Earnings call transcript: Amtech Systems Q2 2025 sees major earnings miss

Amtech Systems Inc. (NASDAQ:ASYS) reported a substantial earnings miss for Q2 FY2025, with an EPS of -$0.16, falling short of the forecasted $0.03. Revenue also fell below expectations at $15.6 million, compared to the anticipated $25.6 million. Following the earnings release, Amtech’s stock declined by 5.83% in after-hours trading, closing at $3.23. With a market capitalization of just $48.65 million, the company’s stock has shown significant volatility, as indicated by its beta of 1.53. InvestingPro analysis reveals 13 key factors affecting the company’s performance, including its current trading patterns and valuation metrics.

Key Takeaways

• Amtech’s Q2 revenue decreased 39% year-over-year.
• The company reported a GAAP net loss of $31.8 million.
• Strong demand for AI-related packaging equipment was noted.
• Cost-saving measures are expected to yield $11 million annually.
• The stock is trading near its 52-week low, reflecting investor concerns.

Company Performance

Amtech Systems experienced a challenging second quarter, with revenue declining by 39% compared to the same period last year, continuing a broader trend of revenue decline (-13.71% over the last twelve months). The company cited prolonged weakness in the mature node semiconductor market as a significant factor. Despite these challenges, Amtech highlighted strong demand for its advanced packaging equipment, particularly in AI applications, which could drive future growth. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 3.39, providing financial flexibility to pursue growth opportunities.

Financial Highlights

• Revenue: $15.6 million, down 39% year-over-year.
• GAAP net loss: $31.8 million or $2.23 per share.
• Non-GAAP net loss: $2.3 million or $0.16 per share.
• Adjusted EBITDA: -$1.4 million.

Earnings vs. Forecast

Amtech’s actual EPS of -$0.16 missed the forecast of $0.03 by $0.19. The revenue of $15.6 million was also below the expected $25.6 million, marking a significant shortfall. This earnings miss is one of the largest in recent quarters, reflecting the company’s ongoing challenges in the semiconductor market.

Market Reaction

Following the earnings announcement, Amtech’s stock dropped by 5.83% in after-hours trading, closing at $3.23. This decline places the stock near its 52-week low, indicating a bearish sentiment among investors. The aftermarket trading volume was moderate, suggesting cautious investor activity. InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels. For detailed valuation insights and access to the comprehensive Pro Research Report covering Amtech Systems and 1,400+ other US stocks, visit InvestingPro’s Most Undervalued Stocks list.

Outlook & Guidance

Looking ahead, Amtech expects Q3 FY2025 revenue to reach $16.9 million, with adjusted EBITDA anticipated to be nominally neutral. The company remains optimistic about its long-term prospects, driven by streamlined cost structures and strong AI infrastructure investments. The company’s gross profit margin stands at 37.12%, while maintaining a moderate debt level with a debt-to-equity ratio of 0.21, providing room for strategic investments in growth initiatives.

Executive Commentary

CEO Bob Daigle emphasized the strong demand for advanced packaging equipment, stating, "We are experiencing very strong demand for our advanced packaging equipment." CFO Wade Janke highlighted cost management efforts, saying, "We have proactively streamlined our cost structure and aligned our operations with market realities."

Risks and Challenges

• Continued weakness in the mature node semiconductor market.
• Impairment charges and inventory write-offs impacting financials.
• Tariff-related headwinds in the U.S. market.
• Potential supply chain disruptions affecting production.
• Competitive pressures within the semiconductor equipment industry.

Q&A

During the earnings call, analysts inquired about the benefits of U.S. manufacturing repatriation and the impact of tariffs on various business segments. Executives also detailed improvements in the margin profile and the AI-driven demand for advanced packaging equipment.

Full transcript - Amtech Systems Inc (ASYS) Q2 2025:

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

Erica Mannion, Investor Relations, Saphyr Investor Relations: Good afternoon, and thank you for joining us for Amtech Systems’ fiscal second quarter twenty twenty five conference call. With me today on the call 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 second 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’d like to remind everyone that the safe harbor 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 the demand for products, the effect of changing worldwide political and economic conditions, including trade sanctions, 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 ks and Forms 10 Q. Additionally, in today’s conference call, we will be referring to non GAAP financial measures as we discuss the fiscal second quarter financial results. You’ll find a reconciliation of these non GAAP measures to our actual GAAP results included in this press release today. I will now turn the call over to Amtech’s Chief Executive Officer, Bob Daigle.

