Amtech Systems, Inc. — Q1 FY2021 10-Q
Reporting period: Three months ended December 31, 2020; financial statements are unaudited. Amtech manufactures semiconductor thermal-processing equipment and wafer-polishing equipment and consumables. It reports Semiconductor and SiC/LED segments; its solar and automation businesses have been divested.
Financial results
| Metric | Q1 FY2021 | Q1 FY2020 |
|---|---|---|
| Revenue | $17.975 million | $20.692 million |
| Gross profit / margin | $7.512 million / 42% | $8.174 million / 40% |
| Operating income | $1.054 million | $1.637 million |
| Continuing-operations income (loss), net | $0.719 million | $(1.267) million |
| Net income (loss) | $0.719 million | $(1.932) million |
| Diluted EPS | $0.05 | $(0.14) |
| Operating cash flow | $0.104 million | $(0.168) million |
Cash and cash equivalents were $45.614 million at December 31, 2020, versus $45.070 million at September 30, 2020. Working capital was $70.6 million; the current ratio was 9.4:1. Debt totaled approximately $5.085 million, including current maturities. Operating lease liabilities were $5.208 million. Capital expenditures were $0.198 million. The filing reports no material off-balance-sheet arrangements.
Material changes and segment performance
- Revenue declined 13% year over year. Semiconductor revenue fell 10% to $15.575 million; SiC/LED revenue fell 15% to $2.400 million, primarily due to lower machine sales. Prior-year revenue also included $0.643 million from the divested automation business.
- Gross margin improved to 42% from 40%. Semiconductor margin rose to 44% from 42% on favorable product mix; SiC/LED margin fell to 25% from 35%, reflecting lower revenue over higher fixed costs following capacity expansion.
- Operating income decreased to $1.054 million from $1.637 million. SG&A declined to $5.213 million from $5.915 million, while research, development and engineering expense increased to $1.245 million from $0.622 million, reflecting product-improvement and new-product work.
- The prior-year quarter included a $2.793 million loss on the R2D automation sale and a $0.665 million after-tax loss from discontinued solar operations; neither was recorded in the current quarter.
- Orders rose 1% to $17.869 million; backlog was $13.799 million at quarter-end, up 3% year over year. Management cautions that orders may be delayed or canceled and backlog is not assurance of future sales or profit.
Outlook, risks and contingencies
No specific revenue or earnings guidance is provided. Management expects $6.0–$8.0 million of research and development and capital expenditures to support growth, including SiC opportunities, product development and facility capacity. It expects capital expenditures to increase as it relocates its Shanghai manufacturing facility after the current lease expires in Q3 FY2021. Projects may be deferred depending on COVID-19 conditions. Management stated that available liquidity should support operations for at least the next twelve months.
Management described COVID-19 impacts and semiconductor-market volatility as ongoing uncertainties, with possible disruption from resurgences and new virus strains, as well as U.S.-China trade tensions and the cyclical nature of the industry. Three customers represented 16%, 15% and 13% of quarterly revenue; customer concentration and order timing are notable exposures. The filing reports $4.7 million of unrecorded purchase obligations. Legal claims arise in the ordinary course; management considers provisions adequate for probable and estimable losses but notes outcomes could adversely affect results or liquidity. U.S. deferred tax assets remain subject to a full valuation allowance.
Investor facts to verify
- Whether order growth and backlog convert into shipments and revenue, given cancellation and timing risks.
- Whether SiC/LED sales and margins recover enough to absorb the segment’s fixed costs.
- Execution, cost and timing of the Shanghai facility relocation and planned growth investments.
- Customer concentration, COVID-19 effects, trade risks, and the impact of currency movements on cash and results.
- Debt repayment and lease commitments, as well as the realization of tax assets and resolution of contingencies.