Amtech Systems, Inc. Q2 FY2026 earnings call

CEO Remarks

• Revenue for the quarter was $20.5 million, up over 30% from same quarter last year and 8% sequentially. Adjusted EBITDA was $2.5 million, about 12% of sales, increase of $1.1 million from prior quarter and $3.9 million from a year ago. Gross margin approached 48% in second quarter, up from 45% in first quarter. Cash on hand at end of quarter was $24.4 million.
• AI-related sales accounted for over 30% of TPS segment revenue in second quarter, bookings strong. Advanced packaging is critical for AI, and demand for advanced packaging equipment and AI server board assembly equipment is strong due to differentiated capabilities. Plan to launch first products for higher-density packaging at SEMICON trade show in Taiwan in early September.
• Growth of TPS parts and service business was a highlight, with revenue up 10% sequentially and 56% year over year. Using AI software integrated with ERP and CRM sales tools.
• For SFS segment, continue to leverage foundry service and technical capabilities, IDI Chemicals business revenue up 15% year over year, Intrepix parts and service revenue up about 40% year over year. But SFS business affected by weak sales of PR Hoffman products due to major silicon carbide customers' demand weakness.
• Operating leverage and working capital efficiency from product line rationalization and semi-fabless manufacturing model helped deliver improved results, should result in strong cash flow and further increases in margins.
• Organization announcements: Tom Sabol appointed as CFO joining May 14; Guy Shechter joining May 19 as President and Chief Operating Officer.

CFO Remarks

• Second quarter GAAP net income $1.2 million, or $0.08 per share. Gross margin increased to 47.7% from 44.8% in first quarter. Selling, general and administrative expenses increased $0.3 million sequentially due to expanding business activities, etc. Research, development, and engineering expenses relatively flat.
• Unrestricted cash and cash equivalents at 03/31/2026 were $24.4 million. No debt. $5 million stock repurchase program not used as no shares repurchased since plan in place.
• Outlook: Third fiscal quarter ending 06/30/2026 expects revenue in range of $20.5 million to $22.5 million, AI-related equipment sales for TPS segment to drive majority of revenue growth and account for as much as 40% of segment sales, adjusted EBITDA margins in low double-digits range.

For the Thermal Processing Solutions segment, revenue was up over 30% from the same quarter last year and up 8% sequentially. AI-related sales accounted for over 30% of TPS segment revenue in the second quarter and bookings were very strong, with expectation that the percentage of revenue from AI applications in TPS segment to exceed 40% in the third quarter. Growth of TPS parts and service business was a highlight, with revenue up 10% sequentially and 56% year over year. For the Semiconductor Fabrication Solutions segment, total SFS revenues were $5.7 million in the second quarter, up 15% from approximately $5 million in both the prior sequential quarter and the prior-year quarter. IDI Chemicals business revenue was up 15% year over year. Revenue for parts and service at Intrepix was up about 40% year over year. However, much of the success from initiatives in SFS segment has been masked by weak sales of PR Hoffman products due to weakness in demand from major silicon carbide customers.

• For the third fiscal quarter ending 06/30/2026, the company expects revenue in the range of $20.5 million to $22.5 million.
• AI-related equipment sales for the Thermal Processing Solutions segment are anticipated to drive the majority of revenue growth and account for as much as 40% of the segment sales in the 2026 third quarter.
• Amtech Systems, Inc. expects to benefit from its operating leverage to deliver adjusted EBITDA margins in the low double-digits range.

• Changes in technology used by customers and competitors.
• Changes in volatility and demand for products.
• Effect of changing worldwide political and economic conditions including trade sanctions.
• Effect of overall market conditions, including equity and credit markets and market acceptance risks.
• Ongoing logistics, supply chain and labor matters.
• Capital allocation plans.
• Other risk factors detailed in SEC filings, including non-GAAP financial measures reference risks.

Q: Hi, good afternoon, guys. Thanks for taking my questions. Bob, I was hoping to get a little more granularity on gross margins in SFS. Looks like it was up about 800 basis points sequentially. So any kind of added color on what is going on there would be great.

A: Yes. Again, I think the additional revenue contributed a bit to that, and I think the balance would really be mix-related. There was not anything really structurally different quarter to quarter in that segment. It is more reflective of the mix of products through that business and the incremental revenue. We have a lot of operating leverage, as you might imagine, with the structural changes we have made over the past couple of years. We have positioned ourselves where we do get very solid flow-through of any incremental revenue to our overall results.

Q: And then I want to ask about kind of geographic mix and how you are seeing demand trends across regions?

A: Yes. So as you might imagine, Asia is really the hotbed for AI infrastructure buildouts. Traditionally in the packaging area, it has been almost exclusively Taiwan, but what we are seeing is a significant buildout of packaging infrastructure in other parts of Southeast Asia—Thailand, Malaysia, Indonesia, India, for example. So we are seeing a broadening of geographic footprint in terms of major investments in the packaging area, almost all driven by AI infrastructure. And I would say more recently, we are seeing quite a bit more activity in North America as well. It was pretty quiet, but we are starting to see some investments being made. I would say more so on the enterprise-level board assembly at this stage than chip packaging, but it is nice to see some increased AI activity in North America as well.

Q: In terms of Asia, should we be keeping an eye out on any kind of trade policy, tariff, or supply chain dynamics?

