Amtech Systems, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended September 30, 2020. The filing also reports fourth-quarter results. Amtech manufactures semiconductor thermal-processing equipment and wafer-polishing equipment and consumables. Continuing operations are reported in Semiconductor and SiC/LED segments; the Solar businesses were divested.
Financial performance
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | $65.5 million | $85.0 million |
| Gross profit / margin | $24.4 million / 37% | $33.4 million / 39% |
| Operating income (loss) | $(0.5) million | $4.9 million |
| Continuing-operations net income (loss) | $(3.9) million | $3.1 million |
| Net income (loss), including discontinued operations | $(15.7) million | $(5.2) million |
| Operating cash flow | $(1.7) million | $0.2 million |
| Cash and cash equivalents at year-end | $45.1 million | $53.0 million in continuing operations |
FY2020 revenue fell 23%. Semiconductor revenue decreased 18% to $54.5 million; SiC/LED revenue decreased 25% to $10.3 million. Gross margin declined chiefly from product mix in Semiconductor and facility-move overhead and inventory reserves in SiC/LED. SG&A decreased to $21.4 million from $24.3 million, while RD&E increased to $3.3 million from $3.1 million.
Fourth quarter: Revenue was $15.1 million, gross margin 32.9%, operating loss $1.2 million, and net loss $2.0 million, or $(0.14) per diluted share. Revenue was down from $20.2 million in Q4 FY2019; gross margin was 42.4% and operating income was $1.7 million in that prior quarter.
FY2020 new orders were $62.8 million, down 13%; year-end backlog was $13.9 million, down 12% from the comparable backlog excluding Automation. Backlog is subject to customer cancellation or delay. Two customers represented 20% and 11% of backlog.
Liquidity, debt and capital
- Working capital was $69.1 million; current ratio was 10.2:1. Management said available liquidity was sufficient for at least the next 12 months.
- Year-end debt was $5.2 million, including $0.4 million current maturities. The mortgage matures in September 2023; its 4.11% rate is scheduled to reset in September 2021.
- Cash declined by $14.1 million, including $9.9 million associated with subsidiary disposals, $2.7 million of capital expenditures and $2.0 million of share repurchases. Operating cash use reflected working-capital movements, including inventory purchases.
- Operating lease liabilities were approximately $5.2 million. Contractual obligations also included $4.6 million of purchase obligations.
- Amtech repurchased 366,000 shares for approximately $2.0 million during FY2020; approximately $2.0 million remained under the authorization at year-end. The company has not paid dividends and does not expect to do so in the foreseeable future.
Material changes and unusual items
- Amtech completed the Tempress sale in January 2020, recording a pre-tax discontinued-operations loss of approximately $10.9 million, including $7.2 million of accumulated foreign-currency translation losses. It sold R2D in December 2019 and recorded a $2.8 million loss in continuing operations. The 2019 SoLayTec sale had generated a gain of approximately $1.6 million.
- Discontinued Solar operations generated a net loss of $11.8 million in FY2020, materially contributing to the consolidated net loss. The filing reports a $11.1 million tax benefit associated with the Tempress sale.
- Cash used in investing activities was $12.6 million, primarily reflecting subsidiary disposals and construction of the new SiC/LED facility. The facility move was completed in Q4.
- There was no goodwill impairment in FY2020; annual testing found the Semiconductor and SiC/LED reporting units’ fair values exceeded carrying values.
- The company adopted lease accounting standard ASC 842 in FY2020. The auditors issued unqualified opinions on the financial statements and internal controls; management and the auditor reported effective internal control over financial reporting.
Outlook, commentary and risks
Management sees long-term opportunities in SiC power devices, 300mm thermal reactors, advanced semiconductor packaging, EVs and 5G. It plans $6–$8 million of RD&E and capital expenditures to support growth, with further possible spending on systems and capacity. Management said projects could be deferred depending on COVID-19 conditions. No acquisition agreement was in place as of the filing date.
Management described the COVID-19 impact as potentially temporary but said demand, bookings and shipments could remain volatile. China operations had returned to near-capacity and domestic facilities to normal operations by the filing date. Key risks include semiconductor cyclicality, customer and backlog concentration, COVID-19 and supply-chain disruption, U.S.–China trade tensions, competition, and execution of growth and acquisition plans. A Semiconductor customer accounted for 11% of FY2020 revenue; two Semiconductor customers represented 11% and 10% of year-end receivables.
Investor facts to verify
- Whether revenue, orders and backlog recover after the FY2020 declines, and whether backlog converts to shipments.
- Whether margins improve, particularly after the SiC/LED facility move and FY2020 inventory reserves.
- Cash generation and working-capital needs as inventory is built for supply-chain protection and anticipated shipments.
- Customer concentration and collection risk, plus the effects of COVID-19 and trade restrictions on suppliers and overseas sales.
- Execution and returns on planned $6–$8 million investment, facility expansion, and any future acquisitions.