Earnings call transcript Q1 2023

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Operator

Good day and welcome to the Amtech Systems Fiscal First Quarter 2023 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.

Erica Mannion

Good afternoon and thank you for joining us for Amtech Systems’ fiscal first quarter 2023 conference call. With me on the call today are Michael Whang, Chief Executive Officer; Lisa Gibbs, Chief Financial Officer; and Paul Lancaster, Vice President of Sales and Customer Service. today, quarter its of market the results of first fiscal XXXX. close Amtech financial released for After The earnings release at www.amtechsystems.com is posted on the section. the Investors in company’s website

Safe to Before I’d and our filings remind Harbor call disclaimer everyone covers we this in like that begin, webcast. public our the

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

These undue on expectations. guarantee to are a which actual statements of not future You performance, today. could forward-looking current are reliance from cautioned differ materially and not speak place statements, results of only as

factors risks; equity which we our acquired labor worldwide and COVID-XX detailed acquisition Entrepix used Forms Form XX-Q. the Inc., markets change ability our worldwide for those Among the changing our are are of XX-K political risk ongoing in changes including and which our including materially the the important effect trade pandemic, to effect conditions, conditions, our allocation factors and in plans; logistics, acceptance technologies sanctions; from customers the cause actual overall differ XXXX. credit the of including supply forward-looking and and capital SEC of demand statements chain volatility market to and and market by results and challenges; in products; the effectively filings, Other could economic in integrate in January competitors;

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

Michael Whang

of generated the us Erica everyone XX%. a $XX.X decrease and year-over-year quarter, we Thank joining today. in revenue representing million you, In for fourth

are this, last continued demand expansion temperature both two applications. currently in for discussed customers SMT the of very and quarter, strong years capacity of to packaging changing decrease was advanced to market furnaces projects, for spending expected we EV following driving due see our Helping softening high as we the this belt offset evaluating our and capital As demand products conditions. strong

remain we our all about of excited our Overall, and long-term across businesses. opportunities steadfast

division, cycle while in an additional opportunity some products, through our of Within transitioning creates position capture a next industry which the downturn are in the we remains currently upside investment cycle. for semi competitive the in the spending strong to our

record with as surge we built Fortunately, for furnaces applications in high a EV are force. driving experiencing temperature currently demand a

orders the makes repeat the press see us Adding continue for scale today demand to undergoes capacity EV to tailwind, cycle. regarding multiyear this like recent industry While the release consumable expansion products we still as strong the carbide optimistic of early, opportunity silicon ahead. this

we a weeks announced initiatives, ago, our recognized wafer in Turning and CMP three globally acquisition growth Entrepix, of to expert strategic the cleaning.

in greater With the Amtech the take the provide discuss providing Entrepix’s addition offers detail. moment like robust to customer broadest opportunities one perspective, I’d combined business additional solutions, a now substrate To bases. industry’s of across cross-selling of processing of to Entrepix, sets

CMP ensure at able LTM Entrepix performance. are Starting roughly represents are and they and most of with their developed parts these are XXX-millimeter cleaning business the half popular customers obsolescence maintain operating engineered the below to cleaners together systems and by engineered for products, on replacement and tools and Utilizing CMP upgrades, and an Entrepix’s products, existing the basis. peak

OEMs well and and tools these to OEMs support customers the alike. in resourced for often the need volume, XXX-millimeter below XXX-millimeter tend to on not for high are focus As Entrepix legacy and tools platforms fulfills

base OEM referral created reliability very OEMs parts a tools opportunities products, large source. have engineered become in customers lower from on-track applications, very become upgrade operating many replacement market, suited from millimeter, Entrepix additionally performance, and In has to are the installed by including fact, for which gallium both system legacy the costs experience, materials new nitrite. wafers silicon XXX given for and many the and double-sided these well these XXX modernized cost-effective compound replacing with for scrubber, advancements like is robust. of The and carbide Drawing the semiconductor wafer improved the cleaning very the and Entrepix’s most

market suited size XXX-millimeter and needs today meet Given applications these the cleaning to compound processes. silicon and specific on the of volumes are and scale of of volume the tools processes, the ill relative many to demands wafer the semiconductor

new silicon a and for on-track strong the double-sided front-end silicon demand a by in in there the been driven part manufacturing. carbide As scrubber, market large has result, in investments

