AMTECH SYSTEMS INC Q4 FY2024 earnings call

• Strategic actions included a restructuring plan with organizational adjustments, cost reductions, and operational enhancements, resulting in $7 million of annualized operating savings. - Streamlined the product portfolio by exiting unprofitable legacy equipment business at PR Hoffman and investing in consumables business, with consumable sales up 28% Y/Y. - In Thermal Processing Solutions, shifted to hybrid manufacturing model to manage lead times, reduce capex, and enhance flexibility. - Focus for 2025 is on driving sustainable growth with recurring revenue streams like consumables, parts, and services; renamed segments to better align with markets served. - Ended fiscal 2024 with positive adjusted EBITDA of $4M (vs $1.8M in 2023), cash balance over $11M, and paid off $4M in debt.

For the Semiconductor Fabrication Solutions segment, sales of consumable products at PR Hoffman surged by 28% year-over-year despite overall revenue growth of just 2%. The Thermal Processing Solutions segment accelerated its shift to a hybrid manufacturing model, combining in-house production with outsourced capabilities to manage lead times, reduce capital expenditures, and enhance operational flexibility. In absolute terms, net revenues for the fourth quarter decreased 10% sequentially and 13% year-over-year. GAAP gross margin in the Thermal Processing Solutions segment was positively affected by product mix, while the Semiconductor Fabrication Solutions segment's GAAP gross margin slightly decreased due to less favorable product mix on consumables and equipment.

• Fiscal Q1 2025 revenue expected in range of $21M to $24M with adjusted EBITDA nominally neutral. - Annual structural cost reduction of approximately $7M achieved through 2024 actions. - Expect to realize an additional $2M in operational savings by mid-2025 from outsourcing to contract manufacturing. - Near-term outlook for revenue and earnings remains challenging, with operating results impacted by order timing, system shipments, and semiconductor manufacturer financials.

• Factors affecting results include changes in technologies used by customers and competitors, market volatility and demand, worldwide political and economic conditions (including trade sections), overall market conditions (equity/credit markets), market acceptance risks, logistics/supply chain/labor challenges, and capital allocation plans. - Currency fluctuations as a portion of results are denominated in RMBs.

Q: Can you call out applications or opportunities where Amtech can participate in AI and data center growth?

A: Amtech participates in AI on the back end with reflow equipment for advanced packaging, and in consumables for thermal management and front-end solutions. Focus is on broadening into consumables beyond just back-end equipment.

Q: What is the outlook for cash flow generation over the next 6 months?

A: Cash flow generation will be partially fueled by operation activities reducing inventory and future positive EBITDA; also, the company paid off $4M in debt and is debt-free, with focus on cash flow positive operations even during downturn.

Q: What is your margin outlook?

A: For fiscal Q1 2025, slightly below Q4 performance, but expect to be in 40% range with restructuring and contract manufacturing strategy helping enhance margins over time.

Q: What is the outlook for R&D?

A: R&D expenses were up slightly due to timing, but expected to return to normal run rate around $1M per quarter on average.