ASYS - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to the Amtech Systems' First Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

I would now like to turn the conference over to Lisa Gibbs, Chief Financial Officer. ma'am. ahead, go Please

Lisa Gibbs

Executive thank President. fiscal joining call. year call Hass, Whang, on and Executive our Systems' and Officer; With for first the Robert Amtech's J.S. are quarter XXXX Executive today Michael you afternoon, Whang, us Chief Vice for our Amtech me Chairman; Good results conference

Company's XXXX. release will be Today, Amtech for results earnings financial amtechsystems.com. the first on That the website released its quarter at of fiscal posted

forward-looking could will date, make guarantee from to differ such cause could in volatility competitors; used Commission plans. technologies and worldwide economic markets the of in based a forward-looking no During the the and sanctions; effect conditions, our performance, statements today's of such overall us materially this conditions, are These Securities differ information All from of including not products; obligation the call, political in by those demand allocation current changing and actual statements and to market the available statements materially trade including customers acceptance are Among and in Other for XX-Q. our are management Forms our of filings, forward-looking the changes effect Exchange detailed risks; statements. results which actual are risk any expectations. on statements. credit market assume forward-looking to as results future update and factors important including we capital our factors XX-K and equity change and and our and the Form

our Hass, to Robert? turn President. I the will now over Vice Robert call Executive

Robert Hass

sale Group I B.V. our for Tempress we on to foundation interest to XXXX, some would in to foundation additional why shares XX, was the an January of the shareholders. announced On the best foundation. and Lisa. sale structure and you, the the provide Amtech of details like our independent of Holding Tempress Thank

created and Dutch foundation governed an and benefit stand-alone the legal entity by a an of partners no for employees, entity independent members. of formed shareholders, suppliers restructuring The The or customers is law Continuiteit independent with is Tempress, foundation Stichting Amtech. and is expertise the with Board Foundation, under sole The with affiliation no Tempress.

closing of interest the has involvement forth loan control receive the and or the or Amtech profits future the Tempress, further occurrence Foundation than the Tempress with no to Foundation, no with longer sale agreement any Effective repayments term over and of no in limited of from of right or pursuant other the in financial Tempress. has connection certain the receive with and set covenants Foundation, the loan information the events upon losses to

our stop to $XX were and over its in losses. objectives resources to million to operations, our dedicate strategy power solar of and solar the without the our semiconductor selling Our continuing distraction internal which in resulting from Tempress alone, XXXX the were losses operations

unfavorable to As who in the And most sales terms potential cash infusion that went process large from us emerged an through stated a year. and financial as buyers a were we independent that the one we adviser with spanned nearly parties press offered release, Amtech. required robust

the or where We it preparation to of process these in attempt, go independent for ourselves restructuring another Amtech. options, along restructure and shares sales which it it wind independent foundation evaluated included an and keeping with Tempress offers down sales our other can selling through Tempress

the maintaining losses, future. required all cash, of infusion while the continuation Keeping terms of the the ongoing Tempress whether resulting management's the more have it could in acceptable of sold uncertainty and distraction be would of on burden more in

we would have a be restructuring for cumulative significant objectives. uncertainty. winding and obligations losses the under or than the continued could neither still achieve down basis, to costly which, what extremely Dutch retaining Thus, quarter, employees and customers Tempress, due our down recorded down suppliers possibly we required higher to on law. and sale Winding or both wind time-consuming be Tempress scenarios, In Tempress restructuring would would have and to severance of this during while

working with closely entity Foundation Dutch Foundation In we a under stand-alone our law examined legal the incorporated the incorporation. a filing of is advisers, The option. Dutch of through deed

our to foundation management the prospective its terms best a Given the to option strategy. and offered nominal for that and amount effectively deliberation, Amtech semiconductor power and considerable efficiently our business solar unfavorable Tempress Tempress exit sell the effort Board on by focus review and an during buyers independent almost after and concluded was for to year-long selling

a Tempress and first sale. $X.X and $XXX,XXX, restructure The position for an customer in and the loan primarily week, agreement cash repaid orders to This the provides working loan met the it necessary eventual milestone loan balance The to Tempress million. down with on Tempress' going capital give remain concern to time fulfill is Foundation deposits. the balance to Tempress the sheet bringing

our objectives allows focus and in of the Tempress. XXX% of and semiconductor. team Amtech, have Foundation and interest in business we for Amtech's on the continuation customers power Tempress' in to opportunities this sale Thus, are sale Foundation the of the ahead us sort best the of believe the accomplishes now involvement and that vendors employees, shareholders. our management is for any Board no of allows Directors further to our The benefit

