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Amtech Reports Second Quarter Fiscal 2019 Results

Amtech Reports Second Quarter Fiscal 2019 Results

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TEMPE, Ariz.: Amtech Systems, Inc. (NASDAQ: ASYS), a manufacturer of capital equipment, including thermal processing and wafer handling automation, and related consumables used in fabricating semiconductor devices, light-emitting diodes (LEDs), silicon carbide (SiC) and silicon power chips and solar cells, today reported results for its second quarter ended March 31, 2019.

On March 28, 2019, the Company adopted a plan to sell the majority of the Solar segment to include Tempress and SoLayTec.  As a result, the Company is reporting those subsidiaries as discontinued operations beginning with its second quarter results. Including discontinued operations, the Company had $28.8 million of revenue, gross margin of 24%, and operating loss of $5.3 million for the quarter ended March 31, 2019. The remainder of this release, including the Outlook section below, relates only to the results from continuing operations.

Second Quarter Fiscal 2019 Financial and Operational Highlights from Continuing Operations:

  • Net revenue of $20.6 million
  • Income from continuing operations, net of tax, of $1.0 million
  • Income per diluted share from continuing operations of $0.07
  • Customer orders of $19.3 million
  • March 31, 2019 backlog of $22.0 million
  • Book to bill ratio of 0.9:1
  • Unrestricted cash of $47.9 million

Mr. J.S. Whang, Executive Chairman and Chief Executive Officer of Amtech, commented, “With the announced plans to divest our solar businesses, we are increasing our effort and focus on our semiconductor and SiC/LED businesses, and future opportunities, which we believe will best position Amtech Group for profitable growth over the long-term.”

Mr. Whang continued, “Despite a softening semi industry environment, our core semiconductor business continues to see a solid base level of demand.  We are benefiting from the strength in the North American market while also experiencing tough period-to-period comparisons as the industry is impacted by softening demand from Asia, particularly in China.  Our objective is to maintain our market share through the cycle, and we believe we are well positioned to do so. We are meeting with our customers to ensure we fully understand their current needs and longer-term objectives. These planning discussions suggest opportunity for us when the market turns up and further validates our semiconductor and SiC/LED businesses are well positioned to benefit in the near and longer term as demand for increasingly robust power chips continues to expand. In order to manage the current and anticipated future growth we are expanding SiC/LED capacity.”

Net revenue for the second quarter of fiscal 2019 was $20.6 million compared to $23.2 million in the preceding quarter and $21.1 million in the second quarter of fiscal 2018. Sequentially, Semiconductor revenue decreased by approximately $2.9 million due primarily to quarter-to-quarter variability of orders and delivery schedules established by one customer. SiC/LED revenue increased by approximately $0.3 million due primarily to increased machine sales. Compared to prior year, Semi net revenue decreased by approximately $0.5 million due primarily to weakness in the China market, while SiC/LED revenue decreased slightly, by approximately $0.3 million, due primarily to higher initial sales of consumable products in the second quarter of fiscal 2018.

Unrestricted cash and cash equivalents at our continuing operations at March 31, 2019 were $47.9 million, compared to $45.9 million at September 30, 2018.

At March 31, 2019, our total backlog was $22.0 million, compared to total backlog of $23.7 million at December 31, 2018. Backlog includes customer orders that are expected to ship within the next 12 months. The nature and composition of our backlog from continuing operations reflects shorter lead times and lower risk of cancellation when compared to previous quarters that included solar orders.

Gross margin in the second quarter of fiscal 2019 was 38%, compared to 39% in the preceding quarter and 41% in the second quarter of fiscal 2018.  Sequentially and compared to prior year, gross margins decreased primarily due to product mix, most notably, the type and volume of equipment and consumables sold in each quarter.

Selling, general and administrative expense (“SG&A”) in the second quarter of fiscal 2019 was $5.8 million, compared to $6.6 million in the preceding quarter and $6.3 million in the second quarter of fiscal 2018.  Sequentially and compared to prior year, SG&A decreased primarily due to lower headcount, employee-related expenses and professional fees.

Restructuring expense was $0.2 million in the second quarter of fiscal 2019, and $0.9 million in the preceding quarter. We did not have any restructuring expense in the second quarter of fiscal 2018.