In turn addition provides the the and Entrepix sales both of further being and training on-track engineered and products, foundry efficacy and as field and enables Field Entrepix engineered Entrepix to perspective foundry unique provided. maintain with CMP service the double-sided stickiness in-depth the other processes service Entrepix. scrubbers quality CMP end products, as and and a in customers, CMP-related the services products contact services promoting supplier enhancing also provides services to well training the creating equipment services. and of and from user of products,

capacity. Additionally, several and their been foundry by IDMs has the foundries CMP to leading qualified existing backfill

Group, potential. to opportunities Amtech we ahead part As as Entrepix see look of we synergy the meaningful for

to market further customer substrate allows with no the us areas existing our relationships expanding cement the cross-selling the overlap, while in current our customer several front, market. On manufacturing device customers exist. in opportunities Similarly, process overlap with into

and footprint a overseas, established these effectively Leveraging built expansion efforts. expansion U.S., and has company Entrepix foundation accelerate has international channel the Entrepix been in believe can focus has cost of we while an Amtech area scales. Lastly, the resources solid the as

and adoption technical proliferation unparalleled of the combined with deep across Macro of culture customer semiconductor expertise growth a domain share leadership, driving company are entire compound Our EV portfolio. service. themes and

in our market. and these strongly opportunities, ahead investments position the benefit address expect years future the respective we make necessary As existing the capacity customers to to in given

growth megatrend EV points and strategy and as In across coming our the value to to foundation very the closing, creation we that high-growth of multiple pursuit durable strong such for traction. product We areas greater gaining in a strategic confident efficiency customer is creates and touch megatrend our are divisions a energy markets that years. alignment to believe align

I to detail Paul go call into will to markets. now turn our Lancaster more over end on the

Paul Lancaster

second Thank which in you, products, Michael. Expanding we further the on continuing environment the our a quarter, in in into advanced as first packaging for demand softness the anticipated, SMT experienced the quarter. is orders

reflected trough to end QX. guidance macro further the products. shipped for our since the the due at spending QX. These Barring shipments in timing QX of impact QX to in deterioration are which to a may for new these we moved have portion order represent of Additionally, in environment, in quarter, revenue products expected the plans, of orders customer the and expect

of these importance towards and impact At our against it advanced of applications, this have and macro complexity the however, relates And interest the mid moves to continue given thermal reflow may packaging semiconductor outlook process see it’s industry requirements. market as In of architectures stage, and we demonstrated have to a is of mount the further to as predict difficult as said, long-term demand. uniformity on surface to recovery conditions timing strenuous it. we line capable choosing delivering the paramount a when and changing increases. healthy sophistication shape That PYRAMAX product is repeatability the such of

levered record packaging tool are once have the as resumes of a we looking well advanced investment since are to highest areas become the As OSATs the leading positioned we many We believe as result, growth of capacity to in we for market. fabs leading incorporate capabilities. well the

temp belt high we from in which relates the As strong furnaces, manufactured applications. here this quarter our it again United saw to States, are demand EV

requirements complexity and for safety as there cooling this which assemblies consistent substrates EVs, such potential the and from dialogue customers manufacture due to market orders to automotive remains continue these of grow the automotive to the processing assemblies power amongst new us. critical. interest and a components SMT customer from for customers, others. receive our and subassemblies battery as by leading ahead existing Specifically, as as with strict opportunity we in well believe uniform market we repeat Evidenced Similar module large suppliers, is are thermal application, of sensors, the and

we to our and horizontal both for robust XXX-millimeter see diffusion forecast XXX-millimeter applications. product a line for Additionally, continue

for the for due to manufacturing silicon predominantly reduce in backlog subassemblies our orders serve while chain this growth, lead these outsourced certain supply Some high-tech contribution to By carbide of ramp to capacity are EV-related of With goal is increase profitability are and to production. and new our slated products. leverage. current which improving to our backlog steps better adjusting our margins and demand, operating furnaces, of supporting for XXXX to times utilizing support both and we through taking manufacturing current efficiencies growing operations and greater capacity our improve

including and demand silicon for Materials applications. we see to for consumable segment, Substrate our products, Within those continue healthy our carbide

As silicon of consumable we fully discussed existing and utilized before of year-over-year, up phase a is online brought the carbide expected, of wafer demand is previously, until with this capacity portion capacity next of stabilization progressing the remain demand the to likely brought as over consumable wafer XXX% capacity end is This anticipated we levels year. at business as has expansion towards additional online. anticipated with calendar current our

newer many existing it this to is both relationships Amtech with note carbide has leaders that and a across in entrants. important leader consumables, industry Specific to silicon for been market years

growth-in-demand a that which As undergoing a tend follow capacity consumable is for multiyear our in expansion of phased overall result, the to products industry, wafer cycle.

