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Amtech Systems Inc (ASYS) Q2 2024 Earnings Call Transcript Highlights: Navigating Market ...

GuruFocus Research
·4-min read

  • Revenue: $25.4 million, exceeding guidance range.

  • Adjusted EBITDA: $0.8 million despite soft demand.

  • Backlog: Ended at $44.3 million, down $5.7 million from previous quarter.

  • Book-to-Bill Ratio: 0.8 to 1 as of March 31, 2024.

  • GAAP Gross Margin: Flat sequentially; decreased year-over-year.

  • GAAP Net Income: $1 million or $0.07 per share.

  • Non-GAAP Net Loss: $0.2 million or $0.01 per share.

  • Cash and Cash Equivalents: $13 million as of March 31, 2024.

  • Debt: Term loan balance of $4.2 million as of March 31, 2024.

  • Q3 Fiscal 2024 Revenue Outlook: Expected to be between $22 million and $25 million.

  • Q3 Fiscal 2024 Adjusted EBITDA Outlook: Nominally positive.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Revenue of $25.4 million exceeded the high end of guidance, showcasing strong sales performance.

  • Adjusted EBITDA of $0.8 million achieved despite soft overall demand, indicating effective cost management.

  • Implementation of strategic initiatives led to a second consecutive quarter of positive adjusted EBITDA and operating cash flow.

  • Enhanced operational efficiencies through contract manufacturing partnerships, improving flexibility and reducing lead times.

  • Strong positioning to capitalize on secular trends in advanced mobility and advanced packaging within the semiconductor market.

Negative Points

  • Year-over-year net revenues decreased by 24%, reflecting a slowdown in the broader semiconductor market.

  • Backlog decreased by $5.7 million from the previous quarter, indicating potential challenges in order bookings.

  • GAAP gross margin was flat sequentially and decreased compared to the prior year, affected by product mix and increased material costs.

  • Near-term outlook for revenue and earnings remains challenging due to ongoing market softness.

  • Lead times for certain products like horizontal diffusion furnaces remain long, impacting the ability to reflect current cost conditions in pricing.

Q & A Highlights

Q: Are you seeing any pickup in quoting activity? If so, where are you seeing it? A: (Robert Daigle, CEO) Yes, there has been a significant uptick in back-end processing, particularly with reflow equipment. We're seeing more activity in advanced chip packaging and multiple unit quoting, which is a change from previous single equipment scenarios. Additionally, there's been an increase in parts and service activities.

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Q: How has the improvement in consumable sales impacted margins? A: (Lisa Gibbs, CFO) The improvement in consumable sales has positively impacted our margins, increasing non-GAAP gross margin from about 43% to 45%. This segment is crucial for our business and aligns with our strategic focus.

Q: Regarding the softness across the broader market, do you see any light at the end of the tunnel? Will the recovery be a snapback or more of a gradual improvement? A: (Robert Daigle, CEO) The recovery in areas related to AI, particularly in memory bookings, looks promising towards the end of the year or early next year. However, equipment demand recovery is more complex due to factors like utilization rates at customer facilities.

Q: Can you provide an update on lead times and when they might return to normal? A: (Lisa Gibbs, CFO) Lead times vary by product. For back-end equipment, normal lead times are four to six weeks. For products like horizontal diffusion furnaces, we've reduced lead times from over a year to about five to six months, which is closer to normal.

Q: Could you comment on the silicon carbide market and the potential for premium products in this segment? A: (Robert Daigle, CEO) Most silicon carbide production is currently at six inches, but we are positioning ourselves to potentially benefit from eight-inch production. The opportunity to offer premium products depends significantly on the customer and their core technologies.

Q: What is your visibility like for the back end of the year, and how does this influence your strategic planning? A: (Robert Daigle, CEO) Visibility varies by segment. In the furnace area, we have good visibility extending through the December quarter due to long lead times. For consumables and parts and service, visibility is shorter, often only a few months, reflecting more immediate market demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.