Research, development and engineering (RD&E) expense was $0.7 million in the second quarter of fiscal 2019 compared to $0.9 million in the preceding quarter and $0.8 million in the second quarter of fiscal 2018.

Income tax expense in the second quarter of fiscal 2019 was $0.3 million compared to $0.6 million in the preceding quarter and $0.4 million in the second quarter of fiscal 2018.

Income from continuing operations, net of tax, for the second quarter of fiscal 2019 was $1.0 million, or $0.07 per share, compared to $1.1 million, or $0.07 per share, for the second quarter of fiscal 2018 and $0.2 million, or $0.02 per share, in the preceding quarter.

Outlook

For the quarter ending June 30, 2019, the Company expects continuing softness in the semiconductor equipment industry to result in revenue to be in the range of $19 to $21 million. Gross margin for the quarter ending June 30, 2019 is expected to be in the mid to upper 30 percent range, with operating margin in the low single digits.

The semiconductor equipment industries can be cyclical and inherently impacted by changes in market demand. Additionally, operating results can be significantly impacted, positively or negatively, by the timing of orders, system shipments, and the financial results of semiconductor manufacturers.

A substantial portion of Amtech’s revenues are denominated in Renminbis.  The revenue outlook provided in this press release is based on an assumed exchange rate between the United States Dollar and the Renminbi.  A significant decrease in the value of the Renminbi in relation to the United States Dollar could cause actual revenue to be lower than anticipated.

Conference Call

Amtech Systems will host a conference call and webcast today at 5:00 p.m. ET to discuss second quarter financial results.  Those in the USA wishing to participate in the live call should dial (844) 868-9329. From Canada, dial (866) 605-3852, and internationally, dial (412) 317-6703.  Request “Amtech” when connected to the operator.  A replay of the call will be available one hour after the end of the conference call through May 16, 2019.  To access the replay please dial US toll free (877) 344-7529 and enter code 10130710.  Internationally, dial (412) 317-0088 and use the same code.  A live and archived web cast of the conference call can be accessed in the investor relations section of Amtech’s website at www.amtechsystems.com.

About Amtech Systems, Inc.

Amtech Systems, Inc. is a global supplier of advanced thermal processing and polishing equipment and related consumables to the semiconductor / electronics, power IC businesses, and advanced lighting manufacturing markets. Amtech’s equipment includes diffusion, solder reflow systems, wafer handling automation, and polishing equipment and related consumables for surface preparation of various materials, including silicon carbide (“SiC”), sapphire and silicon. The Company’s wafer handling, thermal processing, polishing and consumable products currently address the diffusion, oxidation, and deposition steps used in the fabrication of semiconductors, printed circuit boards, semiconductor packaging, MEMS, and advanced lighting, including the polishing of newly sliced sapphire and silicon wafers. Amtech’s products are recognized under the leading brand names BTU International, Bruce Technologies™, PR Hoffman™, and R2D Automation™.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this press release is forward-looking in nature. All statements in this press release, or made by management of Amtech Systems, Inc. and its subsidiaries (“Amtech”), other than statements of historical fact, are hereby identified as “forward-looking statements” (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The forward-looking statements in this press release relate only to events or information as of the date on which the statements are made in this press release.  Examples of forward-looking statements include statements regarding Amtech’s future financial results, operating results, business strategies, projected costs, products under development, competitive positions, plans and objectives of Amtech and its management for future operations, efforts to improve operational efficiencies and effectiveness and greater China sourcing.  In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “would,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology used in this press release or by our management, which are intended to identify such forward-looking statements.  These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. The Form 10-K that Amtech filed with the Securities and Exchange Commission (the “SEC”) for the year-ended September 30, 2018, listed various important factors that could affect the company’s future operating results and financial condition and could cause actual results to differ materially from historical results and expectations based on forward-looking statements made in this document or elsewhere by Amtech or on its behalf.  These factors can be found under the heading “Risk Factors” in the Form 10-K and investors should refer to them.  Because it is not possible to predict or identify all such factors, any such list cannot be considered a complete set of all potential risks or uncertainties.  Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

Contacts:

Amtech Systems, Inc.

