Amtech Systems(US:ASYS)2019-02-08 03:44Financial Data and Key Metrics Changes - Net revenue for Q1 Fiscal 2019 was $29.5 million, compared to $28.8 million in the preceding quarter and $73.6 million in Q1 Fiscal 2018, indicating a year-over-year decrease primarily due to no shipments of solar equipment for the turnkey project [13][18] - Gross margin increased to 31% in Q1 Fiscal 2019 from 29% in the preceding quarter and 28% in the same quarter last year, driven by a higher proportion of semi and SiC/LED shipments [15] - Net loss for Q1 Fiscal 2019 was $2.4 million or $0.17 per share, compared to net income of $6.5 million or $0.42 per diluted share for Q1 Fiscal 2018 [18] Business Segment Performance Changes - The semi and SiC/LED segments generated an operating income of $3.5 million in Q1 Fiscal 2019, supported by continuous demand for products [9] - Solar business segment bookings and financial results reflected challenges in the marketplace, with the termination of a turnkey contract impacting expected revenue [10][12] Market Data and Key Metrics Changes - Backlog at December 31, 2018, was $41.3 million, with $21.6 million from semi and SiC/LED segments and $19.7 million from the solar segment, down from a total backlog of $51.1 million at September 30, 2018 [14] - The company anticipates revenue for the quarter ending March 31, 2019, to be in the range of $27 million to $29 million, with gross margin expected in the mid-to-upper 20% range [19] Company Strategy and Industry Competition - The company is undergoing a comprehensive review to address current solar challenges and position itself for profitable growth, focusing on expanding the semi and SiC/LED segments [7][8] - The solar segment faces significant competition, particularly from local Chinese manufacturers, and is impacted by changing government policies in China [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic challenges, including the U.S.-China trade tensions, which may impact semiconductor sales [22] - The company expects continued growth in the silicon carbide LED polishing segment, despite anticipated headwinds in the broader semiconductor market [22][32] Other Important Information - Restructuring expenses were $0.9 million in Q1 Fiscal 2019, with ongoing efforts to reduce losses in the solar segment [17][30] - The company is exploring potential M&A opportunities in the SiC silicon power chip value chain [26] Q&A Session Summary Question: Can you provide insight into the 13% semiconductor customer and the end market? - The customer is in the chip fabrication segment, and while there are headwinds expected in 2019, growth is anticipated in the silicon carbide LED polishing segment [22][23] Question: What is the outlook for operating expenses in the coming quarters? - Operating expenses are expected to remain relatively flat [25] Question: Are there specific areas for potential M&A to diversify the portfolio? - The company is interested in newly emerging opportunities in the SiC silicon power chip value chain [26] Question: Can you discuss the strong gross margin performance and its sustainability? - The strong gross margin was due to a higher proportion of revenues from the semi and silicon carbide LED segments, which typically have higher margins [28] Question: What is the plan to reduce losses in the solar segment? - A comprehensive review is underway, and the restructuring plan is expected to yield savings as the company reassesses costs associated with the terminated turnkey project [30] Question: What is the growth outlook for the semi and silicon carbide/LED polishing businesses? - While growth may be softer in the short term due to macro challenges, long-term growth prospects remain strong [32]