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Thank you, Erica. Good afternoon and thank you for joining us today. As previously disclosed on April 9, revenue for the second fiscal quarter came in below our guidance range. This shortfall was primarily driven by a shipment delay in our Thermal Processing Solutions segment related to a customer dispute involving a previously canceled order. The situation resulted in a delay of a separate shipment valued at approximately 4,900,000.0 While the matter remains ongoing, we are in contact with the customer and continue to expect that the equipment will ship once the issue is resolved.

Outside of this dispute, during the second quarter, we began to see a broader softening in demand within the mature node semiconductor market, affecting both equipment and consumables. The softness contributed to the overall revenue shortfall, which in turn impacted profitability, resulting in an adjusted EBITDA loss of $1,400,000 for the quarter. While operating expenses were in line with expectations, the ongoing demand headwinds in select markets reinforced the importance of focusing on what we can control, namely driving operational efficiency and broadening our customer and application base. Expanding on the dynamics within our end markets, as we indicated last quarter, demand for the front end equipment and consumables tied to mature node applications, including industrial and automotive, remains weak. These trends are consistent with broader commentary from the semiconductor OEMs and reflects a sustained downturn in capital investment across these sectors.

Given the prolonged softness, we recorded an impairment charge of $22,900,000 and an inventory write off of $6,000,000 in the second fiscal quarter. The equipment product lines associated with the charges and write offs serve mature node and EV related applications. While disappointing, these actions were necessary to align our asset base with the capital equipment demand environment in these market segments. The charge is non cash in nature and has been excluded from our non GAAP financial results. Despite these near term challenges in the mature node market, we continue to be very encouraged by demand trends in back end semiconductor markets.

Orders for our advanced packaging equipment, particularly those supporting AI applications, remain very strong. Notably, in the second quarter, our bookings for this product line exceeded our total bookings for all of fiscal twenty twenty four. This momentum is being driven by secular investments in infrastructure and provides meaningful tailwinds for our advanced packaging equipment. As we look ahead, we are closely monitoring the evolving tariff and macroeconomic landscape. Orders for reflow equipment in The U.

S. During the quarter were weak due to high tariffs. However, tariff related headwinds were more than offset by strength in Asia for AI related advanced packaging equipment. We continue to invest market development initiatives, particularly within our Semiconductor Fabrication Solutions segment. Our focus is on expanding reoccurring revenue streams, including consumables, parts and services, which offer higher margins and more stable, less cyclical revenue.

We are working to grow our footprint with existing customers, capture share at additional sites, and introduce our products to new customers. In addition, we are leveraging our proven technologies to address similar challenges in adjacent applications. While these efforts will take time to contribute meaningfully to our top line, we believe they are fundamental to long term growth. In parallel, we continue to optimize our cost structure in response to the demand environment. During the third fiscal quarter, we executed additional site consolidations and workforce adjustments.

These efforts are expected to yield incremental EBITDA savings of $1,000,000 per quarter starting in the fourth fiscal quarter. Combined with the cost reduction actions we’ve already implemented, we are now anticipate total annualized savings of $11,000,000 on a run rate basis as we exit the fiscal year. Fortunately, we are navigating this dynamic environment from a position of financial strength. We ended the quarter with a solid cash position of 13,400,000 outstanding debt, providing us with the flexibility to continue to invest in our strategic initiatives. Looking forward, we remain optimistic about our long term outlook.

First, our streamlined cost structure positions us to benefit from strong operating leverage as market demand recovers. Over the past year, we have taken meaningful steps to reduce fixed costs, consolidate operations and improve manufacturing efficiency. These actions not only enhance our ability to generate positive EBITDA at lower revenue levels, but also allows us to scale profitably as demand returns. Second, investments in AI infrastructure continue to drive increased demand for advanced packaging. We are experiencing very strong demand for our advanced packaging equipment.

The strength in the second quarter bookings reinforces our belief that this trend is durable and continues to present a significant growth opportunity for our business. Finally, within our Semiconductor Fabrication Solutions segment, we are focusing on driving sustainable higher margin growth by expanding reoccurring revenue streams. Consumables, parts and services not only provide more predictable revenue, but also support deeper customer relationships and reduce exposure efforts to broaden our footprint with existing customers, expand into new sites and apply proven solutions to adjacent opportunities are expected to strengthen our long term competitive position and enhance our margin profile. While the near term environment remains dynamic, we are confident with the structural changes we’ve made over the past year, and we believe they position us well to navigate this cycle and capitalize on the growth opportunities ahead. With that, I’ll turn it over to Wade for further details on our financial results.

