Amtech Systems(ASYS) - 2023 Q1 - Quarterly Report

Cautionary Statement Regarding Forward-Looking Statements This section highlights forward-looking statements and the inherent risks that could cause actual results to differ materially - The report contains forward-looking statements, identifiable by words like 'may,' 'plan,' 'anticipate,' and 'expect,' which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations[11] - Key risk factors include future economic conditions, changes in demand, execution of growth initiatives, competition, the cyclical nature of the semiconductor industry, pricing pressures, new technologies, regulatory developments, potential litigation, business interruptions (including COVID-19 impacts), and cybersecurity incidents[11] - Investors are cautioned not to place undue reliance on these statements and are advised to consult the 'Item 1A. Risk Factors' section in the 2022 Form 10-K and additional risk factors in this Quarterly Report[12][13] PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the reported period Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2022 (Unaudited) | Sep 30, 2022 | |:----------------------------|:-------------------------|:-------------| | Total Current Assets | $99,445 | $102,936 | | Total Assets | $129,537 | $133,534 | | Total Current Liabilities | $21,659 | $22,626 | | Total Liabilities | $33,299 | $35,166 | | Total Shareholders' Equity | $96,238 | $98,368 | - Total assets decreased by $3,997 thousand (3.0%) from September 30, 2022, to December 31, 2022, primarily driven by a decrease in cash and cash equivalents and accounts receivable[18] - Total liabilities decreased by $1,867 thousand (5.3%) over the same period, mainly due to reductions in accrued compensation and contract liabilities[18] Condensed Consolidated Statements of Operations This section presents the company's revenues, costs, and profitability, culminating in net income or loss for the reported periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Change ($) | Change (%) | |:-------------------------------------|:--------------------------------|:--------------------------------|:-----------|:-----------| | Revenues, net | $21,558 | $26,463 | $(4,905) | (18.5%) | | Cost of sales | $13,255 | $16,565 | $(3,310) | (20.0%) | | Gross profit | $8,303 | $9,898 | $(1,595) | (16.1%) | | Selling, general and administrative | $9,190 | $7,086 | $2,104 | 29.7% | | Research, development and engineering| $1,393 | $1,572 | $(179) | (11.4%) | | Severance expense | $400 | $0 | $400 | N/A | | Operating (loss) income | $(2,680) | $1,240 | $(3,920) | (316.1%) | | Net (loss) income | $(2,744) | $997 | $(3,741) | (375.2%) | | Net (loss) income per basic share | $(0.20) | $0.07 | $(0.27) | (385.7%) | - The company reported a net loss of $2.744 million for the three months ended December 31, 2022, a significant decline from a net income of $0.997 million in the prior year, primarily due to decreased revenues and increased selling, general and administrative expenses[21] Condensed Consolidated Statements of Comprehensive Income (Loss) This section details the company's comprehensive income or loss, including net income and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:--------------------------------------|:--------------------------------|:--------------------------------| | Net (loss) income | $(2,744) | $997 | | Foreign currency translation adjustment | $416 | $237 | | Comprehensive (loss) income | $(2,328) | $1,234 | - Comprehensive loss for the three months ended December 31, 2022, was $(2.328) million, a decrease from comprehensive income of $1.234 million in the prior year, despite a positive foreign currency translation adjustment[24] Condensed Consolidated Statements of Shareholders' Equity This section outlines changes in the company's shareholders' equity, reflecting net income, stock compensation, and other comprehensive income adjustments Condensed Consolidated Statements of Shareholders' Equity Highlights (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2022 | |:-------------------------------------|:-------------|:-------------|\ | Common Shares Outstanding | 13,994 | 14,003 | | Additional Paid-In Capital | $124,458 | $124,656 | | Accumulated Other Comprehensive Loss | $(1,767) | $(1,351) | | Retained Deficit | $(24,463) | $(27,207) | | Total Shareholders' Equity | $98,368 | $96,238 | - Total shareholders' equity decreased by $2.130 million from September 30, 2022, to December 31, 2022, primarily due to the net loss incurred during the period, partially offset by stock compensation expense and foreign currency translation adjustments[26] Condensed Consolidated Statements of Cash Flows This section reports the company's cash inflows and outflows from operating, investing, and financing activities for the reported periods Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:--------------------------------------------------------------------|:--------------------------------|:--------------------------------| | Net cash (used in) provided by operating activities | $(2,508) | $2,489 | | Net cash used in investing activities | $(224) | $(45) | | Net cash provided by (used in) financing activities | $20 | $(2,741) | | Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash | $372 | $175 | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(2,340) | $(122) | | Cash and Cash Equivalents, End of Period | $44,534 | $32,714 | - Operating activities shifted from providing $2.489 million in cash in Q1 FY2022 to using $2.508 million in Q1 FY2023, primarily due to the net loss and changes in working capital[30] - Cash used in investing activities increased to $0.224 million in Q1 FY2023 from $0.045 million in Q1 FY2022, driven by higher capital expenditures[30] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements Note 1. Basis of Presentation and Significant Accounting Policies This note details operations, accounting policies, financial statement presentation, and prior immaterial misstatement corrections - Amtech Systems, Inc. manufactures capital equipment (thermal processing, wafer polishing) and related consumables for semiconductor devices (SiC, silicon power, analog, discrete, LEDs), serving global markets[33] - The company operates in niche, cyclical markets, with future profitability dependent on new product development/acquisition and adaptation to cyclical trends[33] - Immaterial misstatements related to the classification of sales discounts were corrected, reclassifying them as a reduction of revenues instead of selling, general and administrative expenses, without impacting operating income or net income[48][49] Correction of Immaterial Misstatements (Three Months Ended December 31, 2021, in thousands) | Metric | As Reported | Adjustment | As Corrected | |:--------------------------------|:------------|:-----------|:-------------| | Revenues, net | $27,329 | $(866) | $26,463 | | Gross profit | $10,764 | $(866) | $9,898 | | Selling, general and administrative | $7,952 | $(866) | $7,086 | Note 2. Earnings Per Share This note details the calculation of basic and diluted earnings per share, noting identical calculation during net loss periods Earnings Per Share Calculation (in thousands, except per share amounts) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:--------------------------------------|:--------------------------------|:--------------------------------| | Net (loss) income | $(2,744) | $997 | | Weighted-average shares used to compute basic EPS | 14,008 | 14,254 | | Common stock equivalents | — | 231 | | Weighted-average shares used to compute diluted EPS | 14,008 | 14,485 | | Net (loss) income per basic share | $(0.20) | $0.07 | | Net (loss) income per diluted share | $(0.20) | $0.07 | - For the three months ended December 31, 2022, 259,000 weighted average options were excluded from diluted EPS calculations as they were anti-dilutive due to the net loss[51] Note 3. Inventories This note provides a breakdown of inventory components, including purchased parts, raw materials, work-in-process, and finished goods Inventory Components (in thousands) | Component | Dec 31, 2022 | Sep 30, 2022 | |:----------------------------|:-------------|:-------------| | Purchased parts and raw materials | $15,918 | $15,377 | | Work-in-process | $8,065 | $6,146 | | Finished goods | $4,253 | $3,965 | | Total Inventories | $28,236 | $25,488 | - Total inventories increased by $2.748 million (10.8%) from September 30, 2022, to December 31, 2022, primarily driven by an increase in work-in-process inventory[55] Note 4. Leases This note details the company's lease balances, expenses, and future minimum lease payments, distinguishing between operating and finance leases Lease Balances (in thousands) | Metric | Dec 31, 2022 | Sep 30, 2022 | |:----------------------------|:-------------|:-------------| | Total right-of-use assets | $10,963 | $11,407 | | Total lease liabilities | $11,201 | $11,643 | Total Lease Cost (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:-----------------|:--------------------------------|:--------------------------------| | Total lease cost | $668 | $298 | - Total lease cost significantly increased by $370 thousand (124.2%) from $298 thousand in Q1 FY2022 to $668 thousand in Q1 FY2023, primarily due to higher operating lease costs classified under cost of sales and SG&A[60] Weighted Average Lease Terms and Discount Rates | Metric | Dec 31, 2022 | Sep 30, 2022 | |:--------------------------------------|:-------------|:-------------| | Weighted average remaining operating lease term | 12.77 years | 12.65 years | | Weighted average remaining finance lease term | 2.25 years | 2.45 years | | Weighted average operating lease discount rate | 4.17% | 4.17% | | Weighted average finance lease discount rate | 4.17% | 4.17% | Note 5. Income Taxes This note discusses the company's income tax benefit/provision and effective tax rate, explaining factors contributing to the difference from the U.S. statutory rate Income Tax (Benefit) Provision (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:-----------------------------|:--------------------------------|:--------------------------------| | Income tax (benefit) provision | $(4) | $160 | | Effective tax rate | 0.1% | 13.8% | - The effective tax rate for Q1 FY2023 was 0.1%, significantly lower than 13.8% in Q1 FY2022, primarily due to higher state taxes partially offset by lower taxes in foreign jurisdictions[64] - The company maintains a full valuation allowance for all net deferred tax assets related to U.S. net operating losses and foreign tax credits due to