often that the and their of companies existing several take time whole. pace market, grow will enter the are the grow traditional either to to there a is of than each capacity for capacity longer looking silicon, as of market contributions wafer While it additions or

high for temp robust. remains products, furnaces demand near-term silicon our the consumables together, very carbide namely and Taking belt

we over long-term, participate mid of believe the carbide we return. growth silicon semiconductor positioned when to cycles investment and are While capacity well both in the to industries

Lisa call over results. our I’ll now turn to financial review to the

Lisa Gibbs

$XX.X margin shipments Thank attributable semiconductor due XXXX. was lower prior periods. decreasing you, offset our decreased gross consumable million, changes Net were consolidated equipment, is revenues year XX% the decrease quarter. first to XX% sequentially mix. Gross to a On an shipments from basis, primarily substrate of fiscal among consistent polishing our margin in material by partially relatively Paul. in in primarily of segment increase compared and the product The to and quarter and

$X.X basis of in administrative fourth the operating fiscal as and expenses well million and operating XXXX was first and million acquisition $X.X $X.X of XXXX. in share. million due share the million primarily to loss million $X.X of net ERP for of million to the $X.XX fiscal preceding on or in the $X.X income increased costs per This $X.XX prior for $X.XX loss same the million year quarter income $X of per share sequential or XXXX net a period first $X.X compares to compared of of and $X.X period. to higher was prior general consulting Operating and quarter quarter quarter fiscal income Net per Selling, income compared year the expenses. for as $X.X million or million

cash were United XXXX, compared September and XX, $XX.X XX, Approximately the million equivalents XX, XX% at is $XX.X of as at cash December December million of XXXX. in Unrestricted States. balance cash to XXXX, held our

Looking from the – ahead, to plus price. our $XX Entrepix. position lower fund of cash cash purchase with cash a our be term will million used sheet loan We balance materially of acquisition balance $XX our million

months, the credit coming growth customers. $X In to are are have Entrepix working now capital which with to the will to key days, we we that of working leverage and revolving million our success, synergies line Additionally, for access and needs. on an weeks our focused be

into synergies we the reductions any We that reinvested cost business. or back will identify expect that be

at part corporate locations our space. could synergies Additionally, or we corporate use operating in additional or building of from evaluate making in two and our estate with far include production footprint, for not Entrepix will storage real capacity our one office Phoenix office, back which of

filed our of the a as April amendment reminder and XXXX, by as the statements to will Entrepix in As financial be X, X-K filing XX, Form X-K an indicated historical XXXX. on January

continue we to business, future our of make fuel focused rest investments growth. the to to relates it As our

our are labor in and improve investments our manufacturers As targeted performance. with partnering lead operating decrease making capacity we to are times contract to discussed, both Paul and and

warranted investments they we these a have effect but opportunity are on the expect margin support in near-term, negative We to believe ahead. the to operating

turning outlook. our Now to

ship good to may ongoing to the weeks March XX, million quarter, the which range logistical excluding contribution company’s and fiscal the delay and ending our quarter well $XX to with be Entrepix. in as digits, the we second related reflects results are a approximately the in of months chain are For acquisition-related operation. million, impacts experiencing Actual expected low includes from million the single XXXX, outlook differ materially costs. and our supply $X.X operating in Revenues from in The margin for in as China delays, ahead. $XX

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

operator for Operator? will Now the questions. call turn to I over the

Operator

from [Operator with you. your ROTH Partners. Please Irwin Craig line with Our the comes Thank question. of question proceed first Capital Instructions]

Craig Irwin

Thank – evening. booking Can good I this is am color, had high-volume for kind questions. wanted And maybe maybe application, could off give many talk a you But thermal application guessing you of how EV $X that or America, might to my for you and you silicon if about the Europe that the Hi, with geographic us this guys silicon carbide taking supply for or be? it chain. furnaces if I then systems start for million a Asia? North silicon carbide.

Michael Whang

over and lead for to turn the Greg, I’ll question, us that Hi, Paul. ask with it thanks I’ll joining and question. off

also assembly. number of of substrate around varies systems, cooling carbide terms and X%, the other and application from and it’s battery silicon modules In

So it’s a pretty broad spectrum.

Craig Irwin

Okay.

