Home PV Manufacturing Amtech Reports Third Quarter Fiscal 2019 Results
Amtech Reports Third Quarter Fiscal 2019 Results

Amtech Reports Third Quarter Fiscal 2019 Results

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TEMPE, Ariz : Amtech Systems, Inc. (NASDAQ: ASYS), a manufacturer of capital equipment, including thermal processing, related consumables, and wafer handling systems used in fabricating semiconductor devices, silicon carbide (SiC) and silicon power chips, electronic assemblies, light-emitting diodes (LEDs), and solar cells, today reported results for its third quarter ended June 30, 2019.

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

  • Net revenue of $21.0 million
  • Income from continuing operations, net of tax, of $0.9 million
  • Income per diluted share from continuing operations of $0.06
  • Customer orders of $16.3 million
  • June 30, 2019 backlog of $17.2 million
  • Book to bill ratio of 0.8:1
  • Unrestricted cash of $49.1 million

Mr. J.S. Whang, Executive Chairman and Chief Executive Officer of Amtech, commented, “Our results reflect the slower demand environment in the semiconductor cycle, with the trade dispute and related tariffs being a significant contributing factor. We are monitoring our cost structure to ensure it is aligned with the current operating environment, while making select investments in preparation for the industry’s next growth cycle and to support our semi growth strategy. Today we also announced an order for our 300mm diffusion furnace from another top-tier power semiconductor customer. We believe having two leading players as our strong customers in the growing 300mm power semiconductor market is an important achievement which will significantly contribute to our future semi growth. As previously announced, we are investing in a larger facility for our PR Hoffman business to increase productivity, drive sales and enhance profitability. With great enthusiasm, we are shaping our overall business, putting the right capabilities in place, and we are confident we will be a significant participant in the highest growth areas in the semiconductor market over the long term.”

Mr. Whang continued, “In line with our plan to divest substantially all of our solar business, at the end of the quarter we announced the sale of our SoLayTec solar subsidiary. And, today, our advisor in the Netherlands continues to be actively engaged in discussions with private equity and strategic investors regarding the sale of Tempress.”

Net revenue for the third quarter of fiscal 2019 was $21.0 million compared to $20.6 million in the preceding quarter and $28.7 million in the third quarter of fiscal 2018. We continue to see weaker demand due primarily to the economic conditions resulting from the trade dispute. Sequentially, Semiconductor revenue increased by approximately $0.2 million, and SiC/LED revenue decreased by approximately $0.2 million. Compared to prior year, Semi net revenue decreased by approximately $7.2 million. SiC/LED revenue decreased by approximately $0.5 million, due primarily to the timing of machine shipments.

Unrestricted cash and cash equivalents at our continuing operations at June 30, 2019 were $49.1 million, compared to $45.9 million at September 30, 2018.

At June 30, 2019, our total backlog was $17.2 million, compared to total backlog of $22.0 million at March 31, 2019. Backlog includes customer orders that are expected to ship within the next 12 months.

Gross margin in the third quarter of fiscal 2019 was 37%, compared to 38% in the preceding quarter and 35% in the third quarter of fiscal 2018. Compared to prior year, gross margins increased primarily due to product mix, most notably, stronger sales of our higher margin machines.

Selling, general and administrative expense (“SG&A”) in the third quarter of fiscal 2019 was $5.7 million, compared to $5.8 million in the preceding quarter and $6.8 million in the third quarter of fiscal 2018. Sequentially SG&A decreased slightly due to lower stock compensation expense. Compared to prior year, SG&A decreased due primarily to lower headcount, lower employee-related expenses and lower commissions on lower revenue.

Restructuring expense was $35,000 in the third quarter of fiscal 2019, and $0.2 million in the preceding quarter. There were no restructuring expenses in the third quarter of fiscal 2018.

Research, development and engineering (RD&E) expense was $0.7 million in the third quarter of fiscal 2019 compared to $0.7 million in the preceding quarter and $0.6 million in the third quarter of fiscal 2018.

Income tax expense in the third quarter of fiscal 2019 was $0.7 million compared to $0.3 million in the preceding quarter and $1.4 million in the third quarter of fiscal 2018. We realized an income tax benefit in our discontinued operations in the third quarter of fiscal 2019 due primarily to the tax treatment related to our sale of SoLayTec.

Income from continuing operations, net of tax, for the third quarter of fiscal 2019 was $0.9 million, or $0.06 per share, compared to $5.0 million, or $0.33 per share, for the third quarter of fiscal 2018 and $1.0 million, or $0.07 per share, in the preceding quarter.