Chairman. the turn now call will over to J.S. Whang, I J.S.? our Executive

Jong Whang

of our you, the with Robert. on future look opportunities our decided Officer Executive solar the Whang, Michael our today. to right In business for Chief and Board is you to Officer, present XXX% to time as Chief is Amtech. promote behind We has Thank previously it Thank they focused the now Operating call the business line semiconductor that, that joining us.

been serve. Michael strategic our has been divisions, with has and and the ongoing successes. customers has has of their to in forward roadmap our growth discussions businesses overseeing of semiconductor worked U.S. developing plan, silicon instrumental future our knowledge and has our He in-depth leadership power silicon semiconductor we and semiconductor carbide markets regarding carbide needs with power side-by-side semiconductor

XX of As spoken to Robert time. the you the announced the Robert with I look us. In retirement the Michael Chairman, Company. Amtech Executive front for who entire the opportunities best over in also on I working his with contributed retirement. very January press we with years And the the capitalize release, to of Amtech Hass, much to we in speak of forward him many the over XX have as wish his team growth

the call Michael I our Chief Michael? Executive will Whang, turn now Officer. to

Michael Whang

J.S. Thank you,

With semiconductor businesses they carbide and the our now on can our of diligent and we attention divestiture, completion silicon growth solar opportunities present. and our full focus the

distinguished technologies, dedicated talented employees products, great brands, service capabilities. and and excellent well-recognized role have We

We have customer profiles. leaders market growth a base diverse global of long-term with attractive

We exciting on a very are path.

We organic will areas sustain acquisitions We are overall market. that new product focused evaluate strategic believe to upon look technology semi drive our to continue expand we to strengths build development on and our product outgrow to in and growth. portfolios and the

We continuous our are improvement and expansion, people, in technologies management diligently focused on systems. invest our as our we capacity

While industry. pleased to look our to the we exceeded that are growth XXXX performance in half return first quarter our the of we solid expectations, second for continue to

have results in very We value-enhancing strong improving to deliver are environment. operating an that platforms confident we

markets, to semi profitable of or selective well supports consistently back-end solid our capabilities. all is product through product end worldwide our development diversified portfolio highly markets as base BTU grow We many with touches deeper business expand key by customer that to penetration acquisitions and as look a and a geographies. advance

ending product We In never Scrub. XXXX, Aqua November focus have featured on development. BTU

APEX flux at this deal Our the a in again, with at more and trade show. in trade interest in to strong management just a patent-pending San efficient week its technology show Diego Munich, way. There was in capabilities

Aqua sonar solution. In addition oven, Scrub, Diego, in a the reflow team to vacuum low a San voice reflow featured

in our leader XXX-millimeter furnaces new successful chips for for further top-tier emerging furnace XXX-millimeter diffusion than more tubes significant highly shipped diffusion to our power HTR XXX-millimeter furnace HTR XXX-millimeter the Bruce we in announce also diffusion proven received clustered furnace power full the worldwide. Asia. pleased and HTR increased interest semi global strategy customer installed second customer. our order recent first its in am is Bruce has semi I This from another and In solution QX, power solution. XXX order and validates to clustered horizontal a a

PR to Hoffman. on Moving

with good for several capability a in anticipated us early much This PR to in uptick forward. positions move leading a marketplace. Hoffman and new going seeking facility productivity capacity a facility new our added brand as of the indicator semi dramatically volumes, activities, markets years spring. is have well a premier We substrate in for higher and strengthening are polishing market is in which quoting we consumable an leader,

are well chips grow growing Plus, The and size SiC to the aggressively the as is intensifies. participate next application. we years, advanced carbide silicon for pushing power is in demand market device substrate several for to towards significantly over world expected this positioned next-gen

for have We of requests to engineers ready strong high-value unique team a solutions. customers' to respond our

I the power in am our strategy. pivot changes towards semi as new investments we with excited people our and and recent technology

to We very our are forward before you the forward ready opportunities updating are look for us. much on that progress. I

happening to in coronavirus the Lastly, I want what's touch in upon China.

monitoring wellbeing partners. First, health our we and the are of and employees

quite difficult fiscal us situation, to are QX we navigating for our forecast very making Second, a dynamic results. it

update situation our return As down range outlook, you. to release, causes we'll operations in in to and account slow provide you saw changes our revenue for normal we range the broadened an a If the then press that to took material to mid-February.

