Q1 2025 Amtech Systems Inc Earnings Call
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Speaker Change: Good day and welcome to the Amtech systems fiscal first quarter 2025 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.
Speaker Change: Good afternoon, and thank you for joining us for Amtech Systems' fiscal first quarter 2025 conference call with me on the call today are Bob Daigle, Chairman and Chief Executive Officer, and Wade Yankee Chief Financial Officer.
Speaker Change: After close of market today Amtech released its financial results for the fiscal first quarter of 2025. The earnings release is posted on the company's website at Www Dot Amtech Systems' dot com in the investors section.
Speaker Change: Before we begin I would 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.
Speaker Change: Filings all of which are posted within the Investor section of our corporate website.
Speaker Change: The company assumes no obligation to update any such forward looking statements.
Speaker Change: You are cautioned not to place undue reliance on forward looking statements, which speak only as of today.
Speaker Change: Statements are not a guarantee of future performance and actual results could differ materially from current expectations.
Speaker Change: Among the important factors, which could cause actual results to differ materially from those in the forward looking statements or 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 sanctions the effect of overall market conditions.
Speaker Change: Including the equity and credit markets and market acceptance risks.
Speaker Change: I'm going to logistics supply chain and labor challenges and capital allocation plans.
Speaker Change: Other risk factors are detailed in our SEC filings, including our Form 10-K and forms 10-Q.
Speaker Change: Additionally, in today's conference call, we will be referring to non-GAAP financial measures as we discuss the fiscal first quarter results.
Speaker Change: You'll find a reconciliation of these non-GAAP measures to our actual GAAP results included in the press release issued today.
Speaker Change: Now I will turn the call over to Amtech, Chief Executive Officer, Bob Daigle.
Speaker Change: Okay.
Speaker Change: Oh, good good afternoon, and thank you for joining us today.
Speaker Change: I'm pleased to report that our first quarter results exceeded our guidance with revenue of $24 4 million and $1 $9 million and adjusted EBITDA.
Speaker Change: While revenue remained muted on a year over year basis due to continued softness in the markets we serve.
Speaker Change: Our profitability continued to improve with year over year, adjusted EBITDA, increasing by $1 $8 million.
Speaker Change: This performance underscores our ongoing focus on operational excellence and cost optimization.
Speaker Change: 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.
Speaker Change: These efforts are delivering tangible results.
Speaker Change: Our restructuring initiatives have yielded over $8 million in annualized cost savings to date, excluding one time costs and are expected to generate approximately $9 million in annualized savings by the end of the second fiscal quarter.
Speaker Change: The adoption of a semi fabless model for our capital equipment segment has further strengthened our operating leverage by enabling us to rightsize the organization and reduce fixed costs.
Speaker Change: This transition has positioned us well to efficiently support production with varying levels of market demand.
Speaker Change: Additionally over the past several quarters, we implemented pricing actions to offset inflationary pressures and enhance our product margin profile.
Speaker Change: By the end of the second quarter, we will have shipped the majority of the low price lower margin business in our backlog.
Speaker Change: Going forward, we'll remain vigilant and adjust pricing as necessary to preserve profitability.
Speaker Change: 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 <unk> equipment and leading edge applications, such as AI infrastructure has continued to strengthen.
Speaker Change: 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.
Speaker Change: To that end as we discussed last quarter, we have refined our business segments to provide greater clarity and focus.
Speaker Change: The semiconductor fabrication solutions business previous previously known as the materials and substrate segment includes PR Hoffman and idea of consumables and Traffics parts and services as well as some front end capital equipment used for semiconductor wafer and device fabrication.
Speaker Change: Meanwhile, the thermal process solutions business, formerly the semiconductor segment focuses on re flow equipment for advanced chip packaging and surface Mount Assembly applications as well as furnaces for power electronic device production and packaging.
Speaker Change: Okay.
Speaker Change: 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.
Speaker Change: These revenue streams, not only provide higher margins, but also deliver more predictable less cyclical revenue growth.
Speaker Change: To achieve this we are working to broaden our footprint with existing customers unlock new opportunities at additional sites 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.
Speaker Change: 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.
Speaker Change: Although the near term macro and.
Speaker Change: 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.
Speaker Change: Looking forward, our alarm 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.
