Earnings call transcript: Amtech Systems Q1 2025 beats EPS forecasts

Amtech Systems Inc (NASDAQ:ASYS) reported stronger-than-expected earnings for Q1 FY2025, with non-GAAP earnings per share (EPS) of $0.06, surpassing the forecasted loss of $0.01. The company posted revenues of $24.4 million, slightly below the anticipated $24.75 million. Despite the revenue miss, Amtech’s stock rose 4.02% in after-hours trading, closing at $5.44, buoyed by positive earnings and strategic initiatives. According to InvestingPro analysis, the company’s current market capitalization stands at $74 million, and its Fair Value assessment suggests the stock is fairly valued at current levels.

Key Takeaways

• Amtech reported a non-GAAP EPS of $0.06, beating forecasts.
• Revenue slightly missed expectations at $24.4 million.
• Stock surged 4.02% in after-hours trading.
• Restructuring efforts led to significant cost savings.
• Positive outlook for AI infrastructure and semiconductor packaging.

Company Performance

Amtech Systems demonstrated resilience in Q1 FY2025, with a focus on optimizing its operations and refining its business segments. The company achieved a 1% sequential revenue increase, although revenues were down 2% year-over-year. Amid muted demand for mature node semiconductor equipment, Amtech capitalized on strengthening demand in AI infrastructure and advanced packaging. InvestingPro data reveals the company maintains strong liquidity with a current ratio of 3.28, while operating with a moderate debt-to-equity ratio of 0.21, indicating financial stability.

Financial Highlights

• Revenue: $24.4 million (1% sequential increase, 2% YoY decrease)
• Adjusted EBITDA: $1.9 million (up $1.8 million YoY)
• GAAP Net Income: $300,000 ($0.02 per share)
• Non-GAAP Net Income: $800,000 ($0.06 per share)
• Unrestricted Cash: $13.2 million (up from $11.1 million)

Earnings vs. Forecast

Amtech’s actual EPS of $0.06 significantly exceeded the forecasted loss of $0.01, marking a positive surprise for investors. However, the revenue of $24.4 million fell short of the $24.75 million forecast, a minor miss that did not dampen investor enthusiasm, as evidenced by the after-hours stock price increase.

Market Reaction

Following the earnings announcement, Amtech’s stock rose 4.02% in after-hours trading, reflecting investor confidence in the company’s strategic direction and cost-saving measures. The stock closed at $5.44, moving closer to its 52-week high of $6.96, indicating positive sentiment despite the revenue miss. InvestingPro analysis shows the stock has a beta of 1.38, suggesting higher volatility than the market, and trades at an EV/EBITDA multiple of 38.6x. Investors seeking deeper insights can access comprehensive valuation metrics and additional ProTips through InvestingPro’s detailed research reports, available for over 1,400 US stocks.

Outlook & Guidance

For Q2, Amtech projects revenue between $21 million and $23 million, with adjusted EBITDA expected to be nominally positive. The company continues to invest in growth initiatives, particularly in AI infrastructure and semiconductor packaging, which are seen as long-term growth drivers.

Executive Commentary

"Our restructuring efforts have strengthened our ability to navigate industry cycles," said Bob Daigle, CEO of Amtech. "We are starting to resource efforts to really broaden what we do in the marketplace," he added, highlighting the company’s strategic focus on expanding its market presence. Daigle also emphasized, "We believe these strategic initiatives and industry dynamics position us well for sustained growth." This optimism is supported by InvestingPro data, which indicates analysts expect the company to return to profitability this year. Two key ProTips highlight the company’s high shareholder yield and strong liquidity position, with several more insights available through InvestingPro’s comprehensive analysis platform.

Risks and Challenges

• Potential supply chain disruptions could impact production timelines.
• Market saturation in mature node semiconductor equipment may limit growth.
• Macroeconomic pressures, including inflation, could affect profitability.
• Softness in the automotive market may impact related segments.
• Dependence on AI infrastructure growth poses a strategic risk.

Q&A

During the earnings call, analysts inquired about ongoing cost reduction opportunities and the company’s strategies to address automotive market softness. Amtech’s focus on advanced packaging and AI edge computing trends was also explored, with management expressing confidence in these areas as key growth drivers.