cumulative losses in recent years, expecting minimal U.S. federal cash taxes for the foreseeable future[66] Note 6. Equity and Stock-Based Compensation This note provides details on stock-based compensation expense, stock option activity, and the company's stock repurchase plans Stock-Based Compensation Expense (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:-----------------------------|:--------------------------------|:--------------------------------| | Stock-based compensation expense | $200 | $100 | Stock Option Activity (Three Months Ended Dec 31, 2022) | Activity | Options | Weighted Average Exercise Price | |:------------------------------|:----------|:--------------------------------| | Outstanding at beginning of period | 589,341 | $8.06 | | Granted | 111,500 | $9.27 | | Exercised | (8,875) | $3.80 | | Forfeited | (2,000) | $9.27 | | Outstanding at end of period | 689,966 | $8.31 | | Exercisable at end of period | 451,221 | $7.41 | | Weighted average fair value of options granted | $4.81 | | - The 2022 stock repurchase plan, approved for up to $5 million, had $3.6 million remaining available for repurchases as of December 31, 2022, with no repurchases made during the quarter[70] - The 2021 stock repurchase plan, which expired in Q2 FY2022, resulted in the repurchase of 291,383 shares for approximately $2.7 million during the three months ended December 31, 2021[72] Note 7. Commitments and Contingencies This note outlines the company's purchase obligations, legal proceedings, and employment contracts, including provisions for potential losses - As of December 31, 2022, the company had unrecorded purchase obligations of $19.5 million, consisting of outstanding purchase orders for goods and services[73] - The company is involved in various legal claims and actions arising from business operations, for which it evaluates the probability and estimability of losses, maintaining adequate provisions for probable and estimable losses[74] - Employment contracts and severance plans cover certain officers and management, with severance payments generally ranging from six to twelve months of salary under specified termination circumstances[75] Note 8. Reportable Segments This note describes Amtech's two reportable operating segments, Semiconductor and Material and Substrate, with revenue and operating income breakdowns - Amtech operates in two reportable segments: Semiconductor (thermal processing equipment) and Material and Substrate (consumables and machinery for lapping/polishing)[76] Segment Net Revenues (in thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Change ($) | Change (%) | |:-------------------------|:--------------------------------|:--------------------------------|:-----------|:-----------| | Semiconductor | $16,887 | $22,765 | $(5,878) | (25.8%) | | Material and Substrate | $4,671 | $3,698 | $973 | 26.3% | | Total Net Revenues | $21,558 | $26,463 | $(4,905) | (18.5%) | Segment Operating Income (Loss) (in thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:-------------------------|:--------------------------------|:--------------------------------| | Semiconductor | $869 | $2,357 | | Material and Substrate | $633 | $181 | | Non-segment related | $(4,182) | $(1,298) |\ | Total Operating (Loss) Income | $(2,680) | $1,240 | Note 9. Major Customers and Foreign Sales This note identifies major customers and provides a geographic breakdown of net revenues, highlighting regional shifts - One Semiconductor segment customer represented 11% of net revenues for the three months ended December 31, 2022, a decrease from 20% in the prior year period[80] Net Revenues by Geographic Region | Region | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:---------------|:--------------------------------|:--------------------------------| | Total Americas | 44% | 27% | | Total Asia | 31% | 47% | | Total Europe | 25% | 26% | - The Americas region's contribution to net revenues increased significantly from 27% to 44% year-over-year, while Asia's contribution decreased from 47% to 31%[81] Note 10. Subsequent Events This note details significant post-period events, including the acquisition of Entrepix, Inc. and a new stock repurchase program - On January 17, 2023, Amtech acquired Entrepix, Inc., a manufacturer of chemical mechanical polishing (CMP) technology, for $35.0 million, expanding its substrate polishing and wet process chemical offerings[83] - The acquisition was funded by cash on hand and a new Loan and Security Agreement (LSA) with UMB Bank, N.A., which includes a $12.0 million Term Loan and an $8.0 million revolving loan facility[83][85] - A new stock repurchase program was approved on February 7, 2023, authorizing the repurchase of up to $5 million of common stock over a one-year period[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial condition and operational results, covering business overview, strategy, and key performance drivers Overview This section provides a general description of Amtech's business as a global manufacturer of semiconductor equipment and consumables, highlighting its market focus and cyclical industry nature - Amtech is a global manufacturer of capital equipment (thermal processing, wafer polishing) and consumables for semiconductor devices, focusing on electric vehicles (EV) and clean technology (CleanTech) applications[92] - The company operates in two reportable segments: Semiconductor (thermal processing equipment) and Material and Substrate (substrate consumables, chemicals, and machinery)[93] - The semiconductor industry is cyclical, and the company's revenue is impacted by these broad industry trends[94] Strategy This section outlines the company's strategic growth plan, focusing on SiC industry opportunities, advanced packaging, and investments in R&D, capacity, and acquisitions - The company's strategic growth plan focuses on emerging opportunities in the SiC industry, leveraging its 300mm Horizontal Diffusion Furnace solution, and growing its BTU International, Inc. subsidiary in advanced semi-packaging and surface-mount technology[95][96] - Future investments are planned for research and development, capital expenditures, capacity expansion, talent, and management information systems to meet demand and support growth targets[98] - A key aspect of capital allocation is growth through acquisitions, exemplified by the acquisition of Intersurface Dynamics in 2021 and Entrepix in January 2023[99] COVID-19 Update This section provides an update on the operational status of the Shanghai manufacturing facility following its reopening and acknowledges ongoing pandemic uncertainties - The Shanghai manufacturing facility, which experienced a mandatory shutdown in March 2022, fully reopened on June 1, 2022, and is operating at normal capacity levels, having made up missed shipments[100] - Uncertainty surrounding the COVID-19 pandemic means there is no assurance the Shanghai facility will remain consistently open in the future[100] Cybersecurity Incident This section details a past data incident, its impact on personal information, insurance coverage, and subsequent security enhancements implemented by the company - A data incident detected on April 12, 2021, involved attackers acquiring data and disabling systems at a subsidiary, leading to an investigation and notification of law enforcement[101] - The incident, which affected personal information of employees and beneficiaries, is covered by insurance, and the company received approximately $0.6 million in reimbursement[101][105] - The affected network is now secure with enhanced controls, including advanced anti-virus and endpoint detection tools, and the company may make further cybersecurity investments[102] Results of Operations This section analyzes financial performance, detailing changes in net revenue, orders, backlog, gross profit, and operating expenses, noting a shift to operating loss Net Revenue This section analyzes the changes in net revenue by segment, highlighting the decrease in Semiconductor revenue and growth in Material and Substrate revenue Net Revenue by Segment (in thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Change ($) | Change (%) | |:-------------------------|:--------------------------------|:--------------------------------|:-----------|:-----------| | Semiconductor | $16,887 | $22,765 | $(5,878) | (26%) | | Material and Substrate | $4,671 | $3,698 | $973 | 26% | | Total Net Revenue | $21,558 | $26,463 | $(4,905) | (19%) | - Total net revenue decreased by 19% to $21.6 million, primarily due to a 26% decrease in the Semiconductor segment's revenue, reflecting lower production from the Shanghai facility and reduced diffusion furnace shipments[109] - Material and Substrate revenue increased by 26% due to higher consumables shipments driven by customer capacity expansion and production increases[109] Orders and Backlog This section details new orders booked and total backlog by segment, showing a decrease in new orders but an increase in overall backlog New Orders Booked by Segment (in thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Change ($) | Change (%) | |:-------------------------|:--------------------------------|:--------------------------------|:-----------|:-----------| | Semiconductor | $21,084 | $27,809 | $(6,725) | (24%) | | Material and Substrate | $4,145 | $3,828 | $317 | 8% | | Total New Orders | $25,229 | $31,637 | $(6,408) | (20%) | Backlog by Segment (in thousands) | Segment | Dec 31, 2022 | Dec 31, 2021 | Change ($) | Change (%) | |:-------------------------|:-------------|:-------------|:-----------|:-----------| | Semiconductor | $52,209 | $46,921 | $5,288 | 11% | | Material and Substrate | $2,243 | $1,531 | $712 | 47% | | Total Backlog | $54,452 | $48,452 | $6,000 | 12% | - Total new orders decreased by 20% to $25.2 million, driven by a 24% decline in the Semiconductor segment, while total backlog increased by 12% to $54.5 million, with the Semiconductor segment backlog growing by 11%[111][114] Gross Profit and Gross Margin This section examines gross profit and gross margin by segment, noting an overall margin improvement despite a decrease in total gross profit Gross Profit and Gross Margin by Segment (in thousands) | Segment | Three Months Ended Dec 31, 2022 | Gross Margin (%) | Three Months Ended Dec 31, 2021 | Gross Margin (%) | Change ($) | |:-------------------------|:--------------------------------|:-----------------|:--------------------------------|:-----------------|:-----------| | Semiconductor | $6,172 | 37% | $8,662 | 38% | $(2,490) | | Material and Substrate | $2,131 | 