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) - 2024 Q1 - Earnings Call Transcript