Full transcript - Amtech Systems Inc (ASYS) Q1 2025:

Conference Operator: Good day, and welcome to the Amtech Systems Fiscal First Quarter twenty twenty five Earnings Conference Call. Please note that this event is being recorded. I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead.

Erica Mannion, Investor Relations, Sapphire Investor Relations: Good afternoon, and thank you for joining us for Amtech Systems’ fiscal first quarter twenty twenty five conference call. With me on the call today are Bob Daigle, Chairman and Chief Executive Officer and Wade Janke, Chief Financial Officer. After close of market today, Amtech released its financial results for the fiscal first quarter of twenty twenty five. The earnings release is posted on the company’s website at www.amtechsystems.com in the Investors section. Before we begin, I would like to remind everyone that the Safe Harbor’s disclaimer in our public filings covers this call and the webcast.

Some of the comments to be made during this call today will contain forward looking statements and assumptions that are subject to risks and uncertainties, including, but not limited to, those contained in our SEC filings, all of which are posted within the Investors section of our corporate website. The company assumes no obligation to update any such forward looking statements. You are cautioned not to place undue reliance on forward looking statements, which speak only as of today. These statements are not a guarantee of future performance, and actual results could differ materially from current expectations. Among the important factors which could cause actual results to differ materially from those in the forward looking statements are changes in the technologies used by customers and competitors, change in volatility and demand for products, the effect of changing worldwide political and economic conditions, including trade sanction the effect of overall market conditions, including the equity and credit markets and market acceptance risks ongoing logistics, supply chain and labor challenges and capital allocation plans.

Other risk factors are detailed in our SEC filings, including our Form 10 K and Forms 10 Q. Additionally, in today’s conference call, we will be referring to non GAAP financial measures as we discuss the fiscal first quarter results. You’ll find a reconciliation of these non GAAP measures to our actual GAAP results included in the press release issued today. Now, I will turn the call over to Amtech’s Chief Executive Officer, Bob Daigle.

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Good afternoon and thank you for joining us today. I’m pleased to report that our first quarter results exceeded our guidance with revenue of $24,400,000 and $1,900,000 in adjusted EBITDA. While revenue remained muted on a year over year basis due to continued softness in the markets we serve, our profitability continued to improve with year over year adjusted EBITDA increasing by $1,800,000 This performance underscores our ongoing focus on operational excellence and cost optimization. Over the past year, we have made significant progress restructuring our business to enhance our cost efficiency and improve our ability to adapt to market demand. These efforts are delivering tangible results.

Our restructuring initiatives have yielded over $8,000,000 in annualized cost savings to date excluding one time costs and are expected to generate approximately $9,000,000 in annualized savings by the end of the second fiscal quarter. The adoption of a semi fabless model for our capital equipment segment has further strengthened our operating leverage by enabling us to right size the organization and reduce fixed costs. This transition has positioned us well to efficiently support production with varying levels of market demand. Additionally, over the past several quarters, we implemented pricing actions to offset inflationary pressures and then enhance our product margin profile. By the end of the second quarter, we will have shipped the majority of the low price lower margin business in our backlog.

Going forward, we will remain vigilant and adjust pricing as necessary to preserve profitability. Turning to our end markets, demand remains muted for equipment and consumables supporting mature node semiconductor production from markets such as industrial equipment and automotive. However, demand for our reflow equipment in leading edge applications such as AI infrastructure has continued to strengthen. While optimizing our cost structure remains a priority, given the macro backdrop, we are investing in growth initiatives in 2025 and have aligned our organization to better serve our customers. To that end, as we discussed last quarter, we have refined our business segments to provide greater clarity and focus.

The Semiconductor Fabrication Solutions business previously known as the Materials and Substrate segment includes PR Hoffman and IDI Consumables, Entrefix parts and services, as well as some front end capital equipment used for semiconductor wafer and device fabrication. Meanwhile, the Thermal Process Solutions business, formerly the Semiconductor segment, focuses on reflow equipment for advanced chip packaging and surface mount assembly applications, as well as furnaces for power electronic device production and packaging. Within the semiconductor fabrication solutions business, our goal is to drive long term sustainable growth by expanding the reoccurring revenue streams such as consumables, parts and services. These revenue streams not only provide higher margins, but also deliver more predictable, less cyclical revenue growth. To achieve this, we are working to broaden our footprint with existing customers, unlock new opportunities at additional site and are actively pursuing opportunities to introduce more of our products to new customers.