A: Yes. Specific to the tariffs, we positioned ourselves pretty well there. If you go back a year ago, any equipment coming into the U.S. was basically being manufactured in China, and obviously there were very meaningful tariff impacts as a result of that. But we did establish a partner where we now manufacture equipment for the U.S. in the Singapore/Malaysia area. So we have kind of insulated ourselves quite a bit from the U.S.–China stress levels. And beyond that, there really have not been a lot of cross-Asia issues. Back to your supply chain question, everyone is talking about memory being more expensive and obviously that is the same for us, and we have to adjust our cost and pricing accordingly if memory becomes more expensive. We really have not seen any shortages; I would say it is more that there is a little bit of price pressure that we need to deal with and pass along on the memory side.

Q: Okay, great. And then last one for me. Cash continues to improve. How should we be thinking about capital allocation? Or I should say, how are you thinking about capital allocation? You have the $5 million repurchase authorization out there. Is that a priority? Or is it more R&D in new products or even potentially M&A?

A: Yes. I would say growth is number one, because back to the operating leverage discussion, as we grow with the strong margin leverage we have in our portfolio—and I should mention with all the product lines that we cut from the portfolio rationalization efforts, I would say across the board we have very healthy margins across the entire portfolio right now—so any of the product lines that grow are very meaningful in terms of improving cash generation, gross margins, and EBITDA. From an investment standpoint, we are making those investments. We have been increasing our R&D efforts around next-generation equipment. There could be a little bit of incremental investment needed to drive that home. We are investing in resources to develop the pipeline for SFS in terms of trying to build out our IDI portfolio and the recurring revenue streams. We will continue to incrementally invest in that and do not see that having a meaningful impact on cash needs. And then the other factor I think we want to point out is with our semi-fabless model, we have the ability to scale without meaningful CapEx. As I mentioned in my comments, even looking out a year in terms of high growth and demand for the equipment used for AI packaging, we do not really see the need for deploying meaningful cash for CapEx. The semi-fabless model and our supply chain can handle that growth. So having said all that, long story short is if we find inorganic opportunities, we would deploy cash accordingly. But as I have said to many people, I spent over a decade doing corporate development in a prior life, and I would say we need to be prudent, cautious, and make sure that what we do is generating real meaningful value. So when people ask me, are you going to acquire, I always answer the question with “maybe,” because if we find acquisitions that can create real value, we are going to do those to accelerate growth. But we do have a great pipeline of organic growth that I think can push us forward. And then back to your question about capital allocation, obviously, the priority is growth. If we did not have better uses for that, then of course we would look at providing the cash back to shareholders in some form.

Q: Good evening. Thanks for taking my questions, Bob. Last quarter, the small delay in one of your AI customers in taking some packaging equipment had a big impact in your stock. Did we maybe see the delivery of that equipment in this current period, or is it expected over the next couple of months? And do you expect the linearity or the overall business to have sort of a smoother trajectory given the size and scale that you are gathering over the next couple of quarters?

A: Yes, we did ship that particular equipment during the quarter. And I would say that the visibility—I would not say it is great—but it is getting better because there is a lot more activity in terms of new facilities being put in. And so we are seeing more bookings with deliveries out a quarter, and in a couple of cases, actually a couple of quarters now, which is very unusual for our business because, as I have mentioned before, we have very short lead times, we have a very efficient supply chain, and we turn equipment around very quickly. So we have typically been a book-and-ship, even in this large-scale capital equipment space. But having said that, because people are actually building new facilities now and do not necessarily need all the equipment immediately, we are seeing better visibility, which I think will translate to smoothing things out a bit, frankly, as we get better visibility and bookings that are not just current quarter, but out a ways.

Q: That definitely makes sense. The next question is one that I get asked fairly often, right? It is more of a big-picture question, Bob. So can you talk a little bit about Amtech Systems, Inc.'s moat in advanced packaging and AI? What has allowed you to dominate this space? There are others that would like to do business in here, but you have maintained a really strong reputation on technology that has allowed you to have those long-term customer relationships and supplier relationships too. What is different about what you are doing that gives you this moat?

A: Generally, we win when it is a demanding application, and there are actually three components that usually come into play. In advanced packaging, that TruFlat technology—and unfortunately we do not have graphics in front of you—but these are large conveyorized pieces of equipment, almost half the length of a tractor-trailer bed, that are doing the reflow operations for these packages. You are raising things to very high temperatures; most materials, most substrates, tend to bow and twist and deform as you are heating them up. We have technology which allows us to pull a vacuum and hold the substrates down flat against the belt so things do not basically shift during the assembly process. What does that mean? That means high yield. So in applications where you are trying to process something that is very expensive, you are not going to sacrifice yield; you have to have equipment that is going to be robust. The other thing I would say is temperature uniformity. I think we have a significant advantage in being able to provide uniformity across our reflow—across the belt, within zones. Our latest equipment actually has reconfigurable zones that can be customized by customers. So we have provided capabilities that really are enabling for high-yield, high-throughput processing of these things. And I would say the last thing—which I think I have mentioned before—like our AccuScrub technology, for example, where we can remove the contaminants from the processing fluxes out of the gas stream so that it reduces downtime in the ovens and reduces the risk of contaminating the product. So it is not just one thing; we have a portfolio of capabilities and IP around some of these capabilities that put us in a position where if you are trying to process an AI package, an AI enterprise board, it is expensive. We are worth it, which is why we have captured the strong market position that we enjoy today.