So if this probably not cutting-edge customers. This multiple just mega correct. multiple that is are offering, is I’m that, Bruce’s then is This one adopting individual I customers product facility. guess,

Paul Lancaster

Yes.

are or you North only they these but belt not America. our several across, customers Europe in U.S. in as said, Craig, and Asia, and here furnaces, also temp So high located are the

applications, horizontal diffusion are custom these in applications, thermal copper and not So of end treating line these power all for supporting production. brazing Bruce’s are used furnaces furnaces. for electronics bond These heat applications EV direct

kind shipping gives in flavor those that that categories. what of a – in you of we’re So

Craig Irwin

that. for you Thank

silicon for Can carbide And to the the way carbide someone competition future. the that do third a finally that into in market times have much a wide running to U.S. of lead when one exciting So, be the most space here facility. in is in in in Obviously, companies second going several there to is from one see way would expectation company a companies and other This you? be from about the and XXXX, carbide the announced order up facility going talk in the is to of necessary expressed the they likely the mega in Bruce’s you same investors there built for that silicon if in offering be be Germany, silicon facility similar have you they wants equipment market? will

Paul Lancaster

months some to the lead weeks. vary as some we BTU furnaces in on competitors it’s into XX anywhere know, of strong And depending are product belief segments, leadership consumables. positions – consumables competitors actual product then Typically, of in-line and definitely our a the get Hofman hold all times from can of then you But be and is even There or will lines, it the when whether range our Craig. is them toolsets, the you belt XX horizontal Bruce of actual matter across diffusion definitely furnaces can months, longer. like multiple products, our

we some little EV of and of the seeing is phase supply a And to current X for be growth, are for set we continues. mentioned, validation So, exists also, start are that in that as But chain tools especially space. risk improving, world signs at years least throughout that by the if a to the very us. bit even cognizant that, bit to orders need they safe, will condition testing little and our ahead start their Paul placing

our taking year. also order reduce operating and we lead that so to definitely And improve and expand action. We And are last capacity our leverage. times saw in our

Craig Irwin

Thank you for that.

Entrepix. to the about thing is next I So, wanted ask

interesting First, I maybe many And should your us the into Amtech minor looks tuck similar with do to congratulations. this see of business. synergy not guess that I really your existing at overlap knew equipment, of were and capital you have the different the or is a of are describe that already opportunities for that It given base? asset start traditional consumable other for of where same serve I overlap, the on? calling you sales resources. customer on guess like you Entrepix Can force some a only focus customer but engineering Is businesses a there with same the amount products services the something to you side, where engineered customers areas

Michael Whang

Craig. Absolutely,

see actual do customers, silicon different. new side there definitely strong then And familiar and market. very overlap. large also the of fab be that the across synergies there wafering we names, that will front our The carbide strong also opportunities very we side also with But of across names right, leverage of substrates and customers, silicon are a on definitely before. the have end didn’t So, that, overlap terms a explore we existing in is and will

the also So, suites I that can in near very product long-term. and the internal suites depth and the excited am we greater and service with synergies and offer

Craig Irwin

may. Excellent. Then if I question, last

us things with give chain that been cyclical short-term the can changes there over guys that guess couple be Are us any some solid guidance I resolved to in management you issues you updates about give that proactive the of shared supply the maybe about what the today? months, of you share last can businesses. really have confidence in transparent You and pretty

Paul Lancaster

yes. Craig, Hi

what Operations manufactured we So, temp and high our growth belt done, furnaces, here we hired announced have adjusting supply U.S. are of Golato time, seeing, that Louis are this we especially VP last support our in year. a we which in that implementing and this to at And we as are chain the

I had the start suppliers, to here think was efficiency. And chain to going to towards some single greater I terminating saw of will adding backlog able issue. supply think source We we this in where suppliers the We adjustments cases, be fragile. a come that is that turn at to are there see certain end make we to that. fruition somewhat year,

Craig Irwin

Understood. Well, Thank on you. in progress back will the I congratulations here the and queue. hop

Michael Whang

Thanks Craig.

Paul Lancaster

Thank you, Craig.

Operator

Our of next the question Company. Benchmark with Mark comes Miller line The proceed from with your Please question.

Mark Miller

to they Yes, want Can the congratulate – above Are you furnaces. belt insight margin you the on belt these margins? little the corporate below give furnaces? a recent corporate about order for or of I

Lisa Gibbs

Hi Mark.

previously the and product certainly, We about margins. results. have of our BDF how furnace it term with talked some of the trying belt and mix product our affect to longer mix our And in here we make improvements is part the can gross are

we we products where – mix see so in are of our when margins it’s that in the And you out don’t Shanghai, in the XXs.