I turn over our it first financial quarter now And review to Lisa to results.

Lisa Gibbs

QX our you, preceding new to to in XXXX. increase and fiscal diffusion quarter of from sequential contributed quarter of which decreased XXX-millimeter XXXX semiconductor the Semiconductor slightly furnace revenue. revenues customer, XX% the Net in Thank the to power includes shipment fiscal a Michael. first top-tier compared increased revenue the

diffusion shipments year revenue compared due to sequentially lower to carbide/LED the was due decreased prior quarter. year Silicon and furnace primarily to prior primarily shipments. to quarter machine the lower decreased revenue relatively compared Semiconductor flat

furnace adjusted of customer months. was XXXX, our a orders. decrease XXXX, our ship not a is to $XX.X within XX, is replaced of due with at to XX, December to immediately new million orders decrease are At that September includes shipments diffusion from next RXD. which total primarily backlog $XX.X shipments The backlog and that expected exclude other were XX HCR the XXX-millimeter Backlog million,

Gross higher-margin margin the due sequential primarily first to to due year XXXX quarter, XXXX. product the mix while a product fiscal fiscal fourth a increased mix, primarily to of quarter favorable basis the prior in in of decreasing on compared a quarter

administrative related legal decreased general $X.X to expense, XXXX the in in expenses our the first $X.X primarily the due to fiscal of Sequentially, in and XXXX. million $X.X to quarter million SG&A higher by million preceding of or compared fees Selling, divestitures. employee-related offset quarter partially fiscal lower was quarter solar and SG&A, first

and CEO, quarter lower in the the year other to including the divestitures. year sales with expenses departure our offset furnace SG&A our to prior relating prior relating and diffusion to quarter costs lower decreased partially former period, the on current by legal compared commissions solar of legal increased

tax income The our $XXX,XXX in We our for provision primarily foreign U.S. both a $XX,XXX income to discontinued quarter for XXXX at the XXXX. taxes represents of of able expense. compared due quarter first the benefit XXXX provision offset the first the fiscal from taxes operations jurisdictions. Looking received We fiscal to federal for continuing of of tax had fiscal and were sale RXD. with in

the of share compared a million. $X in or or of of tax was per our recognized RXD, is million XXXX $X.XX quarter fiscal income quarter. This continuing for sale to for of quarter share million pretax share. operations loss from $X.XX per of the of net the XXXX, of first million We per Loss automation $X.X the from or $X.X division, $X.XX preceding $X.X first fiscal income an

XXXX, to XX, continuing million Unrestricted operations Turning $XX equivalents at at cash December our compared at were XX, cash. XXXX. million to and September cash $XX.X

States, XXXX, XX, outside approximately our cash held December in continuing at our of cash United China. operations unrestricted mostly of As equivalents was and XX% the

Last capital discussed allocation plan. our quarter, I

Our expansion. and teams development, with work are systems at internal hard IT investments, product capacity our

growth for We acquisition we allocation our sound will our have are value that believe Board repurchase capital opportunities. pursuing share Amtech renewed a shareholders. our drive and plan. And for create We of plan Directors X, on profitable February

outlook. to our turning Now

want we the that Michael caution do to have second indicated, results. an impact is on As coronavirus expected investors our to quarter

coronavirus China's Our and government Lunar outlook X to Year New the February enterprises outbreak. until due XX closed holiday reflects by announcement the extend the to keep January

for also required builds time supply and believe employees to an work outlook Our the chain normal levels. be and estimated resume will we production

than our account response materially the not normal outlook. for taken returning results by does to in cause measures the further be lower to delay The schedule, health outlook any government the that crisis operating businesses could future could to Chinese which from a

Lastly, Chinese seasonality QX, Year. fiscal that the occurs outlook reflects some New historical the in to softness our and attributable

in XX, expected the XXXX, XXXX, ending of margin to quarter the in negative. to for ending be fiscal to XX% are upper range $XX March Gross quarter, $XX revenues quarter range expected the be million operating margin our second million. March For XX, to is XXs the with

fiscal on loss recognition Additionally, which foreign in million recorded expect QX, the in the losses. of we record divestiture previously million, the range $XX.X of million is accumulated Tempress $XX $X.X to pretax of to a currency translation of approximately