Lisa D. Gibbs

Chief Financial Officer

(480) 967-5146

irelations@amtechsystems.com

Christensen

Investor Relations

Patty Bruner

(480) 201-6075

pbruner@christensenir.com

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

May 9, 2019

(Unaudited)

Summary Financial Information for Continuing Operations

(in thousands, except percentages and ratios)

Three Months Ended

Six Months Ended March 31,

March 31,
2019

December 31,
2018

March 31,
2018

2019

2018

Amtech Systems, Inc.

   Revenues, net of returns and allowances

$

20,633

$

23,225

$

21,115

$

43,858

$

48,231

   Gross profit

$

7,927

$

9,020

$

8,582

$

16,947

$

18,542

   Gross margin

38

%

39

%

41

%

39

%

38

%

   Operating income

$

1,248

$

664

$

1,485

$

1,912

$

4,346

   New orders

$

19,325

$

20,613

$

22,848

$

39,938

$

53,728

   Book-to-bill ratio

0.9:1

0.9:1

1.1:1

0.9:1

1.1:1

   Backlog

$

21,991

$

23,656

$

30,376

$

21,991

$

30,376

Semiconductor Segment

   Revenues, net of returns and allowances

$

16,053

$

18,960

$

16,582

$

35,013

$

37,473

   Gross profit

$

6,443

$

7,490

$

7,075

$

13,933

$

14,563

   Gross margin

40

%

40

%

43

%

40

%

39

%

   Operating income

$

1,732

$

2,745

$

2,257

$

4,477

$

5,261

   New orders

$

15,469

$

16,094

$

19,227

$

31,563

$

44,519

   Book-to-bill ratio

0.9:1

0.8:1

1.2:1

0.9:1

1.2:1

   Backlog

$

17,286

$

18,158

$

26,366

$

17,286

$

26,366

SiC/LED Segment

   Revenues, net of returns and allowances

$

3,273

$

2,983

$

3,603

$

6,256

$

7,126

   Gross profit

$

1,262

$

1,224

$

1,540

$

2,486

$

3,076

   Gross margin

39

%

41

%

43

%

40

%

43

%

   Operating income

$

877

$

769

$

1,111

$

1,646

$

2,215

   New orders

$

3,133

$

3,744

$

2,532

$

6,877

$

7,233

   Book-to-bill ratio

1.0:1

1.3:1

0.7:1

1.1:1

1.0:1

   Backlog

$

3,311

$

3,456

$

1,794

$

3,311

$

1,794

Automation Segment

   Revenues, net of returns and allowances

$

1,307

$

1,282

$

930

$

2,589

$

3,632

   Gross profit (loss)

$

222

$

306

$

(33)

$

528

$

903

   Gross margin

17

%

24

%

(4)

%

20

%

25

%

   Operating loss

$

(116)

$

(224)

$

(483)

$

(340)

$

(36)

   New orders

$

723

$

775

$

1,089

$

1,498

$

1,976

   Book-to-bill ratio

0.5:1

0.6:1

1.2:1

0.6:1

0.6:1

   Backlog

$

1,394

$

2,042

$

2,216

$

1,394

$

2,216

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

May 9, 2019

(Unaudited)

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended March 31,

Six Months Ended March 31,

2019

2018

2019

2018

Revenues, net of returns and allowances

$

20,633

$

21,115

$

43,858

$

48,231

Cost of sales

12,706

12,533

26,911

29,689

Gross profit

7,927

8,582

16,947

18,542

Selling, general and administrative

5,793

6,319

12,419

12,743

Research, development and engineering

713

778

1,579

1,453

Restructuring charges

173

1,037

Operating income

1,248

1,485

1,912

4,346

Income from equity method investment

28

2

Interest and other income (expense), net

96

(32)

262

(14)

Income from continuing operations before income taxes

1,344

1,481

2,174

4,334

Income tax provision

332

420

914

1,572

Income from continuing operations, net of tax

1,012

1,061

1,260

2,762

(Loss) income from discontinued operations, net of tax

(6,647)

1,774

(9,267)

6,525

Net (loss) income

$

(5,635)

$

2,835

$

(8,007)

$

9,287

(Loss) Income Per Basic Share:

Basic income per share from continuing operations

$

0.07

$

0.07

$

0.09

$

0.19

Basic (loss) income per share from discontinued operations

$

(0.47)

$

0.12

$

(0.65)

$

0.44

Net (loss) income per basic share

$

(0.40)

$

0.19

$

(0.56)

$

0.63

(Loss) Income Per Diluted Share:

Diluted income per share from continuing operations

$

0.07

$

0.07

$

0.09

$

0.18

Diluted (loss) income per share from discontinued operations

$

(0.47)

$

0.12

$

(0.65)

$

0.43

Net (loss) income per diluted share

$

(0.40)

$

0.19

$

(0.56)

$

0.61

Weighted average shares outstanding – Basic

14,228

14,891

14,224

14,835

Weighted average shares outstanding – Diluted

14,258

15,154

14,255

15,223

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

May 9, 2019

(unaudited)

Condensed Consolidated Balance Sheets

(in thousands, except share data)

March 31,
2019

September 30,
2018

Assets

Current Assets

Cash and cash equivalents

$

47,921

$

45,897

Restricted cash

502

18

Accounts receivable

Trade (less allowance for doubtful accounts of $444 and $454 at March 31, 2019, and September 30, 2018, respectively)

17,093

17,985

Unbilled and other

291

Inventory

19,272

17,835

Contract assets

107

Held-for-sale assets

25,977

45,322

Other current assets

2,091

2,884

Total current assets

112,963

130,232

Property, Plant and Equipment – Net

10,180

10,509

Intangible Assets – Net

1,000

1,131

Goodwill – Net

6,633

6,633

Other Assets

828

901

Total Assets

$

131,604

$

149,406

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable

$

6,128

$

6,867

Accrued compensation and related taxes

3,604

3,359

Accrued warranty expense

530

644

Other accrued liabilities

1,171

667

Current maturities of long-term debt

356

350

Contract liabilities

2,015

1,519

Income taxes payable

2,630

2,357

Held-for-sale liabilities

21,965

31,798

Total current liabilities

38,399

47,561

Long-Term Debt

5,361

5,542

Income Taxes Payable

3,147

3,213

Total Liabilities

46,907

56,316

Commitments and Contingencies

Shareholders’ Equity

Preferred stock; 100,000,000 shares authorized; none issued

Common stock; $0.01 par value; 100,000,000 shares authorized; shares issued and outstanding: 14,227,580 and 14,216,596 at March 31, 2019, and September 30, 2018, respectively

142

142

Additional paid-in capital

124,716

124,316

Accumulated other comprehensive loss

(10,760)

(9,974)

Retained deficit

(29,401)

(21,394)

Total shareholders’ equity

84,697

93,090

Total Liabilities and Shareholders’ Equity

$

131,604

$

149,406

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

May 9, 2019

(unaudited)

Condensed Consolidated Statements of Cash Flows

(in thousands)

Six Months Ended March 31,

2019

2018

Operating Activities

Net (loss) income

$

(8,007)

$

9,287

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization

888

916

Write-down of inventory

2,794

126

Capitalized interest

106

143

Deferred income taxes

7

(23)

Non-cash share-based compensation expense

363

463

Loss (gain) on sale of property, plant and equipment

9

(57)

Income from equity method investment

(2)

Provision for allowance for doubtful accounts, net

1,141

48

Changes in operating assets and liabilities:

Accounts receivable

(1,533)

(3,642)

Inventory

(650)

1,644

Contract and other assets

10,143

(1,899)

Accounts payable

(650)

9,097

Accrued income taxes

216

(2,954)

Accrued and other liabilities

(378)

423

Contract liabilities

(7,516)

(31,085)

Net cash used in operating activities

(3,067)

(17,515)

Investing Activities

Purchases of property, plant and equipment

(238)

(686)

Proceeds from sale of property, plant and equipment

68

Net cash used in investing activities

(238)

(618)

Financing Activities

Proceeds from the exercise of stock options

37

1,340

Payments on long-term debt

(186)

(183)

Net cash (used in) provided by financing activities

(149)

1,157

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash

(903)

1,372

Net Decrease in Cash, Cash Equivalents and Restricted Cash

(4,357)

(15,604)

Cash, Cash Equivalents and Restricted Cash, Beginning of Period*

62,496

75,761

Cash, Cash Equivalents and Restricted Cash, End of Period*

$

58,139

$

60,157

* Includes Cash, Cash Equivalents and Restricted Cash that are included in Held-For-Sale Assets on the Condensed Consolidated Balance Sheets.

Source: Amtech Systems, Inc.
Anand Gupta Editor - EQ Int'l Media Network