ASYS - Earnings call transcript Q2 2022

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Erica Mannion

Good afternoon, and thank you for joining us for Amtech Systems' Fiscal Second Quarter 2022 Conference Call. With me on the call today are Michael Whang, Chief Executive Officer; Lisa Gibbs, Chief Financial Officer; and Paul Lancaster, Amtech's Vice President of Sales and Customer Service. After close of market today, Amtech released its financial results for the fiscal second quarter of 2022. 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 our webcast.

not to statements during subject all and and including, comments will call to of the contained our uncertainties, forward-looking those corporate within contain assumptions but section which of are be SEC the the made today risks in posted Some our to, Investors filings, of limited that are website. to statements. The forward-looking company such assumes update any no obligation

pandemic. important are of to and effect current not equity forward-looking risk Executive market of results effect and and market the plans; I to political worldwide COVID-XX statements now supply logistics, differ XX-Q. capital demand overall and on conditions, the cautioned for guarantee the competitors; its forward-looking labor conditions, undue statements, used today. call not the These differ Form credit the filings, sanctions; Chief Other trade and chain in only challenges; and allocation economic speak including changing risks; ongoing worldwide cause materially changes are including performance, markets and statements You in the of future technologies our reliance XX-K as Forms a the products; those which acceptance in factors are could the factors will turn Mike are company's by of the could and expectations. Whang, to SEC volatility over materially detailed including Officer. and in which results place actual actual Among customers from change from

Mike Whang

by for their team thanking like Erica, I start everyone extraordinary off would for else you, today. global us and Thank efforts. joining our to

stakeholders. increased know unparalleled are experience also through the families. want let employees several and of years. couple with of resiliency of commitment furthered all that to We have our has and our No our past Shanghai them all scale to their doubt, navigating our on I of challenges an the our been thoughts

have we strong. challenge will together We in as Stay prior this overcome storms.

Moving million, robust million, for year-over-year over revenue past products of demand another a year-over-year, Backlog second continued yet three of second up our X% $XX.X in a up XXXX. the strong record million, the XX% bookings representing the up $XX.X and in on, over of years. XXX% quarter with $XX.X quarter

As the second many aware, of the are throughout Shanghai a of area. government at the COVID you mandated quarter, end the Chinese lockdown

While our second which lockdown quarter given impact this has in our environment, operation impact an effect closed closure, our have the remained results. limited on overall third quarter robust will the manufacturing results, mandated on since had demand Shanghai in

packaging reopening. past revenues, submissions Our government producing has be quarters. into the limited notice Shanghai our advanced There mix the allowed key factory reopening. for been our represented approximately four before and factory over product on have and X, permitted upon have reopen, with the to cleared required support our that from May in several SMT our customers, we number such On products workers by and received depending steps we half being Chinese are we will of

to reopen approximately our factory weeks, next the in allowing today, with have of As the the XX% return. could to government XX% we few workforce of

the Chinese customers possibility We quickly take production market, to Despite growing the fiscal of larger staffing, both the demand Once uncertainty to last and due chain nature of our likely ramp Unfortunately, continue situation a returns closures the in are our closure, the to backlog. shipping limited capacity increase. the Shanghai strong. the of our of advantage shipments normal, facility to our numbers of to and and due the of timing and our reopens COVID disruptions to reopening chain remain QX factory reopening beyond suppliers, to in limitations and expect third local supply the fully if full will the this and customers extraordinary our quarter. supply out including we serve of from rolling of

of Our To strategic no orders. customers application understand letters larger that to our we are not canceled support date, alone and customers situation have in reopen. wrote customers this our

sizable In fact, new orders during we even continue closure. to receive the

these to beyond business we Paul and I and demand increased in accelerates, believe leverage opportunities strongly our with markets Looking leadership operating uncertainties, the value exposure call significant to current secular tailwinds, realize Paul? drive turn into end into our as details now select on to several markets. more near-term profitability growth model. our to we built creates the go will over shareholder

