Amtech Systems, Inc. — Q3 FY2021 Form 10-Q
Business context and period: Global manufacturer of semiconductor thermal-processing equipment, wafer-polishing machinery, consumables and process chemicals. The quarter and nine-month period ended June 30, 2021; fiscal year ends September 30. Figures below are in U.S. dollars; financial statement amounts are in millions unless otherwise noted.
Financial performance
| Metric | Q3 FY2021 | Q3 FY2020 | Nine months FY2021 | Nine months FY2020 |
|---|---|---|---|---|
| Revenue | $23.1 | $15.2 | $60.9 | $50.4 |
| Gross profit / margin | $10.1 / 44% | $6.0 / 39% | $25.3 / 42% | $19.5 / 39% |
| Operating income | $1.2 | $0.03 | $2.4 | $0.7 |
| Net income (loss) | $0.37 | $(0.07) | $0.84 | $(13.70) |
| Diluted EPS | $0.03 | $(0.01) | $0.06 | $(0.96) |
- Q3 revenue increased 52% year over year; nine-month revenue increased 21%. Semiconductor segment revenue rose 58% for the quarter and 26% for the nine months. Material and Substrate revenue rose 25% for the quarter and 6% for the nine months.
- Q3 gross margin improved to 44% from 39%, reflecting better Semiconductor capacity utilization and product mix, as well as higher machine sales and the IDI acquisition. Nine-month Material and Substrate gross margin declined to 31% from 36%, with higher material, labor, fixed and inventory-obsolescence costs.
- Nine-month 2020 results included a $11.8 million discontinued-operations loss, largely related to the solar-business disposal. The 2021 comparison therefore reflects a significant prior-year unusual item.
Cash, debt and liquidity
- Cash and cash equivalents were $37.0 million at June 30, 2021, down $8.0 million from September 30, 2020. Nine-month operating cash flow was negative $2.8 million, versus negative $1.0 million a year earlier; working-capital investment, including receivables and inventory, was a major cash use.
- Current assets were $81.4 million and current liabilities $15.6 million; working capital was $65.8 million and the current ratio 5.2:1, versus $69.1 million and 10.2:1 at September 30, 2020.
- Interest-bearing long-term debt, including current maturities, totaled approximately $4.9 million. Lease liabilities totaled $8.9 million. Management said available liquidity was sufficient to support operations for at least the next 12 months.
Changes, outlook and risks
- Backlog more than doubled year over year to $34.3 million at June 30, 2021; Semiconductor backlog was $32.4 million. Nine-month orders increased 66% to $81.3 million. Backlog is subject to customer cancellation or delay and is not assurance of future revenue or profit; one Semiconductor customer represented 31% of backlog.
- On March 3, 2021, Amtech acquired Intersurface Dynamics, Inc. for $5.3 million in cash. IDI contributed to the Material and Substrate segment; approximately $4.5 million of goodwill was recorded.
- Management described continued recovery in Semiconductor demand and identified growth opportunities in silicon carbide, power semiconductors, advanced packaging, electric vehicles and 5G. It anticipated $6–$8 million of investment in research and development and capital expenditures, and planned to relocate its Shanghai manufacturing facility in August 2021. No specific revenue or earnings guidance was provided.
- Management expects rising labor and material costs to continue at least through fiscal 2021; pricing pressure may limit pass-through. Sapphire consumables face competition from lower-cost Chinese manufacturers, a trend management expected to persist in the near term.
- An April 12 cybersecurity incident disabled some systems at a subsidiary and involved unauthorized access to data, including certain employee and beneficiary information. Production continued and systems were restored with enhanced security. Amtech recorded about $1.1 million of response costs, expected to submit an insurance claim in Q4, and cautioned that full reimbursement is not assured; potential legal or regulatory exposure remains.
- Unrecorded purchase obligations were $11.1 million. The filing reports no material off-balance-sheet arrangements and no specific quantified legal-loss contingency.
Important facts for investors to verify
- Whether the strong orders and backlog convert to shipments and revenue, given customer cancellation rights and the large customer concentration.
- Progress and costs of the Shanghai facility move, planned $6–$8 million investment, and ability to meet increased demand.
- Final cybersecurity investigation costs, insurance recovery, and any claims, regulatory actions or customer impacts.
- Whether higher material and labor costs can be passed through without eroding margins, particularly in Material and Substrate.
- Cash conversion and working-capital needs as receivables and inventory rise, alongside acquisition integration and planned capital spending.