The total balances to not expected loss have from effect operations. on pretax cash our material is continuing a our

expect tax inherently future relating to semiconductor cyclical by years. The in carried over benefit loss, industries to and impacted also recognize demand. which significant to can be a We changes can equipment market this be

this and by exchange differ manufacturers. results from on press and expectations. timing of the results outlook currency. States in results Changes the Amtech's an positively between shipments relation provided the impacted the or the a to Additionally, portion orders, of States in is United A rate Chinese operating based dollar could financial release RMB, The be significantly value RMB actual results are assumed semiconductor in cause system dollar negatively RMB. to in United of of can the denominated

to over questions. call the Operator? turn let's operator Now the for

Operator

Thank you.

now And Partners. Craig come Irwin will Instructions] the will our question begin session. first from with [Operator Capital Please ROTH ahead. go We question-and-answer

Craig Irwin

and for questions. Hi, thanks my good evening, taking

the you factors you Hoffman the So little down did Can there? business of to in number there new of that consumables know XXXX. side? points strategic decision But for other the your the increase do visibility of that and make see a a on that sales in as commitment? are sort space. few move describe cloud equipment you decision what drivers a the there to And as to increased we runway bit. visibility last in look external primary of out I What see the as both you Hoffman, months your diversification are any supported maybe the

Michael Whang

into Hi drivers call. forward Craig, Thanks customer of XXXX, Mike. base. for the your we this then significant see later look still and growth year, part from is we Hoffman's also When this

that capacity they SiC manufacturers, all If the through large And expansions. are we a are all experiencing you today. headwinds few leading quite very same follow wafer facing them also planned running have of or considerable the

large some these are CapEx tied to in the So we of sense, expansion players.

long-term However, been silicon subsized. solar, are demand we're our wafers. there. this demand I'm very forward-looking still in carbide applications long very felt There bullish devices, on has This real the it, prospects. a for is time that The for future unlike I a heavily which excited. excitement was

Craig Irwin

good hear. really That's Okay. to

silicon that single-digit the over fabs diffusion be describe and the number, the for see your is MOSFETs then for – carbide? potentially major that a So will given process semiconductors versus next opportunity you conventional How serving five for power Can a expectation devices hopefully. built silicon do look in small content there's IGBTs. the world the yes, is three between And silicon demand still short that semiconductor number, greater typical carbide what still really at us single-digit we there for plant? silicon-based and maybe should you potential

Michael Whang

in carbide furnace now. devices, currently that want So no our silicon terms have say of to clear. we I fusion make with right

to power asking that customers economics quotes to least, it of move trend XX-inch. current either, Tier the chips, for into a are The ICs, budgetary the and has more However, power investigating manufacturing. silicon-based of more Infineon, and just power are growing value our there. move XX-inch chip do see at we economics The to X-inch shown and very also or general for from leader, X

dependent capacity and that on is their of all expansion manufacturers the carbide, wafer for SiC the substrates. silicon For

believe, we're with where towards, long going preparing And and And as executing, expected execute, that's the are next right we end we the cycle working meet We're year. we so some their now stand we're new this of ourselves facility. on new to as CapEx that products. is we

Craig Irwin

last you restructuring. cash, you the your give completed million take, may? now Excellent. investment nice if then allows chest is you've It question, future. products mode war you to organically? be Your I look that $XX supplement could new more acquisitive Or invest you an towards be Would competitors the to products, a acquire and where do to likely Excellent. in technologies for in that consider initiatives business And in adjacent Amtech portfolio? existing or new potentially pretty or adjacent

Michael Whang

of going be Craig, So both. combination that's a to

peers. and be catch-up our We our I operations. remind And years, acquisition we Amtech's either that recently standpoint, have our several, will also looking that growth. everyone DNA. acquisitions Also, and are been when to constantly gone focus we to make and We've in have with we or organic and chain value we've semi adjacent. at within very neglected investments we on in for acquisitions have U.S. direct now solar well from successful. And through an opportunities, fit you been competitive many

Craig Irwin

to That's the Excellent. and Well, solid we execution look hear. continue forward keep up progress. to good

Michael Whang

Thanks, Craig.