Thank you, Bob.

Wade Janke, Chief Financial Officer, Amtech Systems: For the fiscal second quarter of twenty twenty five, net revenue was $15,600,000 representing a decrease of 36% from fiscal Q1 and a decrease of 39% from the second quarter of fiscal twenty twenty four. The decrease in both periods is primarily due to a customer dispute that delayed shipment of a $4,900,000 order. In addition, we have had prolonged weakness in the mature node semiconductor market driving reduced sales for wafer cleaning equipment, diffusion and high temperature furnaces, partially offset by higher sales of advanced packaging solution. For Q2, the book to bill ratio was slightly above one, and we have worked through the majority of the lower margin legacy backlog, except for the delayed 4,900,000 order mentioned previously. The bookings in Q2 were significantly stronger with AI packaging equipment partially offsetting lower bookings in the high temp and belt furnace business.

Also, we have seen stabilization in the semiconductor fabrication solutions segment with a book to bill ratio slightly above one. GAAP gross profit decreased by $9,700,000 sequentially compared to last year and decreased by $8,800,000 compared to the same prior year period. The decrease across both periods is primarily due to lower sales volume and $6,000,000 in non cash inventory write downs during Q2 twenty twenty five, driven by sustained weak demand from mature node semiconductor customers. On a non GAAP basis, gross margin for the second quarter was 36% compared with 34% in the same prior year period, driven by fixed cost reductions and product mix. During the second quarter of fiscal twenty twenty five, we recorded $22,900,000 in impairment charges due to $15,300,000 in goodwill and $2,600,000 in intangible asset impairment charges in our Semiconductor Fabrication Solutions segment and $5,000,000 in goodwill impairment charges in our Thermal Processing Solutions segment.

The impairment charges were due primarily to recent events in our markets indicating that the current demand weakness is expected to last a prolonged period for the mature node semiconductor market. Selling, general and administrative expenses decreased by 900,000 sequentially from last year and decreased $1,100,000 compared to the same prior year period. The decrease across both periods is primarily due to fixed cost reductions attributed to actions we have taken and lower commissions from the lower sales volume we experienced. Research, development and engineering expenses decreased $44,000 sequentially from last quarter and decreased $100,000 compared to the same prior year period. The sequential decrease is due primarily to timing of purchases related to specific projects.

The decrease from prior year is attributable to development efforts in our Semiconductor Fabrication Solutions segment that did not recur. GAAP net loss for the second quarter of fiscal twenty twenty five was $31,800,000 or $2.23 per share. This compared to GAAP net income of $300,000 or $02 per share for the preceding quarter and GAAP net income of $1,000,000 or $07 per share for the second quarter of fiscal twenty twenty four. Non GAAP net loss for the second quarter of fiscal twenty twenty five was $2,300,000 or $0.16 per share. This compares to non GAAP net income of $800,000 or $06 per share for the preceding quarter and non GAAP net loss of $200,000 or $01 per share for the second quarter of fiscal twenty twenty four.

Our adjusted EBITDA was negative $1,400,000 for fiscal Q2 twenty twenty five compared to $1,900,000 for the preceding quarter and $800,000 for the second quarter of fiscal twenty twenty four. Unrestricted cash and cash equivalents at 03/31/2025, were $13,400,000 compared to $11,100,000 at 09/30/2024, due primarily to strong accounts receivable collections from customers. Now turning to our outlook. For the third quarter ending 06/30/2025, we expect revenues in the range of $16,900,000 with adjusted EBITDA nominally neutral. Although the near term revenue and earnings outlook remains challenging, I remain confident in the disciplined financial strategy we’ve employed throughout this downturn.

We have proactively streamlined our cost structure and aligned our operations with market realities, resulting in significant annualized savings. In our U. S. Operations, we have completed our strategy for a semi fabless operating model. This includes additional headcount reductions, contract manufacturing, optimized resourcing, manufacturing footprint reduction, and we are pursuing opportunities to sublet.