Paul Lancaster

to the on further In Expanding capacity for for million for products. applications. well continue SMT both the second booked as initiatives, interest Michael. in example, for demand we as strong $X.X advanced a order environment, you, see we quarter, Thank packaging advanced expansion the market packaging

one to and As context, buying for typically over in we quarter mentioned this prior last to the quarters. and was two our of demand fulfilled place level segment semiconductor cycles, backlog

lead and combination longer current backlog fiscal suppliers, the extending demand XXXX. With the from higher times of of is our second into our quarter

to second segment. segment bookings our XX%, driven products manufacturing to consumable on for strength In and improved as Moving material capacity. increase quarter, gross nearly in this saw to our margin XXX% we our customers the expand substrates year-over-year by and continue increasing

which seen to aligns commentary device we carbide wafer in have the rising consumable related market with output. broader market Within silicon demand, the increases specifically,

of long-awaited to multiyear While of silicon traditional continues early over driven energy, in ramp vehicles, silicon including awareness applications, increasing the carbide strengthen, of in renewable industrial wafer high-voltage manufacturing capacity, the demand communication benefits and electric by still industry applications.

in coming with newer manufacturing processes, market to increase and qualify looking end magnitude entrants With several including templates demand the specialized our products. to the sheer interest of continues in the market years, potential

executing the customers history in new capacity equipment, dialogue significant cost industry. wafer to products, a Related players market to consumable with of throughout Given and are our continue initial with discussions capital and in benefits our of long broadening ownership of have the existing we seeing of phases we the both expansions. potential good

across extending the However, component shortages times industry. are lead

established complementary capacity of said, timing manufacturing quoting equipment XX pace orders are which wafer given of for steps our may our to lead and for of the With months, expansion that products. currently limit up For as providers machine instance, excited in times market-leading product new existing come platforms completed mid-to expansion remain recently as the ever us front capacity to as machine line and focus. new to expand long-term consumables we position of investments, into in our opportunities

the by the difficult which encouraged are about across markets, we to lockdown, such served are predict. Shanghai we cautious While heightened market all our demand ongoing as uncertainties remain

our quarter, ongoing I'll management freight coupled to Lisa. availability, now the cost headwind call and and third Beyond increases this in over industry-wide constraints, with specific business turn inflation, require challenges vigilance. as and costs, impacting continued impact chain the supply such to labor

Lisa Gibbs

all of rates product fiscal a X% quarter Paul. in of quarter XX, shipments for revenues XXXX, quarter increase Selling, from the to margin XXXX, the or XXXX $X Net million December preceding prior you, XXXX, increased across fiscal of SG&A, provision the ended second cash for sequentially million Thank cash second $XX.X higher general $X.XX due share primarily increased per March compared the product quarter to and in repurchase is share were prior tax and Unrestricted This for in due attributable of with XXXX. the during million our Net the and million more Gross shares administrative, of United mix. to the primarily preceding and loss million compared strong $XX.X second or from million the increase sequential of and XX, million available of favorable expenses lines. a quarter XXXX. $X.X on share. for same year remains $X.X our $X.XX advanced the and our $X.X million shipments XXXX, quarter per year repurchases XXX,XXX quarter year XX% $X.X to was the same acquisition $X.X of increased higher expenses shipping first and from decreased sales, cash to from and current stock. compares XX% SG&A due and $X.X $X at packaging at equivalents of Intersurface of income by the primarily to million three quarter States. commissions sequentially equipment net driven shipping revenues due in the partially and XX, was to higher operating was increased million $X.X March expenses, $X.XX $X.X and period in of million million employee-related income Dynamics to added quarter second XXXX. of fiscal $X.X million income to used million higher period. in compared Operating March the income shipping our our operating per for million under the $X.X employee-related million the lower the net primarily $X.X the compared and sequential $X.X fiscal in We held prior $X.X by authorization. million on to Approximately of for expenses. offset year $X.X of costs, million fiscal and of SG&A our increased income or $X.X common basis months period. million XXXX logistics prior Income higher in

for with closing. headquarters we our for a subsidiary, the agreement their entered $XX.X the due which party the of in deposit on XXXX, to into with that BTU sale-leaseback a price $XXX,XXX sale is paid million, third agreement XX, at remainder was Turning X-K of sale Massachusetts. in non-refundable announced International, as The Billerica, a purchase April sale property and the