Lisa Gibbs

Craig. you, Thank

Operator

Our next ahead. question of Jeff Cowen Osborne will come Please from Company. go and

Jeffrey Osborne

good of guys. directly of headcount revenue staffing What corona? exposed as And I level-set there questions percentage in had formulated and But as in could the most total? then you mind. or the is the terms either us of asked indirectly a Hey, of afternoon, on guidance? your China Craig that sort you just

Michael Whang

I'll that, to So try answer Jeff.

XXX So provides oven factory XXX majority we to Shanghai employees Shanghai reflow in have for BTU. revenue. the our our approximately of

now. never was the vaguely remember, only back a outbreak uncertainty how I XXXX. is And this. great now faced The cope there in don't unfortunately, HXNX right So with I We've remember of amount that that. we thing

partners what eye an mentioned, waters. itching They're XX. we're to right is health Thankfully, and will and get in good all of the February work. Outside just keeping operations any – back are unchartered out expectation our through Lisa for condition. to after in start The changes. of we resuming navigating now So we're good or employees our

Lisa Gibbs

Yes, on Monday.

looked we'll could we just than we a material watch update wide better to as at impact and range number Mike provide. And end, hope it Jeff, So outlook. there's for our February revenue more if how mentioned, anticipate, models this productive of and closely. certainly is to and different a And we our a

We will so. do

Jeffrey Osborne

terms your Maybe sense, visibility XXx, other of just of mentioned, up understandable. expansion around Xx, questions cases some have customers completely in on in Hoffman. PR that expansions And Michael, multiyear Craig's of Makes of capacity. you XXx one the following of

into give – this be mentioned quoting with every Can one-off a you months cycle? just three Is of intent for activity to them have us to some insight six Hoffman. PR around conversations customers the your picked you relationship has and the up your purchasing

down avoid there here's Or a and iterative the at of sense a I'm multiple coming a sort of with if polishing process how get plan trying to of number years one-off master of over strategic all? process, we'll is that any are of to need just part – as tools negotiations. sitting over up multiple you

Michael Whang

had been, We prepared." So giving other we one-liners of number terms our like expansion. in right? leading with for unfortunately expansion, customers of nature exact and invested "be This capacity than consumables our is They've and on heavily what just and in kind timing need, are machines. like of of future we've a their SiC the discussions us, coy

customers. follow we certain have for and find and different tell And we of a solution very across to then us with we go, they a where terms that path to them. provide them, competitive needs, aligning in they – each So they're

terms not timing liberty time there'll of closer now that, be on, say more. predict more I'm to outside exact and do But I discussions nature. As anything at right in of goes

Jeffrey Osborne

answer. SiC/LED follow-up better assume quotes Makes alluded what broader half from in that on today, the record when in is today on applications. that. May a the in historically the to sense. quarters you to of carbide one of lag has reasonable just there Hopefully, segment a silicon can with year visibility been? second you that. the semiconductor But Is be I delta you revenue of sort two would or quote

Michael Whang

be two will safely would lag. worth approximately is, it of quarters say I Yes.

Jeffrey Osborne

you. Okay, that's all I had. Thank

Lisa Gibbs

Jeff. Thanks, Okay.

Operator

question next come Mark Miller with The Company. Benchmark from our And go ahead. will Please

Mark Miller

you Just can quarter? and OpEx any if us wondering insights give about the benefit March tax in

Lisa Gibbs

fees quarter. have to think we'll still I that this legal some within continue

we on I terms So The our to jurisdictions, where will did continue U.S. to fairly would able will flat. quarter. OpEx offset income be in income situation, it like depend this tax to of expect generated is our remain we foreign but

Mark Miller

Okay. What was in December quarter? the cash flow operations from

Lisa Gibbs

pulling from looks that just Cash operations It $XXX,XXX. like right it flow in the negative quarter. was I'm now. December

Mark Miller

Was CapEx in quarter? the there any

Lisa Gibbs

is little There there, odds. the in bit a picking of some CapEx

Mark Miller

Thank you.

Lisa Gibbs

Okay. Thank you.

Operator

I over back Please go question-and-answer like would any turn Lisa remarks. our concludes to the ma'am. to ahead, This Gibbs session. for conference closing

Lisa Gibbs

your for for This interest time call. you Amtech. today your in Thank today's and concludes

Operator

you The Thank conference today's has now concluded. attending for presentation.

disconnect. now may You

Amtech Systems (ASYS) 6 Feb 202020 Q1 Earnings call transcript