Amtech Systems(ASYS) - 2019 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Amtech Systems, Inc. presents unaudited condensed consolidated financial statements for Q1 and H1 2019, reclassifying the Solar segment as discontinued operations - The company initiated divestiture of its solar business in Q2 2019, classifying the Solar segment as held for sale and reporting its results as discontinued operations[23] Condensed Consolidated Balance Sheets Total assets decreased to $131.6 million from $149.4 million as of March 31, 2019, driven by reduced held-for-sale assets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 (Unaudited) | September 30, 2018 | | :--- | :--- | :--- | | Total Assets | $131,604 | $149,406 | | Cash and cash equivalents | $47,921 | $45,897 | | Held-for-sale assets | $25,977 | $45,322 | | Total Liabilities | $46,907 | $56,316 | | Held-for-sale liabilities | $21,965 | $31,798 | | Total Shareholders' Equity | $84,697 | $93,090 | Condensed Consolidated Statements of Operations The company reported a net loss of $5.6 million for Q1 2019 and $8.0 million for H1 2019, primarily driven by discontinued operations losses Statement of Operations Summary (in thousands) | Metric | Three Months Ended Mar 31, 2019 | Three Months Ended Mar 31, 2018 | Six Months Ended Mar 31, 2019 | Six Months Ended Mar 31, 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $20,633 | $21,115 | $43,858 | $48,231 | | Gross profit | $7,927 | $8,582 | $16,947 | $18,542 | | Income from continuing operations | $1,012 | $1,061 | $1,260 | $2,762 | | (Loss) income from discontinued operations | $(6,647) | $1,774 | $(9,267) | $6,525 | | Net (loss) income | $(5,635) | $2,835 | $(8,007) | $9,287 | | Net (loss) income per diluted share | $(0.40) | $0.19 | $(0.56) | $0.61 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $3.1 million for H1 2019, with total cash and equivalents decreasing by $4.4 million to $58.1 million Cash Flow Summary for Six Months Ended March 31 (in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,067) | $(17,515) | | Net cash used in investing activities | $(238) | $(618) | | Net cash (used in) provided by financing activities | $(149) | $1,157 | | Net Decrease in Cash | $(4,357) | $(15,604) | | Cash, End of Period | $58,139 | $60,157 | Notes to Condensed Consolidated Financial Statements Detailed notes explain accounting policies, ASC 606 adoption, restructuring charges, solar assets held for sale, segment reporting, and geographic revenue distribution - The company adopted the new revenue recognition standard, ASC 606, on October 1, 2018, with no material effect on results of operations[36][42] - Restructuring charges of $1.0 million were recorded for H1 2019, primarily due to former CEO severance and office consolidations[65][66] - The company plans to sell its Solar operations by March 31, 2020, with net assets held for sale at $4.0 million as of March 31, 2019[70][73] Discontinued Solar Operations Results (in thousands) | Metric | Six Months Ended Mar 31, 2019 | Six Months Ended Mar 31, 2018 | | :--- | :--- | :--- | | Revenues, net | $14,381 | $58,163 | | Gross (loss) profit | $(971) | $13,520 | | Net (loss) income | $(9,267) | $6,525 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, strategic exit from solar, a 9% decrease in net revenue for H1 2019, segment performance, and improved operating cash flow Results of Operations Total net revenue decreased 9% to $43.9 million for H1 2019, with segment declines, while gross margin slightly increased to 39%, and new orders and backlog fell Net Revenue by Segment - Six Months Ended March 31 (in thousands) | Segment | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Semiconductor | $35,013 | $37,473 | (7)% | | SiC/LED | $6,256 | $7,126 | (12)% | | Automation | $2,589 | $3,632 | (29)% | | Total net revenue | $43,858 | $48,231 | (9)% | Backlog and New Orders | Metric | March 31, 2019 | March 31, 2018 | % Change | | :--- | :--- | :--- | :--- | | Total Backlog | $21,991 | $30,376 | (28)% | | New Orders (Six Months) | $39,938 | $53,728 | (26)% | - Gross profit for H1 2019 decreased to $16.9 million, though gross margin percentage slightly increased to 39%[121] - SG&A expenses for H1 2019 decreased slightly to $12.4 million, primarily due to lower headcount and related expenses[124] Liquidity and Capital Resources Working capital was $74.6 million as of March 31, 2019, with cash used in operations improving to $3.1 million, and liquidity is sufficient for the next twelve months - Working capital was $74.6 million as of March 31, 2019, a decrease from $82.7 million at September 30, 2018[134] - Cash used in operating activities improved by $14.4 million, from $17.5 million in H1 2018 to $3.1 million in H1 2019[136] - Management believes existing liquidity sources are sufficient to support operations for at least the next twelve months[135] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Amtech is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Amtech is not required to provide quantitative and qualitative disclosures about market risk[147] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2019[148] - No material changes were made to internal control over financial reporting during the fiscal quarter[149] PART II. OTHER INFORMATION Item 1. Legal Proceedings Legal proceedings refer to Note 9, detailing a terminated turnkey contract in December 2018 with ongoing settlement discussions and no expected material financial effect - A turnkey contract for Phase II was terminated in December 2018, with ongoing settlement discussions and no material financial effect expected[92] Item 1A. Risk Factors A material risk factor highlights the potential inability to find a buyer for solar assets, which could lead to asset auctions or winding down operations - A key risk is the potential inability to find a buyer for divested solar assets, which could lead to alternatives like asset auctions or winding down operations[151] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company announced a $4 million stock repurchase program in November 2018, but no shares were repurchased during Q1 2019 - The Board approved a stock repurchase program of up to $4 million in November 2018[152] - No shares were repurchased during the quarter ended March 31, 2019[153] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and XBRL data files