the to of of expect million a did inefficient. June leaseback rent in absolute needs Terms not execution $X.X premises. of and leaseback of was closing two-year year a for Billerica subject base a expected net in is an energy the triple building suit We close and our lease aged are The term. the to include to and per

operations. conduct building the suits that a another During will we better to eventually leaseback and our search relocate Billerica period,

a limitation. in a to million expect third will $XX we our an XXXX, of to operating this from fiscal on Assuming $XX tax. transaction XX% ending We recognize we of utilize tax to federal be net XX, perspective, our able June believe June to a quarter losses net approximately subject closing, million gain

net and approximately the transaction, very pleased real cash we take million after market of to estate this Additionally, settling are related expenses. sales capital advantage to a our mortgage $XX of unlock million inflow to business. With $XX strong in we expect valuable a outstanding

growth. at past, revenue operations organic our have objective expand stated through same an we to time, have grow the we and while in As pursuing strategic acquisitions the our

enhanced and generated to drive our financial will and creation other transaction, allocation priorities, continue Directors for including the M&A, flexibility opportunities evaluate various by Board capital of long-term this value shareholders. management With will our that operational

of out which our mix Now depending over this ramp factory outlook. shutdowns, in XX, few to approximately the our uncertainty the Therefore, are assuming through to revenues, reopen represented turning product Due COVID outlook Shanghai, on local on we quarters. surrounding very past government's shipments June Shanghai half policies assumes XXXX. the has a to slow our four

from transaction, delays recognized factory the close and differ China. outlook from months expected For is quarter margin June. the be ongoing $XX June Shanghai gain ending third reflects upper XX, our quarter, revenues margin. in to Actual million. materially results June XXXX, be excludes with the expected leaseback for the related are ahead. the million our expected ship ending of in that will and logistical may outlook range range XX, to sale the weeks XXXX, of fiscal company's quarter This The operating is the for Gross to which good closure and be to XX% the anticipated negative to in the in and $XX impacts

changes orders, results Chinese increasing the dollar the or system States manufacturers. the by Additionally, The a rate cyclical impacted Operating be on based differ relation is costs positively from equipment provided shipping demand. results portion results the and impacted Amtech's inherently market expectations. A could actual of dollar timing to logistical by is can the in and the results RMB. the RMBs, Changes semiconductor the shipments, currency. in RMB value financial exchange of in cause to semiconductor industries between of and an can in outlook States assumed denominated negatively be significantly and United of United

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

Operator

with Irwin ROTH first Instructions] Partners. comes question Our Capital today Craig [Operator from

Andrew Scutt

for A a is Craig. here. This bit on Andrew two-parter of

strong quarter the where in had margins to. guided gross of really you guys You ahead

of supply provide So any little through have issues, business? end That's kind taken all line each talk of can me. to be bit to sourcing combat puts the a you out color And the more guys products. on and chain whether shipping initiatives secondly, you it or takes for in

Operator

Please open. is [Technical line your response. again, And your ahead with go Difficulty]

Lisa Gibbs

was ROTH, answering when in there? middle of got the Are we Andrew from you off. your I I question think still cut

Andrew Scutt

I am.

Lisa Gibbs

and profile, from our that about bit. It area, performance. question big attributable performance quite saw I very segment substrates product strong to margin some margin gross higher the was gross exactly talk was the that that a is so So our material in stronger drives which believe we really your contributor. We around and a mix, is a consumables reason

Operator

go next Jeff from our we'll take Cowen and Osborne and And Company. question ahead with

Jeff Osborne

on I logistics think his had question Andrew what and sourcing. the also around part -- to you're a doing second

So well. know to or you that as -- don't several if answer I had I want first

Lisa Gibbs

we think entire I missed that question.

for you repeat Jeff. I'd if love you recall it, to So it,

Jeff Osborne

Yes.

analysts I understand think supply chain inbound -- what both back I shortages. logistics, the for he was trying the handling around and ROTH he and freight queue, hop outbound and can the but you're to in doing think