Additionally, we are leveraging our proven solutions to address similar challenges for other applications. To support these initiatives, we have expanded our team by adding a new business leader for our semiconductor fabrication solutions business, as well as dedicated marketing and application development resources with deep industry knowledge. Although the near term macro environment remains soft, we are confident about our future. Our restructuring efforts have strengthened our ability to navigate industry cycles, enabling us to generate profits during downturns, while unlocking significant operating leverage as business scales. Looking forward, our long term growth drivers remain robust.

Investments in AI related infrastructure and supply chain diversification are expected to drive a recovery in the capital equipment demand. While expectations for EV growth have moderated, we still anticipate double digit expansion in this segment, which will continue to fuel demand for our silicon carbide related consumables. In the medium term, we expect our focus on growing our consumables parts and services offerings will provide higher margins and improve stability. Meanwhile, growing momentum in advanced packaging is providing a tailwind to capital equipment demand. Together, we believe these strategic initiatives and industry dynamics position us well for sustained growth and long term value creation in the years ahead.

With that, I’ll turn it over to Wade for further details on our financial results.

Wade Janke, Chief Financial Officer, Amtech Systems: Thank you, Bob. For fiscal Q1, net revenues increased 1% sequentially from last quarter and decreased 2% from a year ago. The sequential increase from last quarter is primarily due to increased sales of our diffusion and high temperature furnaces, partially offset by lower sales of our wafer cleaning equipment. The decrease from the prior year is primarily attributable to lower sales of the wafer cleaning equipment. In the first quarter of fiscal twenty twenty five, our GAAP gross margin decreased by 400,000 sequentially compared to last quarter due to a less favorable product mix.

GAAP gross margin increased by $1,100,000 compared to a year ago. This is driven by better margin profiles and cost saves despite lower revenue and due to intangible asset impairment last year by $800,000 Selling, general and administrative expenses decreased by $700,000 sequentially from last quarter and decreased $500,000 from a year ago. The decrease across both periods are primarily due to fixed cost reductions by our efforts. Research, development and engineering expenses decreased by $100,000 sequentially from last year and decreased by $700,000 from a year ago. The sequential decrease is primarily due to the timing of purchases related to specific R and D projects.

The decrease from a year ago is attributable to development efforts in our semiconductor Fabrication Solutions segment that did not reoccur. GAAP net income for the first quarter of fiscal twenty twenty five was $300,000 or $0.02 per share. This compares to GAAP net loss of 500,000 or $0.04 per share for the preceding quarter and GAAP net loss of $9,400,000 or $0.6 per share for the first quarter of fiscal twenty twenty four. Non GAAP net income for the first quarter of fiscal twenty twenty five was $800,000 or $0.06 per share. This compares to non GAAP net loss of $7,000 or $0 per share for the preceding quarter and non GAAP net loss of $600,000 or $0.04 per share for the first quarter of fiscal twenty twenty four.

Unrestricted cash and cash equivalents at 12/31/2024, was $13,200,000 compared to $11,100,000 at 09/30/2024, due to stronger accounts receivable collection and inventory management effort during the quarter. Now turning to our outlook. For the second fiscal quarter ending 03/31/2025, we expect revenues in the range of 21,000,000 million dollars to $23,000,000 with adjusted EBITDA nominally positive. Although the near term outlook for revenue and earnings remains challenging, we remain confident that our long term future prospects are strong for both our consumables and equipment serving advanced mobility and advanced packaging applications. We continue to optimize and reduce Amtech’s structural costs.

These steps should significantly improve results and enhance profitability through market cycles. Operating results can be significantly impacted positively or negatively by timing of orders, system shipments, logistical challenges and the financial results of semiconductor manufacturers. Additionally, semiconductor equipment industries can be cyclical and inherently impacted by changes in market demand. Actual results may differ materially in the weeks and months ahead. A portion of Amtech’s results is denominated in RMB, a Chinese currency.

