Sign in

You're signed outSign in or to get full access.

AS

AMTECH SYSTEMS INC (ASYS)·Q2 2024 Earnings Summary

Executive Summary

  • Revenue of $25.4M exceeded the high end of company guidance ($22–$25M) and GAAP EPS returned to positive at $0.07; adjusted EBITDA was ~$0.8M despite soft demand .
  • Orders moderated (book-to-bill ~0.8x) and backlog fell to $44.3M, signaling continued near‑term demand softness; gross margin was 33.2% vs 40.4% a year ago on mix/material cost headwinds tied to horizontal diffusion furnace shipments .
  • Cost actions now total ~$6M annualized savings; net cash improved to $8.8M as the company sold its HQ (gain $2.2M; net proceeds $2.5M) and paid down $6.4M of debt .
  • Q3 FY24 guide: revenue $22–$25M with adjusted EBITDA “nominally positive” (improved from prior quarter’s outlook for negative to neutral EBITDA), but mix/cost headwinds expected to persist through Q3 before improving into Q4/FQ1 as higher‑priced backlog ships .
  • Strategic narrative: improving lead times via contract manufacturing; pricing now aligned with input inflation; AI/advanced packaging and SiC power electronics are medium‑term growth drivers; near‑shoring at North American and Chinese OSATs emerging as catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Exceeded revenue guidance high-end; delivered positive adjusted EBITDA: “Revenue of $25.4 million exceeded the high end of our guidance… adjusted EBITDA of $0.8 million” — CEO .
    • Structural cost reset: actions in Q1–Q2 to reduce structural costs by ~$6M annually; expected to enhance profitability through cycles .
    • Balance sheet progress: $2.5M net proceeds from HQ sale used for ~$1.2M capex and to pay down revolver; net cash improved to $8.8M .

  • What Went Wrong

    • Demand softness: orders $19.8M; book-to-bill ~0.8x, backlog down to $44.3M (from $50.0M at Q1); signals muted near‑term demand .
    • Margin pressure vs prior year: GAAP gross margin 33.2% vs 40.4% in Q2’23 on product mix and higher material costs, largely from horizontal diffusion furnace shipments .
    • Non‑GAAP profitability still negative: Q2 non‑GAAP EPS $(0.01) vs $0.19 in Q2’23, reflecting softer demand and mix .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Millions)$33.310 $24.920 $25.433
GAAP Diluted EPS ($)$0.23 $(0.66) $0.07
Non‑GAAP Diluted EPS ($)$0.19 $(0.04) $(0.01)
GAAP Gross Margin (%)40.4% 33.0% 33.2%
Non‑GAAP Gross Margin (%)40.4% 37.5% 33.9%
GAAP Operating Margin (%)1.6% (35.9%) 5.4%
Orders ($USD Millions)$34.266 $23.105 $19.771
Backlog ($USD Millions)$65.838 $49.979 $44.316

Segment performance

SegmentQ2 2023 Revenue ($M)Q1 2024 Revenue ($M)Q2 2024 Revenue ($M)Q2 2023 GM (%)Q1 2024 GM (%)Q2 2024 GM (%)
Semiconductor$22.047 $17.527 $17.441 41% 35% 29%
Material & Substrate$11.263 $7.393 $7.992 40% 28% 43%

Key performance indicators

KPIQ2 2023Q1 2024Q2 2024
Orders ($M)$34.266 $23.105 $19.771
Backlog ($M)$65.838 $49.979 $44.316
Book‑to‑BillN/AN/A~0.8x
Adjusted EBITDA ($M)N/A$0.168 $0.763
Net Cash ($M)N/A$7.0 (Dec 31, 2023) $8.8 (Mar 31, 2024)

Context and drivers

  • Sequential revenue +2% on higher consumables in Materials & Substrate as customers reset inventory; YoY -24% on broad semiconductor slowdown .
  • Semi segment margin pressure from mix and higher material costs on horizontal diffusion furnaces; Materials & Substrate margins improved on favorable consumables mix .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 FY2024$22–$25M (as guided in Q1 release) N/A (actuals reported at $25.4M) N/A
Adjusted EBITDAQ2 FY2024“Nominally negative to neutral” N/A (actual adj. EBITDA $0.763M) N/A
RevenueQ3 FY2024Not previously guided$22–$25M New
Adjusted EBITDAQ3 FY2024Not previously guided“Nominally positive” New (improved vs Q2 guide stance)

Notes:

  • Management flagged that Q3 mix/cost headwinds (older backlog priced before cost resets) will “repeat again in Q3,” with incremental improvement in Q4 and into FQ1 as higher‑margin backlog ships .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
AI/Advanced Packaging demandTools used for advanced packaging/HPC & AI; long‑term tailwinds emphasized . Confidence AI infrastructure investments will drive demand .AI‑related memory bookings strong; expect better into late ’24/early ’25; tools critical for advanced packaging for AI processors .Strengthening demand signals into 2H’24–’25.
Supply chain & lead timesShift to contract manufacturing; plan to relocate a facility to lower costs .Lead times improving; reflow 4–6 weeks; horizontal diffusion furnaces trending toward 4–6 months from >1 year; margin headwinds from long‑quoted backlog .Improving lead times; cycle time reduction priority.
Pricing actionsPricing aligned to input inflation; benefits lag due to existing backlog .Pricing better aligned; backlog margin to improve as new quotes flow through over several quarters .Benefits building gradually through Q4/FQ1.
End‑market: EV/HEV & SiCExit legacy polishing machines; focus on consumables/CMP/clean; $4M cost saves .EV softness causing lumpiness in SiC consumables; opportunity in HEV power modules and DBC furnaces; SiC trajectory intact; 6‑inch today with positioning for 8‑inch .Near‑term softness; medium‑term positive.
Near‑shoring/OSATsEmphasis on resilient supply chains .Uptick in near‑shoring in North America and capacity adds at Chinese OSATs .Improving activity.
Regulatory/FinancialForbearance agreement disclosed; focus on breakeven .Covenants not discussed this quarter; RMB FX noted in outlook .Stabilized; FX sensitivity remains.
M&ANot emphasized.SiC‑adjacent M&A a strategic priority, timing uncertain .Exploratory.

Management Commentary

  • “Revenue of $25.4 million exceeded the high end of our guidance range and… adjusted EBITDA of $0.8 million… with soft overall demand.” — CEO .
  • “Lead times are improving… shipping equipment booked over a year ago… negatively impacted margins this quarter due to inflation over the past year.” — CFO .
  • “Our goal is to drive cycle times down… margin headwinds… because we quoted [equipment] over a year ago… make sure pricing reflects current cost conditions.” — CEO .
  • “We took actions… to reduce Amtech’s structural costs by approximately $6 million annually.” — CFO .
  • “Tools play a critical role in… advanced packaging… for artificial intelligence applications.” — CEO .

Q&A Highlights

  • Demand recovery cadence: AI‑linked memory bookings strong; expect firmer recovery toward late ’24/early ’25; equipment orders lag until utilizations >~80% at customers .
  • Lead times/cycle times: Reflow 4–6 weeks; high‑end belt furnaces “handful of months”; horizontal diffusion furnaces targeting ~4–6 months; emphasis on partner manufacturing to reduce cycles and align pricing with current costs .
  • SiC/8‑inch opportunity: Market largely 6‑inch today; positioning to capture 8‑inch value varies by customer/tools in CMP .
  • M&A: Power electronics/SiC adjacency is strategic priority; no timing details .
  • Visibility: Furnace backlog extends through December quarter; consumables/parts more short‑cycle; similar product mix expected in Q3 with incremental margin improvement into Q4/FQ1 .

Estimates Context

  • We were unable to retrieve S&P Global (Capital IQ) consensus due to a request‑limit error at the time of access; therefore, we cannot quantify Street revenue/EPS beats/misses for Q2 FY2024 or prior quarters. Where available, we anchor comparisons to company guidance and reported results (above) .
  • Default source for consensus is S&P Global; if you would like, we can refresh and insert consensus revenue and EPS for Q2 FY2024 and revisions post‑print once access resumes.

Key Takeaways for Investors

  • Positive print vs company guidance: Revenue topped the high‑end and adjusted EBITDA turned positive; GAAP EPS back to positive territory .
  • Near‑term demand still soft: Book‑to‑bill ~0.8x and lower orders/backlog imply muted Q3, consistent with revenue guide $22–$25M and only nominally positive adjusted EBITDA .
  • Margin inflection likely gradual: Q3 still carries mix/material headwinds from older backlog; management expects improvement in Q4 and FQ1 as higher‑priced orders ship .
  • Structural cost reset and pricing discipline provide operating leverage into recovery; ~$6M annual savings already implemented .
  • Strategic exposure intact: AI/advanced packaging and SiC power electronics (including HEV modules) underpin medium‑term growth; improving lead times and contract manufacturing add flexibility .
  • Balance sheet better positioned: Net cash of $8.8M after debt paydown and HQ sale; continued focus on working capital and capex for BTU facility move .
  • Trading lens: Watch for order momentum (book‑to‑bill >1x), mix shift to higher‑margin backlog, and margin progression in Q4/FQ1 as drivers of estimate revisions and multiple support.

Citations: Earnings press release and 8‑K for Q2 FY2024 ; Q2 FY2024 earnings call transcript ; Q1 FY2024 8‑K/press release and transcript ; Q4 FY2023 8‑K/press release and transcript .