Paul Lancaster

I diligent a focused Lancaster. mean pretty Paul get sole-source issues. challenging Jeff, so this with question about and secure we're in chain. Yes, really trying away we've from general just that's right ROTH. little supply supply that now is to and I'll answer chain for

we to the is relates that with really mean as lot We're I know that's such need once times, terms we do it that shipments. customers input closely arrange to don't going working to open, the look congested. freight. of And we are the Shanghai, a As our prioritize like. what port customers

is doing to circumstances we preparing going the we're best as all how is unknown can this occur. once the does -- reopening as we're So proceed given of

Jeff Osborne

does a topic. need that when him because on well. delivery remind you line to going? into of along Or it's it that up I accepted wherever support? revenue same the it I be maybe up had record But brought shows That's question do And me upon recognition, it for as why

Paul Lancaster

transfers. title the when It's

So customer revenue in of recognize terms to once title transfers the ownership goes then works, that ex the we like point. at

Jeff Osborne

China much How -- had in locations? how the XX% in of of to other of And versus output [Indiscernible]. mentioned stays that much exported revenue the from facility typically, you then come there

Mike Whang

now We on again and product strong U.S. of depending markets this ship the for [Indiscernible] also varies Jeff, is [Indiscernible] more product Mike. outside season the China manufacture That of mix. see Shanghai and sets with

Jeff Osborne

go shipping on be, the And realistically month people that have back? ahead. do will then levels last the you've on B, Shanghai -- then a locked that an of in to maybe or the assurance Yes, have of XX% this XX% you me been locations? down longer opportunity can staff productive A? what question for or like Is for is seen And come how other sorry,

Mike Whang

on that tremendous. our They're off high-rise in, work. I've stir-crazy about little a seen now to is apartments, that team China-based just a in don't and I'll right years Jeff. start at than apartments over them being What Shanghai more being actually not are worry the one, I the bit these bits month. absolutely wanting chomping locked their for have although to

in So one that concern I is a have another. not or fashion that

our bedded we is being stuff, of ship of productivity, the stage workers, productive. of have who still a in I'm the we we on come terms can course, get. set of all little in we not got be office do here. that a Now our and -- are get employees list might of Those it initial that good depends have But Yes, we and humorous if confidence the vanguard for deal factory. will being a and list reopening as they will

Lisa Gibbs

that. on impact something and our that that companies managed a Jeff, factors have extraordinary and this I But is having well. locations, and event, I'll to Clearly, that forefront, alternative look those is all obviously, The in and supply bringing having been all The to through chain chain. to apparent COVID alternative we tariff quite another our looking at other difficult other dramatic of to add us and so many have we've and have environment it's manufacturing find strong, the but in had continue locations as similar that's it's locations think at. it's and obviously just is China business, of urgently supply those that business. important

that's So our radar. on absolutely

Jeff Osborne

revenue remarks we and all think, more I order booking side. were, up $X.X your that could it on the order carbide well? related nicely all The it, Maybe to sets? that sequentially. margin of in and that of the portion year-on-year silicon But as there new Or strength the tool consumables consumables. to any on strength quarter both is million, at or a gears Is the on side, -- prepared rearward Lisa. is both as switch majority

Paul Lancaster

Jeff, this is was No, by that Paul. of the consumable business. side driven primarily the

for businesses carrier a fairly is business, is see some to starting that's which we're the continuous of cycle template demand one consumables as our what So strong of primary well. our and pretty

demand across we're the that elevation of those board So seeing an just consumables. for just

Jeff Osborne

Paul, you in into were entrants that, new the or -- activities space. think, I around to were the what there but you quoting And misheard remarks, pipeline? prepared you the I in referring mentioned What maybe

Paul Lancaster

about new compound into space. entrants semiconductor We're talking the

So they manufacturers trying expand specifically carbide their up new attracting manufacturing, with silicon the are, forecast, where wafering to obviously, being capacity. and ramp it is

Jeff Osborne

supply times alluded around then just and That there of the was that side? longer ancillary impacting final tool that Is upon is the more other maybe growth provide is speak, don't some chain Or that that question. lead that And you my you. you to some the that? crystal expand to other tools wafer set, so in have are you on to sort hoop,

