Amtech Systems, Inc. — Q2 FY2022 Form 10-Q
Business context and reporting period. Amtech manufactures semiconductor capital equipment, materials and consumables through its Semiconductor and Material and Substrate segments. This unaudited report covers the quarter and six months ended March 31, 2022; fiscal year-end is September 30. Amounts below are in millions of dollars except per-share data.
Financial performance
| Metric | Q2 FY2022 | Q2 FY2021 | Six months FY2022 | Six months FY2021 |
|---|---|---|---|---|
| Revenue | $28.6 | $19.8 | $55.9 | $37.8 |
| Gross profit / margin | $12.2 / 43% | $7.7 / 39% | $22.9 / 41% | $15.2 / 40% |
| Operating income | $2.6 | $0.2 | $3.8 | $1.2 |
| Net income (loss) | $2.0 | $(0.2) | $3.0 | $0.5 |
| Diluted EPS | $0.14 | $(0.02) | $0.21 | $0.03 |
- Q2 revenue rose 44% year over year; six-month revenue rose 48%. Semiconductor revenue grew 44% in Q2 and 48% for six months. Material and Substrate revenue grew 49% and 51%, respectively.
- Q2 gross margin improved to 43% from 39%, while six-month margin increased to 41% from 40%. Management cited stronger utilization and product mix, partly offset by higher material and labor costs.
- Q2 operating income increased to $2.6 million from $0.2 million. SG&A rose to $7.8 million from $5.7 million, reflecting higher sales commissions, employee costs and freight; six-month SG&A was $15.7 million versus $10.9 million.
- Backlog was $53.6 million at March 31, up 102% from $26.5 million a year earlier. Q2 orders increased 4% to $33.7 million; six-month orders rose 30% to $65.3 million. Backlog can be cancelled or delayed and is not assurance of future sales or profit.
Cash, liquidity and debt
- Cash and cash equivalents were $27.9 million at March 31, 2022, with an additional $0.5 million of restricted cash. Cash, cash equivalents and restricted cash declined $4.4 million from September 30, 2021, principally due to stock repurchases.
- Six-month operating cash flow was negative $0.4 million, compared with negative $0.3 million a year earlier. Increased receivables and inventory used cash; customer deposits and other liabilities partly offset the use.
- Working capital was $65.6 million, compared with $65.8 million at September 30; the current ratio was 4.1:1 versus 5.4:1.
- Long-term debt, including current maturities, totaled $4.6 million; the debt bears 4.11% interest and is due September 2023. Lease liabilities totaled $8.7 million. Management expected to repay the debt in Q3 FY2022 after the planned facility sale.
- Management stated that available liquidity was sufficient to support operations for at least the next 12 months. Six-month capital spending was $0.1 million.
Material changes, outlook and risks
- Shanghai shutdown: A government-mandated shutdown began March 28 at a manufacturing facility. Amtech estimated $1.2 million of revenue was shifted to a future quarter after four lost shipping days. As of the May 11 filing, reopening still required further approvals; the company estimated an initial return of only 10–15% of the workforce and said there was no assurance of consistent reopening. It expected at least two quarters to make up missed shipments and warned results for the quarter ending June 30, 2022 could be materially adversely affected.
- Sale-leaseback: On April 15, BTU agreed to sell its Billerica, Massachusetts property for $21.5 million, subject to closing conditions and a two-year leaseback. Closing was tentatively scheduled for June 21. Management estimated net cash proceeds of $15–16 million after debt repayment and expenses, and an after-tax gain of approximately $11–12 million. These outcomes were prospective and conditional.
- Investment plans: Management anticipated $6–8 million of R&D and capital expenditures to support growth, including systems and capacity investments, while noting projects could be deferred. It highlighted SiC opportunities and its 300mm horizontal thermal reactor; it provided no quantified revenue or earnings guidance.
- Costs and execution: Management expected elevated material costs at least through fiscal year-end and continuing pressure on labor costs and customer pricing. Semiconductor markets are cyclical, and shipment timing can materially affect revenue and operating income.
- Other items: The company had $21.0 million of unrecorded purchase obligations. Its prior cybersecurity incident resulted in $1.1 million of expense in FY2021; a final insurance settlement reimbursed approximately $0.6 million, fully received by March 31, 2022. No material off-balance-sheet arrangements were reported. Disclosure controls were deemed effective.
Important facts for investors to verify
- Whether and when the Shanghai facility reopened, staffing and production recovered, and delayed shipments were delivered.
- Whether the Billerica property sale closed on the expected terms and generated the stated cash proceeds and gain; also assess the leaseback costs and relocation plan.
- Whether backlog converts to shipments and revenue, given customer cancellation or delay rights and concentration: four customers represented 61% of March 31 backlog.
- Whether margins withstand materials, labor and freight inflation, and whether planned $6–8 million of investment can be funded while maintaining liquidity.
- Customer concentration and collections: one Semiconductor customer represented 28% of receivables at March 31; two customers accounted for 28% of six-month revenue.