Sign in

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

AS

AMTECH SYSTEMS INC (ASYS)·Q3 2024 Earnings Summary

Executive Summary

  • Revenue of $26.7M exceeded the high end of company guidance; non-GAAP EPS of $0.08 and adjusted EBITDA of $2.3M marked the third consecutive quarter of positive adjusted EBITDA and operating cash flow .
  • Mix shift toward higher-margin reflow equipment and parts/services supported gross margin expansion to 36.5% QoQ, while backlog continued to normalize to $31.8M as older, lower-margin furnaces shipped .
  • Q4 FY2024 guidance: revenue $22–$25M and adjusted EBITDA nominally positive; structural cost reduction target raised to ~$7M annually, reinforcing margin resiliency through cycles .
  • Potential stock reaction catalysts: beat vs company guidance, margin improvement, continued cost actions, and CFO transition (Lisa Gibbs stepping down; Wade Jenke appointed), which may drive debate on execution continuity and capital allocation .

What Went Well and What Went Wrong

What Went Well

  • Revenue outperformed guidance high-end, driven by reflow and wafer cleaning tools and stronger parts/services; gross margin expanded to 36.5% QoQ and non-GAAP operating margin reached 5.6% .
  • Third consecutive quarter of positive adjusted EBITDA ($2.3M) and operating cash flow; net cash improved to $8.9M, reflecting disciplined working capital and deleveraging actions .
  • Strategic initiatives: $7M annualized cost reductions, BTU facility downsizing ($1M fixed cost savings), and contract manufacturing partnerships to enhance flexibility and margins; “we are seeing the financial benefits” (CEO) .

What Went Wrong

  • Backlog fell to $31.8M (from $44.3M in Q2 and ~$50.0M in Q1) as older, lower-margin furnaces shipped; new orders moderated to $18.8M, reflecting continued softness in certain power electronics applications .
  • Horizontal diffusion furnaces (auto/industrial power semis) softened; near-term semi segment book-to-bill expected “below 1” until backlog quality fully refreshes (2–3 quarters lag) .
  • Consumables demand remained “lumpy” and EV market signals mixed; management called the recovery gradual rather than sharp, implying near-term revenue/EPS headwinds despite internal improvements .

Financial Results

Quarterly Trajectory (oldest → newest)

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$24.9 $25.4 $26.7
GAAP Diluted EPS ($)-$0.66 $0.07 $0.03
Non-GAAP Diluted EPS ($)-$0.04 -$0.01 $0.08
Gross Margin (%)33.0% 33.2% 36.5%
GAAP Operating Margin (%)-35.9% 5.4% 3.1%
Non-GAAP Operating Margin (%)-0.8% 0.7% 5.6%
Adjusted EBITDA ($USD Millions)$0.168 $0.763 $2.266

Year-over-Year Comparison (Q3)

MetricQ3 2023Q3 2024
Revenue ($USD Millions)$30.7 $26.7
GAAP Diluted EPS ($)-$0.07 $0.03
Non-GAAP Diluted EPS ($)$0.02 $0.08
Gross Margin (%)35.7% 36.5%
GAAP Operating Margin (%)-3.6% 3.1%
Non-GAAP Operating Margin (%)1.2% 5.6%

Segment Breakdown (oldest → newest)

Segment MetricQ1 2024Q2 2024Q3 2024
Semiconductor Revenues ($M)$17.527 $17.441 $18.038
Semiconductor GAAP Gross Margin (%)35% 29% 35%
Semiconductor GAAP Operating Income ($M)$1.081 $0.896 $1.690
Materials & Substrate Revenues ($M)$7.393 $7.992 $8.711
Materials & Substrate GAAP Gross Margin (%)28% 43% 40%
Materials & Substrate GAAP Operating Income ($M)-$7.844 $0.900 $1.621

KPIs (oldest → newest)

KPIQ1 2024Q2 2024Q3 2024
New Orders ($USD Millions)$23.105 $19.771 $18.814
Backlog ($USD Millions)$49.979 $44.316 $31.837
Net Cash ($USD Millions)$7.0 (Dec 31) $8.8 (Mar 31) $8.9 (Jun 30)
Cash & Equivalents ($USD Millions)$17.033 (Dec 31) $13.000 (Mar 31) $13.183 (Jun 30)

Notes:

  • Book-to-bill: 0.9:1 in Q1; 0.8:1 in Q2; management expects semi segment book-to-bill “below 1” near term as backlog refreshes .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 FY2024$22–$25M N/A (actual delivered $26.7M) Beat vs guidance (internal)
RevenueQ4 FY2024N/A$22–$25M New/maintained range vs prior quarter’s approach
Adjusted EBITDAQ4 FY2024N/ANominally positive New
Structural Cost Reductions (annual)FY2024~$6M ~$7M Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3)Trend
AI/Advanced packagingExpect tailwinds from AI-related infrastructure; recovery timing dependent on utilization; tools critical to HPC/AI packaging “Incremental improvement in demand for advanced packaging”; sequential reflow demand improving, higher margins than SMT Improving
Supply chain/near-shoringNear-shoring uptick in NA and China; leveraging contract manufacturing to reduce fixed costs, improve lead times Continued optimization; BTU facility relocation complete; expanded CM partnerships to improve flexibility Improving
Pricing actions/inflation pass-throughRevised pricing to align with input costs; backlog initially at weaker margins; margins to improve as newer quotes ship Pricing actions broad across portfolio; more significant on equipment; full impact in a few quarters as backlog turns Improving (with lag)
EV/Hybrid macro and SiCEV softness tempered by hybrid vehicle strength; SiC secular tailwinds intact; visibility varies by product Mixed EV signals; CEO sees hybrid push as net positive for power electronics consumables/equipment Mixed but stabilizing
Lead times/backlog qualityGoal to cut cycle times; horizontal diffusion furnaces improved from >1 year toward 4–6 months; margins pressured by older quotes Shipment mix included larger furnaces below corporate average margins; new orders trending higher margin; 2–3 quarters to refresh backlog Improving backlog quality
Book-to-bill/OrdersQ2 book-to-bill 0.8:1; parts/service picking up; consumables lumpy Semi book-to-bill expected below 1 near term; parts/service and reflow demand improving sequentially Gradual improvement

Management Commentary

  • “Revenue of $26.7 million exceeded the high-end of our guidance range, and we achieved adjusted EBITDA of $2.3 million. This is the third consecutive quarter of positive adjusted EBITDA and operating cash flow… approximately $7 million of annualized operating cost reductions” — CEO Bob Daigle .
  • “New orders are trending towards lower order values but higher-margin products… book-to-bill… to stay below 1 [near term]… it will take another 2 to 3 quarters for this to work its way through” — CFO Lisa Gibbs .
  • “We completed the relocation of our U.S. BTU facility to a smaller, more cost-effective facility… reduces our fixed cost by about $1 million a year” — CEO .
  • CFO Transition: Lisa Gibbs resigned; Wade Jenke appointed CFO effective Aug 8, 2024 — press release .

Q&A Highlights

  • Pricing actions: Broad-based increases, disproportionately on equipment to offset inflation; expected to enhance margins as backlog refreshes .
  • EV/hybrid outlook: Hybridization likely to offset tempered full-EV growth, net favorable for Amtech’s power electronics exposure .
  • Reflow demand and mix: Sequential improvements, stronger advanced packaging mix (higher margin, ASP) vs SMT; quoting activity rising .
  • Cash/Capex: YTD cash from operations ~$9M; CapEx just over $5M related to BTU relocation; near-term CapEx to maintenance levels .
  • Market tone: “Incremental improvements… bouncing along the bottom”; strategy focused on cost structure and EBITDA amid gradual recovery .

Estimates Context

  • Street consensus data via S&P Global was attempted but unavailable due to request limits; therefore, comparisons vs Wall Street estimates are not provided. We anchor comparison to company guidance and reported actuals instead (attempted SPGI retrieval failed).

Key Takeaways for Investors

  • Beat vs company guidance: Revenue above the $22–$25M range; margin and non-GAAP profitability improved on favorable mix and cost actions — a constructive signal for near-term execution.
  • Quality of backlog improving: As older, lower-margin furnace orders ship, higher-margin reflow/parts/services bookings should lift gross margins over the next 2–3 quarters.
  • Structural cost reductions and BTU facility move underpin margin resilience and operating leverage; ~$7M annual savings and CM partnerships provide flexibility through cycles .
  • Secular exposure intact: Advanced packaging/HPC-AI tools, power electronics for EV/hybrid, and SiC consumables support medium-term growth despite near-term EV softness .
  • Liquidity discipline: Net cash $8.9M and three straight quarters of positive adjusted EBITDA and operating cash flow enhance balance sheet optionality .
  • Near-term caution: Semi segment book-to-bill below 1 and lumpy consumables point to a gradual, not sharp, recovery; Q4 guide implies continued prudence with revenue $22–$25M and nominally positive adjusted EBITDA .
  • Leadership transition: New CFO Wade Jenke’s operational pedigree could accelerate optimization; monitor capital allocation priorities and M&A timing .