Paul Lancaster

used it. tool then and wire that saws for Yes. edge sets, I once they things and bull to or produced got the of our tools, tool mean, to slice grinding edge are it it, of just they got things sets nature, is would be ahead like that grind

So cases, or steps complementary those in used those some some months. tools extended are complementary in steps XX of out

Operator

Mark from come Miller will question next Benchmark our with And Company. Instructions] [Operator The

Mark Miller

higher the tools could quantify thought inability components you if of you ship kind wondering supply to of the impact or try you just costs in for was of component to could constraints. terms I ship

Lisa Gibbs

we're trying costs Well, not possible. rising business, a in seeing always We're labor to rising customers. on our possible. to pass where certainly our That's material costs those costs

for this can we're quarter, helped So it's decreases, looking Clearly, have certainly business but tremendously. other our consumable having challenging environment. where a areas we business some offsetting in cost robust

So we'll that diversified to continue to profitability. look our help mix for product

Mark Miller

a employees back I think your you'll and but XXX% reopen, that employees clearance the when idea your have some XX% you've to fabs? to of allow new Any -- reopen of allowed it's back. gotten the you be into allowed restrictions indicated of gradual

Lisa Gibbs

our We and don't of can out have the are but walls any local that that we now. right visibility listen government, to within we that reality heard the things there, and to this employees Certainly, at point. that the the is government, don't visibility have to Chinese

Mark Miller

headquarters your BTU the With especially a focus? capital your is these the cash positions. the at What cash International and is of sale position, inflow resulting higher you're what cash building of and nice allocation,

Lisa Gibbs

organically Well, small growth. our tuck-in. products grow driving That's focus product continues with organic about acquisition to to through We a acquisition. strategy our year both development, Paul with a -- ago, talked about new is growth our our into markets. entrants, a did be growth,

to business our part discussed at a and to been We've our plan well. broader and That's a share doing capacity That's augment we that very with as fuel for that that frequently. growth. continue We Board look us. We'll continue look good opportunities for priority all quite to key repurchases. of

Mark Miller

thoughts relocating of out of China? business of Any some the

Lisa Gibbs

us. for a such location is great China

It closure, is continuity that is we our reviewing building with environment, tariffs us. urgently really that into a last alternative now and great clearly, We year base business happening peak missed and are this and with time. have a They a for we this something beat. there. and during at COVID their this we've But a here at plans facility great moved in have look and production what's workforce new to never employee tremendous and dealt sites,

Operator

and question Cowen And to will our go Jeff next Company. back Osborne with

Jeff Osborne

new this was sort have but I Sorry or shelves hand of a systematically and lumpiness curious, yield silicon follow-up for it feeding run the side? consumables of rate it just this been consumable and for the But think because seasonality Obviously, Or a and curious, other where quarter, there, wafer rate? is is for folks improvement. at question. the the is for this in there of more just that any assume, we this carbide, Should the the as the would while? I'm sort run starts history ramp-up in strength you I'm strength buy order one of a that on the is put inventory people new you'll on to be in

Mike Whang

a deny, loaded confirm could question. can aside, like certainly for be humor new but That most a us. either this norm I seems Well, or

a new carbide. that now. our established over to entrants. silicon competitive are getting our in traction. consumables while few And that gain it our have We more a solution demand consumables. addresses is the be And seen past than months highly we've consumables also unique, margins took very the and a These lot attention the from to And opening and customers higher standard higher some up seems ASP now

are finally front. -- finally realizing of start we realizing So on our labors fruits the that

Jeff Osborne

diameters get very your into or at a hands play competitive maybe wafer all stance necessarily? as not And quickly, larger, does from just that

Mike Whang

be, highly we've future necessarily. but tested specific just from Not not wafer X-inch or that. this on some competitive definitely consumable. also And size we wafers this adapt to new can Whatever will new,

Operator

conclude that day. does participation. Have today's and do question-and-answer We session conference. conclude an your And Thank you you. the for excellent thank

Amtech Systems (ASYS) 12 May 222022 Q2 Earnings call transcript