46% | $1,236 | 33% | $895 | | Total Gross Profit | $8,303 | 39% | $9,898 | 37% | $(1,595) | - Total gross profit decreased by $1.6 million, but the overall gross margin improved from 37% to 39% due to higher margins in the Material and Substrate segment (46% vs. 33%), driven by increased consumables sales and capacity utilization[116] - The company anticipates continued increases in material and labor costs through at least the first half of fiscal 2023 and faces pricing pressure from customers[116] Selling, General and Administrative This section analyzes the increase in selling, general, and administrative expenses, primarily driven by acquisition-related transaction costs Selling, General and Administrative Expenses (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Change ($) | Change (%) | |:-------|:--------------------------------|:--------------------------------|:-----------|:-----------| | SG&A | $9,190 | $7,086 | $2,104 | 29.7% | - SG&A expenses increased by $2.1 million (29.7%) to $9.2 million, primarily due to $1.4 million in transaction expenses related to the acquisition of Entrepix, Inc[117] Research, Development and Engineering This section details the decrease in research, development, and engineering expenses, attributed to the timing of strategic development projects Research, Development and Engineering Expenses (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Change ($) | Change (%) | |:-------|:--------------------------------|:--------------------------------|:-----------|:-----------| | RD&E | $1,393 | $1,572 | $(179) | (11.4%) | - RD&E expenses decreased by $0.179 million (11.4%) to $1.4 million, attributed to the timing of purchases for specific strategic-development projects within the Semiconductor segment[120] Severance Expenses This section reports a one-time severance expense related to the retirement of the company's founder Severance Expense (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:-----------------|:--------------------------------|:--------------------------------| | Severance expense | $400 | $0 | - A one-time severance expense of $0.4 million was recorded for the three months ended December 31, 2022, related to the retirement of the company's founder, Mr. J.S. Whang[121] Income Taxes This section discusses the company's income tax provision and effective tax rate, noting the impact of state and foreign taxes and the valuation allowance Income Tax (Benefit) Provision (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:-----------------------------|:--------------------------------|:--------------------------------| | Income tax (benefit) provision | $(4) | $160 | | Effective tax rate | 0.1% | 13.8% | - The effective tax rate was 0.1% for Q1 FY2023, down from 13.8% in Q1 FY2022, primarily due to higher state taxes partially offset by lower foreign taxes[122] - The company maintains a full valuation allowance for U.S. net operating losses and foreign tax credits, expecting minimal U.S. federal cash taxes in the foreseeable future[123] Liquidity and Capital Resources This section discusses cash position, working capital, and cash flow activities, affirming sufficient liquidity for the next twelve months Cash and Cash Flow This section details the company's cash and working capital balances, noting a decrease due to net loss and accounts receivable, while affirming sufficient liquidity Cash and Working Capital (in thousands) | Metric | Dec 31, 2022 | Sep 30, 2022 | |:-------------------|:-------------|:-------------| | Cash and cash equivalents | $44,534 | $46,874 | | Working capital | $77,800 | $80,300 | | Current assets to current liabilities ratio | 4.6:1 | 4.5:1 | - Cash and cash equivalents decreased by $2.3 million, and working capital decreased by $2.5 million, primarily due to the net loss and a decrease in accounts receivable[128] - The company believes its principal sources of liquidity are sufficient to support operations for at least the next twelve months and has never paid dividends on its common stock[129] Cash Flows from Operating Activities This section analyzes the shift from cash provided by operating activities to cash used, primarily due to net loss and working capital changes Net Cash (Used in) Provided by Operating Activities (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:------------------------------------------|:--------------------------------|:--------------------------------| | Net cash (used in) provided by operating activities | $(2,508) | $2,489 | - Operating activities shifted from providing $2.5 million in cash in Q1 FY2022 to using $2.5 million in Q1 FY2023, mainly due to the net loss and changes in accounts receivable and inventory[130] Cash Flows from Investing Activities This section details the increase in cash used for investing activities, driven by higher capital expenditures and planned IT system investments Net Cash Used in Investing Activities (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:--------------------------------------|:--------------------------------|:--------------------------------| | Net cash used in investing activities | $(224) | $(45) | - Cash used in investing activities increased to $0.2 million in Q1 FY2023 from less than $0.1 million in Q1 FY2022, consisting solely of capital expenditures, which