162 | GAAP Net Income (Loss) Reconciliation | Metric (in thousands) | Q2 FY2024 | Q1 FY2024 | Q2 FY2023 | | :-------------------- | :-------- | :-------- | :-------- | | GAAP net income (loss) | $970 | ($9,358) | $3,204 | | Gain on sale of fixed assets | ($2,197) | - | - | | Goodwill impairment | - | $6,370 | - | | Non-GAAP net (loss) income | ($205) | ($634) | $2,683 | [EBITDA and Adjusted EBITDA Reconciliation](index=13&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) This section provides a reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA for the three and six months ended March 31, 2024, with Adjusted EBITDA including adjustments for items such as gain on sale of fixed assets, building move expense, inventory write-down, stock compensation, goodwill impairment, intangible asset impairment, and severance expense EBITDA and Adjusted EBITDA Reconciliation Table | Metric (in thousands) | Six Months Ended March 31, 2024 | | :-------------------- | :------------------------------ | | GAAP net income (loss) | ($8,388) | | Interest income | ($33) | | Interest expense | $391 | | Income tax provision | $281 | | Depreciation and amortization expense | $1,572 | | EBITDA | ($6,177) | | Gain on sale of fixed assets | ($2,197) | | Building move expense | $231 | | Write-down of inventory related to polishing equipment | $448 | | Stock compensation expense | $667 | | Goodwill impairment | $6,370 | | Intangible asset impairment | $1,279 | | Severance expense | $310 | | Adjusted EBITDA | $931 |

Financial Data and Key Metrics - Revenue for Q1 2024 was $24.9 million, exceeding the high end of guidance and marking a 16% increase from Q1 2023 [6][13] - Adjusted EBITDA improved to $0.2 million, a significant turnaround from a $2.4 million loss in the prior quarter [6] - GAAP net loss for Q1 2024 was $9.4 million ($0.66 per share), compared to a $12 million loss ($0.85 per share) in Q4 2023 and a $2.7 million loss ($0.20 per share) in Q1 2023 [17] - Unrestricted cash and cash equivalents increased by $4 million to $17 million during the quarter [18] Business Segment Performance - Revenue decreased 10% sequentially due to lower equipment shipments across business segments, driven by softness in the semiconductor market [13] - Belt furnace shipments and the addition of Entrepix contributed to the year-over-year revenue increase, partially offset by lower reflow equipment shipments [13] - The Material & Substrates segment recorded a non-cash impairment charge of $7.6 million, with $0.8 million impacting gross profit [15] Market Performance - Semiconductor market demand remains mixed, with softness in wafer fabrication and back-end packaging equipment, but resilience in submarkets related to hybrid and electric vehicles [7] - Demand for consumables used in silicon carbide semiconductor production is improving, with strong demand for high-end belt furnaces and diffusion furnaces [8] Strategic Direction and Industry Competition - The company is focused on operational optimization, achieving $6 million in annualized cost savings through restructuring and strategic contract manufacturing partnerships [6][9] - Plans to relocate a US manufacturing facility to a smaller, more cost-effective site in Q3 2024 to reduce fixed expenses while maintaining production capabilities [10] - Pricing strategy adjustments are being implemented to align with rising input costs, with promising progress in new tool quotations [10] Management Commentary on Operating Environment and Outlook - Management expects Q2 2024 revenue to range between $22 million and $25 million, with EBITDA nominally negative to neutral [20] - Long-term growth is anticipated in AI-related infrastructure and global supply chain diversification, driving demand for back-end equipment and silicon carbide wafer production [12] - The company remains confident in the future prospects of its consumables and equipment businesses, particularly in advanced mobility and packaging applications [20] Other Important Information - SG&A expenses decreased by $2.5 million sequentially and $0.6 million year-over-year, driven by lower acquisition expenses, consulting fees, and intangible amortization [16] - Research, development, and engineering expenses decreased by $1 million sequentially due to reduced investment in next-generation polishing tools [16] - Debt restructuring in December 2023 increased the revolver capacity to $14 million, with $5.6 million transferred from the term loan [18] Q&A Session Summary Question: Backlog and Pipeline Outlook - The backlog is strong, particularly in power semiconductor packaging and silicon carbide wafer production, with expectations of increased activity in silicon carbide manufacturing capital equipment over the next 1-2 years [24][26] - A recovery in the back-end and advanced packaging segments is anticipated as the industry digests existing capacity [27] Question: Cost Savings and Demand Response - The $6 million in annualized cost savings will be fully realized by Q2 2024, with $4 million impacting the current quarter and the remaining $2 million lagging slightly [29] - Restructuring efforts, including strategic contract manufacturing partnerships, are designed to maintain scalability and readiness for market rebound without compromising growth [30] Question: Working Capital and Balance Sheet Adjustments - The company expects working capital to fluctuate as it executes its $50 million backlog and relocates a manufacturing facility, with continued focus on optimizing working capital and leveraging partner buying power [32] Question: Financial Covenants and Pricing Strategy - The company is in compliance with revised financial covenants, exceeding the required EBITDA threshold [36] - Pricing strategy adjustments have been well-received, with updated pricing models expected to improve margins as the backlog is replenished [38]