Speaker Change: 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.
Speaker Change: In the medium term, we expect our focus on growing our consumables parts and services offerings will provide higher margins and improved stability means.
Speaker Change: Meanwhile, growing minute momentum in advanced packaging is providing a tailwind to capital equipment demand.
Speaker Change: Together, we believe these strategic initiatives and industry dynamics position us well for sustained growth.
Speaker Change: And long term value creation in the years ahead.
Speaker Change: With that I'll turn it over to Wade for further details on our financial results. Thank you Bob.
Wade Yankee: For fiscal Q1, net revenues increased 1% sequentially from last quarter and decreased 2% from a year ago.
Wade Yankee: 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.
Wade Yankee: The decrease from the prior year is primarily attributable to lower sales of the wafer cleaning equipment.
Wade Yankee: In the first quarter of fiscal 2025, our GAAP gross margin decreased by <unk> 4 million sequentially.
Wade Yankee: Impaired to last quarter due to a less favorable product mix gapped.
Wade Yankee: GAAP gross margin increased by $1 $1 million compared to a year ago and this is driven by better margin profiles in cost save despite lower revenue.
Wade Yankee: And due to intangible asset impairment last year by <unk> 8 million.
Wade Yankee: Selling general and administrative expenses decreased by <unk> 7 million sequentially from last quarter and decreased <unk> 5 million from a year ago.
Wade Yankee: The decrease across both periods are primarily due to fixed cost reductions by our efforts.
Wade Yankee: Research development and engineering expenses decreased by <unk> 1 million sequentially from last year and decreased by <unk> 7 million from a year ago.
Wade Yankee: The sequential decrease is primarily due to the timing of purchases related to specific R&D projects.
Wade Yankee: The decrease from a year ago is attributable to development efforts in our semiconductor fabrication solutions segment that did not re occur.
Wade Yankee: GAAP net income for the first quarter of fiscal 2025 was <unk> 3 million or two cents per share.
Wade Yankee: This compares to GAAP net loss of <unk> 5 million or four cents per share for the preceding quarter and GAAP net loss of $9 4 million or <unk> 60 per share for the first quarter of fiscal 2024.
Wade Yankee: non-GAAP net income for the first quarter of fiscal $2025 8 million or six cents per share.
Wade Yankee: This compares to non-GAAP net loss of 7000 or zero cents per share for the preceding quarter and non-GAAP net loss of <unk> 6 million or four cents per share for the first quarter of fiscal 2024.
Wade Yankee: Unrestricted cash and cash equivalents at December 31, 2024 was $13 2 million compared to 11.1 million at September 32024, due to stronger accounts receivable collection and inventory management efforts.
Wade Yankee: During the quarter.
Wade Yankee: Now turning to our outlook.
Wade Yankee: For the second fiscal quarter, ending March 31 2025.
Wade Yankee: We expect revenues in the range of 21 to 23 million with adjusted EBITDAR nominally positive.
Wade Yankee: 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 structural costs.
Wade Yankee: These steps should significantly improved results and enhance profitability through market cycles.
Wade Yankee: Operating results can be significantly impacted positively or negative lead by timing of orders system shipments logistical challenges and the financial results of semiconductor manufacturers additions.
Wade Yankee: Additionally, semiconductor equipment industries can be cyclical and inherently impacted by changes in market demand.
Wade Yankee: Actual results may differ materially in the weeks and months ahead.
Wade Yankee: A portion of Ametek's results is denominated in RMB, They Chinese currency.
Wade Yankee: The outlet provided is based on an assumed exchange rate between the United States dollar and the RMB.
Wade Yankee: Changes in the value of the RMB related to the U S dollar could cause actual results to differ from expectations.
Wade Yankee: I will now turn the call over to the operator for questions operator.
Wade Yankee: Thank you ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: So you have a question. Please press star followed by the number one on your Touchtone phone.
Speaker Change: You will hear a prompt that your hand, a certain race.
Speaker Change: Should you wish to decline from the polling process He express art.
Speaker Change: If you're using a speaker phone please lift the handset before pressing any keys for your firm.
Speaker Change: First question comes from the line of Kevin Garrigan from Rosenblatt Securities. Your line is now open.