are expected to increase in fiscal 2023 for IT system investments[131] Cash Flows from Financing Activities This section discusses the change in cash flows from financing activities, shifting from cash usage to cash provided, influenced by stock option exercises and prior stock repurchases Net Cash Provided by (Used in) Financing Activities (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | |:------------------------------------------|:--------------------------------|:--------------------------------| | Net cash provided by (used in) financing activities | $20 | $(2,741) | - Financing activities provided $20 thousand in cash in Q1 FY2023 (from stock option exercises), a significant change from using $2.7 million in Q1 FY2022 (primarily due to common stock repurchases)[133] Off-Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements as of the reporting date - As of December 31, 2022, the company had no material off-balance sheet arrangements as defined by SEC regulations[134] Contractual Obligations This section reports a decrease in unrecorded purchase obligations and notes subsequent contractual agreements - Unrecorded purchase obligations decreased by $0.5 million to $19.5 million as of December 31, 2022[135] - Subsequent to the quarter, the company entered into a Loan and Security Agreement with UMB Bank, as described in Note 10[135] Critical Accounting Estimates This section identifies key accounting estimates requiring significant management judgment, including revenue recognition, income taxes, inventory, and goodwill - The company's critical accounting estimates, which require significant management judgment, include revenue recognition, income taxes, inventory valuation, and goodwill[137][138] - There have been no significant changes to these critical accounting estimates during the three months ended December 31, 2022[139] Impact of Recently Issued Accounting Pronouncements This section states that no new accounting pronouncements had a material impact on the financial statements during the period - There were no new accounting pronouncements issued or effective as of December 31, 2022, that had or are expected to have a material impact on the consolidated financial statements[47][141] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Amtech Systems, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Amtech Systems, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[142] Item 4. Controls and Procedures This section confirms effective disclosure controls and procedures and reports no material changes in internal control over financial reporting Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by management - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of December 31, 2022, and concluded they were effective[143] Changes in Internal Control Over Financial Reporting This section states that no material changes occurred in the company's internal control over financial reporting during the quarter - There were no material changes in the company's internal control over financial reporting during the first fiscal quarter[144] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section refers to Note 7 of the condensed consolidated financial statements for a discussion of legal proceedings - Information regarding legal proceedings is discussed in Note 7 to the condensed consolidated financial statements under 'Commitments and Contingencies'[146] Item 1A. Risk Factors This section refers to previously disclosed risk factors and confirms no material changes have occurred during the period - Investors are referred to 'Item 1A. Risk Factors' in the 2022 Form 10-K and the 'Cautionary Statements Regarding Forward-Looking Statements' in this report for important risk factors[147] - There have been no material changes to the risk factors previously disclosed in the 2022 Form 10-K[147] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's stock repurchase program and confirms no unregistered equity sales or repurchases during the quarter - The Board approved a stock repurchase program on February 10, 2022, authorizing repurchases of up to $5 million of common stock over a one-year period[148] - No equity securities were repurchased or sold unregistered during the three months ended December 31, 2022[149] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[149] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[149] Item 5. Other Information This section states that no other information is reported in this section - No other information is reported in this section[149] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and key agreements - Exhibits include certifications (31.1, 31.2, 32.1, 32.2), Inline XBRL documents (101.INS, 101.SCH, 101.PRE, 101.CAL, 101.LAB, 101.DEF, 104), and key agreements[151][152][153][154][155][156][158][159] - Key agreements filed as exhibits include the Agreement and Plan of Merger for Entrepix, Inc. (dated January 17, 2023) and the Loan and Security Agreement (dated January 17, 2023) with UMB Bank, N.A[158] SIGNATURES This section confirms the official signing of the report by the company's Vice President and Chief Financial Officer - The report was duly signed on behalf of Amtech Systems, Inc. by Lisa D. Gibbs, Vice President and Chief Financial Officer, on February 8, 2023[161]