Outlook

For the quarter ending September 30, 2019, the Company expects continuing softness in the semiconductor equipment industry to result in revenue in the range of $18 to $20 million. Gross margin for the quarter ending September 30, 2019 is expected to be in the mid to upper 30% range, with operating margin slightly positive. The outlook assumes continued weakness in demand given soft business conditions due to the ongoing trade dispute and excludes the impact of any potential restructuring actions.

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 portion of Amtech’s results are denominated in Renminbis, a Chinese currency. The outlook provided in this press release is based on an assumed exchange rate between the United States Dollar and the Renminbi. Changes in the value of the Renminbi in relation to the United States Dollar could cause actual results to differ from expectations.

Conference Call

Amtech Systems will host a conference call and webcast today at 5:00 p.m. ET to discuss third 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 August 15, 2019. To access the replay please dial US toll free (877) 344-7529 and enter code 10133320. 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.

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

August 8, 2019

(Unaudited)

Summary Financial Information for Continuing Operations

(in thousands, except percentages and ratios)

Three Months Ended

Nine Months Ended June 30,

June 30, 2019

March 31,
2019

June 30, 2018

2019

2018

Amtech Systems, Inc.

   Revenues, net of returns and allowances

$

21,003

$

20,633

$

28,743

$

64,861

$

76,974

   Gross profit

$

7,850

$

7,927

$

10,183

$

24,797

$

28,725

   Gross margin

37

%

38

%

35

%

38

%

37

%

   Operating income

$

1,351

$

1,248

$

2,826

$

3,263

$

7,172

   New orders

$

16,278

$

19,325

$

22,030

$

56,216

$

75,758

   Book-to-bill ratio

0.8:1

0.9:1

0.8:1

0.9:1

1.0:1

   Backlog

$

17,237

$

21,991

$

23,226

$

17,237

$

23,226

Semiconductor Segment

   Revenues, net of returns and allowances

$

16,254

$

16,053

$

23,472

$

51,267

$

60,945

   Gross profit

$

6,566

$

6,443

$

8,721

$

20,499

$

23,284

   Gross margin

40

%

40

%

37

%

40

%

38

%

   Operating income

$

1,951

$

1,732

$

3,861

$

6,428

$

9,122

   New orders

$

12,899

$

15,469

$

17,871

$

44,462

$

62,390

   Book-to-bill ratio

0.8:1

0.9:1

0.8:1

0.9:1

1.0:1

   Backlog

$

13,931

$

17,286

$

20,764

$

13,931

$

20,764

SiC/LED Segment

   Revenues, net of returns and allowances

$

3,074

$

3,273

$

3,594

$

9,330

$

10,720

   Gross profit

$

1,038

$

1,262

$

1,294

$

3,524

$

4,370

   Gross margin

34

%

39

%

36

%

38

%

41

%

   Operating income

$

607

$

878

$

938

$

2,253

$

3,153

   New orders

$

2,697

$

3,133

$

3,307

$

9,574

$

10,540

   Book-to-bill ratio

0.9:1

1.0:1

0.9:1

1.0:1

1.0:1

   Backlog

$

2,934

$

3,311

$

1,507

$

2,934

$

1,507

Automation Segment

   Revenues, net of returns and allowances

$

1,675

$

1,307

$

1,677

$

4,264

$

5,309

   Gross profit

$

246

$

222

$

168

$

774

$

1,071

   Gross margin

15

%

17

%

10

%

18

%

20

%

   Operating loss

$

(52)

$

(116)

$

(195)

$

(392)

$

(231)

   New orders

$

682

$

723

$

852

$

2,180

$

2,828

   Book-to-bill ratio

0.4:1

0.5:1

0.5:1

0.5:1

0.5:1

   Backlog

$

372

$

1,394

$

955

$

372

$

955

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

August 8, 2019

(Unaudited)

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended June 30,

Nine Months Ended June 30,

2019

2018

2019

2018

Revenues, net of returns and allowances

$

21,003

$

28,743

$

64,861

$

76,974

Cost of sales

13,153

18,560

40,064

48,249

Gross profit

7,850

10,183

24,797

28,725

Selling, general and administrative

5,718

6,775

18,137

19,518

Research, development and engineering

746

582

2,325

2,035

Restructuring charges

35

1,072

Operating income

1,351

2,826

3,263

7,172

Gain on sale of other assets

2,883

2,883

Income from equity method investment

232

234

Interest income and other, net

249

410

511

396

Income from continuing operations before income taxes

1,600

6,351

3,774

10,685

Income tax provision

707

1,372

1,621

2,944

Income from continuing operations, net of tax

893

4,979

2,153

7,741

Income (loss) from discontinued operations, net of tax

1,154

(8)