Amtech Systems (ASYS) came out with a quarterly loss of $0.04 per share versus the Zacks Consensus Estimate of a loss of $0.12. This compares to loss of $0.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 66.67%. A quarter ago, it was expected that this provider of equipment for solar panel and semiconductor makers would post earnings of $0.09 per share when it actually produced a loss of $0.18, delivering a surprise of -300 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 0-11412 AMTECH SYSTEMS, INC. (Exact name of registrant as specified in its charter) | Arizona ...

Financial Performance - Net revenue for Q1 FY2024 was $24.9 million, a 10% sequential decrease but a 16% increase compared to Q1 FY2023 [2][5] - GAAP operating loss was $8.9 million, including $7.6 million in non-cash impairment charges due to market value decline [2][6] - Non-GAAP operating loss improved to $0.2 million, compared to $3.0 million in Q4 FY2023 and $0.7 million in Q1 FY2023 [2][8] - GAAP net loss was $9.4 million ($0.66 per share), while Non-GAAP net loss was $0.6 million ($0.04 per share) [2][8] Operational Highlights - Customer orders totaled $23.1 million with a book-to-bill ratio of 0.9:1 [2] - Backlog stood at $50.0 million at the end of Q1 FY2024 [2] - Achieved $6 million in annualized cost savings through operational optimization [3] - Unrestricted cash and cash equivalents increased to $17.0 million from $13.1 million in the previous quarter [9] Segment Performance - Semiconductor segment revenue was $17.5 million with GAAP gross margin of 35% [17] - Material and Substrate segment revenue was $7.4 million with GAAP gross margin of 28% [17] - Semiconductor segment backlog was $44.8 million, while Material and Substrate segment backlog was $5.1 million [17] Market and Industry Context - Revenue decrease attributed to softness in the semiconductor market, particularly in equipment shipments [5] - Increase from prior year driven by higher belt furnace shipments and Entrepix acquisition [5] - Company expects Q2 FY2024 revenue between $22-25 million with EBITDA ranging from nominally negative to neutral [11] Strategic Initiatives - Focused on operational optimization and cost structure improvement [3] - Implementing strategic actions to enhance operational efficiency and shareholder value [3] - Aligning product pricing with value to improve profitability through market cycles [12]

Core Viewpoint - Amtech Systems, Inc. will announce its first quarter 2024 financial results on February 9, 2024, after market close, with a conference call scheduled for February 12, 2024, to discuss the results and current business conditions [1]. Company Overview - Amtech Systems, Inc. is a global manufacturer specializing in thermal processing, wafer cleaning, and chemical mechanical polishing (CMP) capital equipment, along with related consumables for semiconductor, advanced mobility, and renewable energy manufacturing applications [3]. - The company provides process equipment and services for semiconductor device fabrication, particularly focusing on silicon carbide (SiC) and silicon power, serving manufacturers worldwide, especially in Asia, North America, and Europe [3]. - Amtech's products are marketed under well-known brand names such as BTU International, Entrepix, Inc., PR Hoffman™, and Intersurface Dynamics, Inc. [3].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 0-11412 AMTECH SYSTEMS, INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | --- | --- | |----------------- ...