The outlook provided is based on an assumed exchange rate between the United States dollar and the RMB. Changes in the value of the RMB related to the U. S. Dollar could cause actual results to differ from expectations. I will now turn the call over to the operator for questions.

Operator?

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Kevin Garrigan from Rosenblatt Securities. Your line is now open.

Kevin Garrigan, Analyst, Rosenblatt Securities: Yes. Hey, guys. Great speaking with you again and congrats on the results. So just the first one, you guys have done a great job with the restructuring plan. Are there still additional costs that you can kind of take out of the business?

And if so, what areas would those kind of be in?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Yes. Hi, Kevin. Yes. We’re continuing to work on things. There’s a lot in supply chain management

Kevin Garrigan, Analyst, Rosenblatt Securities: and that

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: we basically have in the pipeline right now where we’ve found and it takes a lot of work through because we do have some inventory in place, but we can through better sourcing practices, better supply chain management able to significantly reduce the input costs for some of the equipment in our business. I’d say the other area we’re looking at in terms of footprint utilization is where there’s opportunities to really free up some space. We’re trying to do that, reduce some of the fixed costs there as well. So there’s always there are always things our teams has been very good in terms of identifying these opportunities and converting them into real savings for us and we’ll continue to make that a focus in 2025.

Kevin Garrigan, Analyst, Rosenblatt Securities: Got it. Got it. Okay. That makes sense. And then second question, we’ve throughout this kind of earning season, we’ve heard mixed outlook so far, especially with regards to the automotive market.

So can you just kind of talk a little bit more about what you’re seeing in the market? I mean, has it gotten better or worse versus kind of three months ago?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Yes. I mean, our guidance, as we pointed out, the 21% to 23% reflects the fact that I think we’re continuing to see softness in that segment. And I’d say it’s particularly it’s been particularly weak in the equipment side of things that are automotive related. So I don’t you know, again, I don’t I haven’t heard anything suggesting that there’s a sharp recovery. A couple of the OEMs are reported that they think we’ve passed bottom.

A couple are still saying things are very weak. So, we’re assuming things will stay soft. And I did maybe a little bit of color on our growth initiatives, kind of the philosophy we’ve operated on, the focus over the past year frankly has been on improving our cost structure, operating leverage. And now the pivot is really I’m accustomed to you control your own destiny on growth as well as costs. And we are starting to resource efforts to really broaden what we do in the marketplace in these markets, so that the hope and the approach we’re taking is really eventually you get market recovery, but we really want to drive organic growth that’s beyond just market recovery.

And I think that’s really our focus right now is get a little bit more control over our own destiny and destiny and the markets are cyclical, they’ll come back, but in the meantime there’s work we can do to improve revenue.

Kevin Garrigan, Analyst, Rosenblatt Securities: Okay. Yes, that answers your question. Yes, yes, it does. Thank you. And then just as my final question, Bob, you had mentioned that you’re seeing more activity in the advanced packaging space.

Can you just kind of give us a little more color on what you’re seeing in that area? And as AI kind of moves from training to inference and more towards the edge, where companies are looking for more efficient chips, do you guys expect to see stronger growth from this trend?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Yes. Let me give you a little bit of the we talked about the past couple of quarters that we had been seeing strengthening in the advanced packaging area. And our customer base, generally, it’s the OSATs in a lot of cases. So it’s the guys who are packaging the chipsets for the AI data centers. But I do believe we’re going to start to see proliferation of more hardware out there to support AI on the edge.

And I think they’ll drive more volume, which should bode well for the advanced packaging equipment side of things. So it’s been a couple of quarters where we’ve seen some meaningful strengthening versus where we were sitting in 2024 for our equipment. And it is the players we’re dealing with are the ones who are have been successful in the industry.

Kevin Garrigan, Analyst, Rosenblatt Securities: Okay, perfect. I appreciate the color. Thanks guys.

Wade Janke, Chief Financial Officer, Amtech Systems: All right. Thanks Kevin.

Conference Operator: There are no further questions at this time. I will now turn the call back to Bob Jagiel. Please continue.

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Well, thank you for joining our conference call today, and we look forward to updating you on the progress we’re making in the months to come. Have a good afternoon, good evening.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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