(8,113)

6,517

Net income (loss)

$

2,047

$

4,971

$

(5,960)

$

14,258

Income (Loss) Per Basic Share:

Basic income per share from continuing operations

$

0.06

$

0.33

$

0.15

$

0.52

Basic income (loss) per share from discontinued operations

$

0.08

$

0.00

$

(0.57)

$

0.44

Net income (loss) per basic share

$

0.14

$

0.33

$

(0.42)

$

0.96

Income (Loss) Per Diluted Share:

Diluted income per share from continuing operations

$

0.06

$

0.33

$

0.15

$

0.51

Diluted income (loss) per share from discontinued operations

$

0.08

$

0.00

$

(0.57)

$

0.43

Net income (loss) per diluted share

$

0.14

$

0.33

$

(0.42)

$

0.94

Weighted average shares outstanding – Basic

14,245

14,925

14,231

14,867

Weighted average shares outstanding – Diluted

14,316

15,091

14,267

15,181

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

August 8, 2019

(unaudited)

Condensed Consolidated Balance Sheets

(in thousands, except share data)

June 30,
 2019

September 30,
 2018

Assets

Current Assets

Cash and cash equivalents

$

49,109

$

45,897

Restricted cash

603

18

Accounts receivable

Trade (less allowance for doubtful accounts of $270 and $454 at June 30, 2019, and September 30, 2018, respectively)

15,488

17,985

Unbilled and other

291

Inventory

18,885

17,835

Contract assets

55

Held-for-sale assets

22,965

45,322

Other current assets

1,688

2,884

Total current assets

108,793

130,232

Property, Plant and Equipment – Net

10,290

10,509

Intangible Assets – Net

935

1,131

Goodwill – Net

6,633

6,633

Other Assets

775

901

Total Assets

$

127,426

$

149,406

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable

$

4,914

$

6,867

Accrued compensation and related taxes

2,684

3,359

Accrued warranty expense

627

644

Other accrued liabilities

1,192

667

Current maturities of long-term debt

369

350

Contract liabilities

2,561

1,519

Income taxes payable

1,708

2,357

Held-for-sale liabilities

18,484

31,798

Total current liabilities

32,539

47,561

Long-Term Debt

5,270

5,542

Income Taxes Payable

3,041

3,213

Total Liabilities

40,850

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: 14,258,307 and 14,216,596 at June 30, 2019, and September 30, 2018, respectively

143

142

Additional paid-in capital

124,964

124,316

Accumulated other comprehensive loss

(11,177)

(9,974)

Retained deficit

(27,354)

(21,394)

Total shareholders’ equity

86,576

93,090

Total Liabilities and Shareholders’ Equity

$

127,426

$

149,406

AMTECH SYSTEMS, INC.

(NASDAQ: ASYS)

August 8, 2019

(unaudited)

Condensed Consolidated Statements of Cash Flows

(in thousands)

Nine Months Ended June 30,

2019

2018

Operating Activities

Net (loss) income

$

(5,960)

$

14,258

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

Depreciation and amortization

1,280

1,622

Write-down of inventory

2,991

195

Capitalized interest

106

143

Deferred income taxes

192

206

Non-cash share-based compensation expense

474

632

Gain on sale of subsidiary

(1,614)

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

1

(53)

Gain on sale of other assets

(2,883)

Income from equity method investment

(234)

Provision for allowance for doubtful accounts, net

1,104

64

Changes in operating assets and liabilities:

Accounts receivable

630

(5,877)

Inventory

284

6,565

Contract and other assets

12,675

10,034

Accounts payable

(3,843)

(9,022)

Accrued income taxes

(1,359)

(1,742)

Accrued and other liabilities

(5,726)

39

Contract liabilities

(814)

(34,550)

Net cash provided by (used in) operating activities

421

(20,603)

Investing Activities

Purchases of property, plant and equipment

(552)

(845)

Proceeds from sale of property, plant and equipment

64

Costs related to sale of equity method investment

(6)

Net cash disposed of in sale of subsidiary

(1,112)

Net cash used in investing activities

(1,664)

(787)

Financing Activities

Proceeds from the exercise of stock options

175

1,889

Payments on long-term debt

(280)

(275)

Borrowings on long-term debt

9

Net cash (used in) provided by financing activities

(96)

1,614

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

(1,450)

(380)

Net Decrease in Cash, Cash Equivalents and Restricted Cash

(2,789)

(20,156)

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

62,496

75,761

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

$

59,707

$

55,605

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

Anand Gupta Editor - EQ Int'l Media Network