And on certainly various as the that initiatives these improvement like discussed. so we in we these work we to and see are would around there products XXs, some

Mark Miller

does improvement, how going or of Are be of an recent In overall margins the compare terms of flattish with the to backlog, your is in the be kind it margins? going equipment backlog to consumables of and margin…? in your that terms

Lisa Gibbs

the again, estimate. we point, are our out of softness good this with think seeing at say I factory a there, Shanghai is would and flattish I

Mark Miller

increases quarter, second OpEx in OpEx decreases? are any flat the or or expecting you

Lisa Gibbs

We mentioned costs. the guidance acquisition in the

an going to increase. So, that’s certainly be

are based to things. initiatives some the contract increases like other We manufacturing that have some on are and we going with undertaking, of targeted other some

of to So, will we control some and can at are be But looking increase some I do. procedures other also couple in some we coming we going things that expense think see the quarters.

Mark Miller

quantify was You there of you into second quarter. the that? sales shifting some indicated Can

Lisa Gibbs

anticipated But Mark, the have than top a little we in we don’t guidance. in of our – me. in lower guided head, my honestly, I had came front the of exact Off bit we number

we think still about I hit consensus. right

to have liked million have to on higher the of guidance range our of would we $XX $XX been certainly, So, there million.

Mark Miller

this finally, expect you And the you be indicate trial second quarter did the to year? for quarter

Paul Lancaster

advanced is this Lancaster. now did Mark, it’s comment. our to I Yes, Hi I Paul mean packaging and related products. that SMT make

that has seen semiconductor there, continued dropped us. We demand a off in have weakness primarily for Asia as

of this going bottom we are And consider where be so of to business to going. the we see sort that

Mark Miller

you. Thank

Lisa Gibbs

Thanks Mark.

Operator

Garrigan [Operator your with Instructions] from proceed next comes Our question. question the Please Capital. of Kevin line WestPark with

Kevin Garrigan

the Hi, everyone. you again, and me on Great let speaking congrats acquisition. Entrepix echo with my

few my quick on questions a end. Just

it it’s bit it and first Dynamics I capture one, expanding backlog more a Entrepix revenue For does acquisition, is And question. your was kind both? think of or the last your and with to acquisition product your quickly or The then a help of the revenues, more EV multipart the Intersurface of little portfolio streams, converting secondly, kind about is acquisition.

what apply learned So, to you acquisition you from one? that this can have lessons that

Michael Whang

this is your Thanks Hi questions. us for Kevin, Mike. joining and for

is the handled undertaking So, related start that of backlog will that of your the the improvement fruits we EV. your now of seeing our the we now. that be of end will question, question acquisition are plans the have first we operational hopefully, will some That have year. And not by towards right with Entrepix the to part fiscal

existing able Hoffman, IDI view more market provides And we expands have PR divisions for And adds. Regarding have touch our and of And Hoffman not eyes on their multiplier that as a or IDI but of ago. to divisions. brings in X front of our be the and been more since been acts that force CMP experience, improvement our as and it toolset. PR is disposed although different greater a a Entrepix to we of years to and access able than CMP European polishing they Entrepix a can there similar also, multiplier It market their their opportunities. process products, worth always those and of segments definitely know well, very of Entrepix foundry I from not a force my couple value and was We touch also we CMP before. will in markets capabilities end, combination also also very the technology to inherent provide importantly, decade’s more it’s regardless size. due engineered

Kevin Garrigan

any just a lot Lisa, makes That touched Thank you for know question, remarks in Great. I quarter, acquiring kind a in of quickly, focus focus then but is And after last it your to the boxes, of on for you and And off change Entrepix one you checking asked know I the can sense. Okay. kind and that. your you us of terms what I and in of capital allocation? remind prepared previous this XXXX? of

Lisa Gibbs

of evolving, Great of a It’s good we we have are our our chunk balance as off cash. took obviously, – question. cash re-forecasted and sheet, we

closely be want revolving meeting into did our at renew that and line to our to going how credit. when Board of are We repurchase we We yesterday. program looking tap share at

in look investments at We business. our continued key to

continue evaluate facility now, loan right digesting are allocation cash flows, and we of thoroughly. Board on to and our the say then meetings discussing that will our would I capital and we So, each

Kevin Garrigan

all me. back Thanks I hop you. the will Thank Great. everyone. Perfect. That’s queue. for in

Lisa Gibbs

Thank you.

Michael Whang

you. Thank

Operator

are to to Lisa over hand queue. the There closing in remarks. would like further questions for call back I the Gibbs no

Lisa Gibbs

concludes time for Amtech. and for in call. thank your today, Thank you your today’s This interest you

Operator

Thank teleconference. today’s conclude does this gentlemen, and your participation. for you Ladies

time disconnect wonderful a lines You may and at day. have your this

Amtech Systems (ASYS) 8 Feb 232023 Q1 Earnings call transcript