Our strategic optimization efforts are expected to deliver an additional $1,000,000 per quarter in future cost reductions starting in Q4 of twenty twenty five. Our streamlined new cost structure will further enhance our ability to generate positive adjusted EBITDA. Once additional cost reductions are fully realized, we expect our adjusted EBITDA breakeven to be approximately $16,000,000 in revenue with a similar product mix. We ended the quarter with $13,400,000 in cash, and our teams are maintaining a strong focus on cash generation. I believe these strategic measures will significantly strengthen our financial performance and enhance long term profitability varying market conditions.

Operating results can be significantly impacted positively or negatively by the timing of orders, systems, 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 renminbi, 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 renminbi in relation to the United States 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. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Your first question comes from the line of Craig Irwin from ROTH Capital Partners.

Your line is now open.

Craig Irwin, Analyst, ROTH Capital Partners: Good evening and thank you for taking my questions. So I apologize if you handled this in the first couple of minutes of the call. So I missed juggling multiple calls tonight. Two key things at the top of my mind, really both related to tariffs. With the outlook for maybe a positive resolution on The U.

S.-China trade disputes, it seems that some of the business activity can normalize and your significant exposure to the Chinese market maybe looks like it’ll face a little bit less of a headwind. I was hoping you could comment a little bit about that. And then the flip side of this is The U. S. Obvious push for repatriation of manufacturing for us to make our own semiconductors.

Seems like it could set up a larger long term opportunity for you here, particularly in The United States. If you could maybe talk about how these major policy actions out of the White House could possibly benefit business activity for Amtech over the next couple of years.

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: All

Erica Mannion, Investor Relations, Saphyr Investor Relations: right, all right.

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Thanks for the questions, Greg. Yes, let me tackle the first part in tariffs. So basically in the front end of our business, so semiconductor fabrication solutions, we’re basically producing the well pretty much all those products are produced in The US for The US and our exports to China historically have been relatively small in that area. So even with the tariffs we didn’t see a tremendous amount of impact on the SFS business. In the case of the back end equipment where we’re producing our reflow equipment, again for advanced packaging and electronic assembly, Those products are manufactured in our Shanghai facility in China and that’s where we saw some basically very weak orders during the quarter as a result of the tariff situation.

So hopefully if tariffs get to some very reasonable level in the future, we should be able to pick up additional strength in The U. S. Markets. But fortunately, to be frank, what drives that reflow business is electronic packaging, basically advanced packaging as well as electronic assembly, which is primarily an Asian market. So even in that case where we saw a little bit of decline in orders in The US, we saw very strong demand in other parts of Asia.

To get to the second part of your question, yeah, I do believe, I hope Craig that we start to see some tailwinds associated with repatriating more manufacturing to The US and in that case, given the fact that especially at the front end, all our manufacturing is in The US today, we would expect to see some nice tailwinds associated with that. We’re also, I should mention, you know, trying to reduce our risk also in terms of in the future shipping to The US. You know, if it turns out that tariffs out of China stay at a pretty elevated level relative to other parts of the world, We’re looking, I don’t think it’s practical for us to manufacture some of this back end equipment in The US, but it is very feasible for us to manufacture in other parts of Asia, for example, or potentially Mexico where we would expect tariffs hopefully land in a much slower place. So I think over time, I do think it’s going to be a net net positive. I think in the near term just because of the structure of our business, it really hasn’t been that negative for us, frankly, to deal with the tariff situation, assuming the uncertainty doesn’t create bigger headwinds in the economy, of course.

Craig Irwin, Analyst, ROTH Capital Partners: Understood. Thank you for that. So my next question again is very much a big picture question. You know, lot of investors have come to and been interested in learning more about Amtech for your involvement in the silicon carbide power semiconductor industry. And people look at your R and D spending and just a few million dollars and often overlook the significant technology contribution that you’ve made to your customers.

Can you maybe talk a little bit about some of the programs that are not front center for investors like now, right now like diamond wafers? I know that you’ve done work there with all the leading diamond wafer producers and some of these other sort of cutting edge technologies that could come to market in the next handful of years. How your customers lean on you as an expert in materials processing and polishing? And how important is this to the basic structure of the industry over the next many years?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Yeah, I think my sense Craig, and this is my opinion, what you’re seeing in the advanced packaging area and the requirements, for example, the GPUs, basically the AI GPUs, is the thermal management challenges and the packaging, the density challenges for advanced packaging are basically we think are going to drive the industry towards more of the some of the more traditional semiconductor fabrication process like chemical mechanical planarization, which is one of our key technology areas. So I believe that we’re going to see basically the addressable market for some of the areas we’ve been playing in terms of CMP really expand to the packaging area as well, where again, type of business we’re in, volumes matter, size of basically the square inches or square millimeters of substrate matters. So I think in some ways if we start to see broader utilization of some of these technologies and advanced packaging, that could be a very strong secular driver, I think, for the industry. What we’re doing, we obviously have a strong presence in areas like, you know, example, you referenced it earlier, Craig. You know, we’re by far the, you know, we’re the technology leader, market leader for providing a lot of the templates, some of the processing consumables that are used for chemical mechanical planarization.