Speaker Change: Yeah, Hey, I, Hey, guys, Chris speaking with you again and congrats on the on the results.
Speaker Change: So just the first one you know you guys have done a great job with the restructuring plan are there still additional cost. So you can kind of take out of the business and if so what areas would those kind of be in.
Yeah, Yeah, Hi, Kevin Thanks for joining the call. Yeah, you know, we're continuing to work on things Theres a lot in supply chain management and.
Speaker Change: We basically have in the pipeline right now where we're we've we've found and it takes a lot of work through because we do have some inventory in place, but that we can through better sourcing practices better supply chain.
Speaker Change: Management able to significantly reduce the input costs for some of the some of the equipment in our business I'd say the other area. We're looking at in terms of footprint utilization is.
Speaker Change: Where there's opportunities to to really free up some space. We are trying to do that reduce reduce some of the fixed costs there as well. So theres always there are always things our teams our teams.
Speaker Change: It has been very good in terms of identifying.
Speaker Change: Identifying these opportunities and converting them into real savings for us and we will continue to make that a focus in 2025.
Speaker Change: Got it got it okay that makes sense.
Speaker Change: And then second question.
Speaker Change: Throughout this kind of earnings season, we've heard mixed outlook, so far, especially with regards to the automotive market. So can you just kind of talk.
Speaker Change: A little bit more about what youre seeing in the market. I mean has it has it gotten better or worse versus kind of three months ago.
Yeah, I mean, our guidance as we pointed out the 'twenty one to 'twenty three reflects the fact that I think we're continuing to see softness in that segment and I'd say, it's particularly.
Speaker Change: Its been particular weak in the equipment side of things that our automotive related so I don't.
Speaker Change: You know again I eh.
Speaker Change: I don't I haven't heard anything suggesting that that that's a sharp recovery a couple of the Oems have reported that they think we've passed bottom a couple are still saying things are very weak.
Speaker Change: So we're assuming things will say stay soft and you know I did maybe a little bit of color on on or 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 <unk>.
Speaker Change: It is really.
Speaker Change: I'm accustomed to you control your own destiny on growth as well as cost.
Speaker Change: And we're starting to resource efforts to really broaden what we do in the marketplace and in in these markets. So that you know the hope and the approach. We're taking is really you know eventually you get market recovery, but we really want to drive organic growth that's beyond just <unk>.
Speaker Change: Recovery.
Speaker Change: And I think that that's really our focus right now is is.
Speaker Change: Get a little bit more control over our own destiny and the markets are cyclical they'll come back but in the meantime, there's work work, we can do to improve revenue.
Speaker Change: Okay.
Speaker Change: I understand your question.
Speaker Change: Yes, yes. It does thank you.
Speaker Change: And then just.
Speaker Change: My final question, Bob You had mentioned that you are seeing more activity in the advanced patch packaging space can you just kind of give us a little more color on what youre seeing in that area and.
Speaker Change: As as AI kind of moves from training to inference and more towards the edge where companies are looking for more efficient ships do you guys expect to see stronger growth from from this trend.
Speaker Change: Yeah, you know what let me give you a little bit of the you know we talked about the past couple of quarters that we had been seeing strengthening in the advanced packaging area and that our customer base.
Speaker Change: Generally it's it's the <unk> and a lot of cases, so it's the guys who are our packaging you know.
Speaker Change: The the chipsets for for the AI data centers, but I do believe we're going to we're going to start to see.
Speaker Change: You know.
Clifford: Clifford mission of more hardware out there to support AI on the edge and I and I think that will drive more volume, which should should bode well for the.
Speaker Change: The advanced packaging equipment side of things.
Speaker Change: So it's been a couple of quarters, where we've seen some meaningful strengthening versus where we were sitting in 2024 for our.
Speaker Change: Our equipment and it is and it is the the players were dealing with are the ones who are.
Speaker Change: Our had been successful in the industry.
Okay perfect I appreciate the color thanks, guys.
Kevin: Alright, Thanks, Kevin.
Kevin: As a reminder, if you have a question. Please press star one on your telephone keypad.
Speaker Change: There are no further questions at this time I will now turn the call back to Bob Daigle. Please continue.
Bob Daigle: 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.
Speaker Change: Have a good afternoon good evening.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].