But what we’ve been doing more recently is really leveraging the fact that we can help customers using our foundry service. So we have our CMP foundry service that was part of our, you know, the Intrepix operation, and we’re pretty actively engaged with customers who are trying to solve leading edge problems, which we think, you know, and again, it’s a medium longer term play, but we think bodes well for generating some new growth drivers that are beyond, you know, we’ve typically played more in this mature node and I’d say the silicon carbide world. We’re looking to frankly to try to see if we can play more in the emerging area of advanced packaging with this type of technology.

Craig Irwin, Analyst, ROTH Capital Partners: Well, that absolutely makes sense. Thank you for taking my questions and congratulations on the continued gross margin strength. Shows you guys are managing things tight and we like that.

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Well, thank you,

Conference Operator: Your next question comes from the line of Mark Miller from Benchmark Company. Your line is now open.

Mark Miller, Analyst, Benchmark Company: Thank you for the question. You mentioned during your remarks that you basically worked through your lower margin backlog. I’m just wondering if you could give us some insight or some color about the current profile, the margin profile of your existing backlog. Is that above what we’ve been seeing recently?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Yes, absolutely. Everything as we’ve pointed out before, a lot of that legacy backlog, some of which went back a couple of years frankly, had less than stellar margins well below our corporate average. And, you know, we’re in the mode now where things are booking with margin profiles that are, you know, kind of near the historic levels, frankly. So I do think as we see some additional volume and are able to leverage, our fixed cost structure, which we’ve obviously brought down quite a bit, that we should start to see some meaningful margin accretion as well, gross margin and at the EBITDA line. We just need the volume right now, because we’ve done an awful lot on getting our cost efficiency in good place from a manufacturing standpoint.

The team’s done an outstanding job there. Migrating to the semi fabless model has basically put us in a much better position to scale with demand. And now that we’ve kind of weaned ourselves off a lot of this legacy, think we’re really well positioned. We just need to grow those volumes, Mark. And I think we should see some nice results.

Mark Miller, Analyst, Benchmark Company: Jay, you indicated that AI was driving strong demand for advanced packaging. Can you be specific about what products you’re seeing a strong demand for?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Yes. So we’re basically the primary supplier of the reflow equipment that’s used for advanced packaging at the major Taiwan and beyond in terms of AI packaging. So it’s primarily been on the equipment side, Mark, and primarily in our thermal process solutions business. If you look at that business, which is, you know, again primarily it’s equipment, but we do have a fairly substantial parts service business as well. But that is what’s driving that business right now.

Legacy, back to the legacy backlog, some of that equipment that, you know, the furnaces and both diffusion and for things like ceramic to metal bonds has been weak, but that’s been offset or is being offset by strong demand for advanced packaging.

Mark Miller, Analyst, Benchmark Company: Finally, just wanted to give us a feeling for the revenue from spares and service?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Yes. So we’re probably roughly speaking 25% or so of that segment would be parts service revenue.

Mark Miller, Analyst, Benchmark Company: Which service?

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: Thermal Process Solutions. And then right now on Semiconductor solutions, that’s primarily consumables parts and service today. The equipment component of that is really small now because of, again, the mature node fabricators are running at very high or very low utilization rates of their fabs. So until their capacity utilization goes up, don’t expect they’re going to be buying more equipment in that segment. So right now where we’re sitting with that business and as Wade mentioned, we’ve seen stabilization.

Book to bill was about one. That’s almost exclusively consumables parts service now.

Mark Miller, Analyst, Benchmark Company: Okay, so semi was basically all parts and services. All right, thank you very much.

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: All right, thank you Mark.

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

Bob Daigle, Chairman and Chief Executive Officer, Amtech Systems: All right. Well, thank you for your interest in Amtech and for joining our conference call today. We look forward to updating you on all of our progress in the months ahead. Thank you.

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

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