Participants

Robert Daigle; Chairman of the Board, President, Chief Executive Officer; Amtech Systems Inc

Presentation

Operator

Good day and welcome to the Amtech Systems Fiscal first quarter, 2025 earnings conference call, please note that this event is being recorded. I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead.

Good afternoon and thank you for joining us for Amtech Systems Fiscal first quarter, 2025 conference call with me on the call today are Bob Daigle, Chairman and Chief Executive Officer and Wade Jenke, Chief Financial Officer.
After close of Market today, Amtech released its financial results for the fiscal first quarter of 2025. The earnings release is posted on the company's website at www.amtechsystems.com in the Investors section.
Before we begin, I'd like to remind everyone that the safe harbor disclaimer in our public filings covers this call and our webcast. Some of the comments to be made during this call today will contain forward-looking statements and assumptions that are subject to risks and uncertainties, including, but not limited to, those contained in our SEC filings, all of which are posted within the investors section of our corporate website.
The company assumes no obligation to update any such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements which speak only as of today.
These statements are not a guarantee of future performance and actual results could differ materially from current expectations among the important factors which could cause actual results to differ. Materially from those in the forward-looking statements are changes in the technologies used by customers and competitors change in volatility and demand for products. The effect of changing worldwide political and economic conditions including trade sanctions; The effect of overall market conditions, including the equity and credit markets and market acceptance risks; ongoing logistics supply chain, and labor challenges; and capital allocation plans. Other risk factors are detailed in our SEC filings including our form 10-K and form 10-Q.
Additionally, in today's conference call, we will be referring to non-GAAP financial measures as we discuss the fiscal first quarter results, you'll find a reconciliation of these non-GAAP measures to our actual GAAP results included in the press release issued today.
Now I will turn the call over to Amtech's Chief Executive Officer, Bob Daigle.

Robert Daigle

Good afternoon and thank you for joining us today. I'm pleased to report that our first quarter results exceeded our guidance with revenue of $24.4 million and $1.9 million in adjusted EBITDA while revenue remained muted on a year over year basis due to continued softness in the markets. We serve. Our profitability continued to improve with year over year adjusted EBITA increasing by $1.8 million.
This performance underscores our ongoing focus on operational excellence and cost optimization. Over the past year, we have made significant progress, restructuring our business to enhance our cost efficiency and improve our ability to adapt to market demand. These efforts are delivering tangible results.
Our restructuring initiatives have yielded over $8 million in annualized cost savings to date excluding one time costs and are expected to generate approximately $9 million in annualized savings. By the end of the second fiscal quarter, the adoption of a semi fabulous model for our capital equipment segment has further strengthened our operating leverage by enabling us to right size the organization and reduce fixed costs. This transition has positioned us well to efficiently support production with varying levels of market demand.
Additionally, over the past several quarters, we implemented pricing actions to offset inflationary pressures and enhance our product margin profile. By the end of the second quarter, we will have shipped the majority of the low price, lower margin business in our backlog going forward, we will remain vigilant and adjust pricing as necessary to preserve profitability.
Turning to our end markets demand remains muted for equipment and consumable supporting mature nodes, semiconductor production for markets such as industrial equipment and automotive. However, demand for our flow equipment in leading edge applications such as AI infrastructure has continued to strengthen.
While optimizing our cost structure remains a priority. Given the macro backdrop, we are investing in growth initiatives in 2025 and have aligned our organization to better serve our customers.
To that end. As we discussed last quarter, we have refined our business segments to provide greater clarity and focus the semiconductor fabrication solutions business previously known as the materials in the substrate segment includes Pierre Hoffman and Idi consumables and TriC parts and services as well as some front end capital equipment used for semiconductor wafer and device fabrication.
Meanwhile, the thermal process solutions business formally, the semiconductor segment focuses on ref flow equipment for advanced chip packaging and surface mount assembly applications as well as furnaces for power electronic device production and packaging within the semiconductor fabrication solutions business. Our goal is to drive long term sustainable growth by expanding the reoccurring revenue streams such as consumables parts and services. These revenue streams not only provide higher margins but also deliver more predictable, less cyclical revenue growth.
To achieve this. We are working to broaden our footprint with existing customers, unlock new opportunities at additional sites and are actively pursuing opportunities to introduce more of our products to new customers. Additionally, we are leveraging our proven solutions to address similar challenges for other applications to support these initiatives. We have expanded our team by adding a new business leader for our semiconductor fabrication solutions business as well as dedicated marketing and application development resources with deep industry knowledge.
Although the near term macro environment remains soft, we are confident about our future. Our restructuring efforts have strengthened our ability to navigate industry cycles, enabling us to generate profits during downturns. While unlocking significant operating leverage as business scales looking forward, our long term growth drivers remain robust. Investments in AI related infrastructure and supply chain diversification are expected to drive for recovering the capital equipment demand. While expectations for growth have moderated, we still anticipate double digit expansion in this segment which will continue to fuel demand for our silicon carbide related consumables. In the medium term, we expect our focus on growing our consumable parts and services offerings will provide higher margins and improve stability.
Meanwhile, growing momentum in advanced packaging is providing a tailwind to capital equipment demand. Together we believe these strategic initiatives and industry dynamics position us well for sustained growth and long term value creation in the years ahead.
With that, I'll turn it over to Wade for further details on our financial results.

Thank you, Bob. for fiscal Q1 net revenues increased 1% sequentially from last quarter and decreased 2% from a year ago. The sequential increase from last quarter is primarily due to increased sales of our diffusion and high temperature furnaces partially offset by lower sales of our Wafer cleaning equipment. The decrease from the prior year is primarily attributable to lower sales of the way for cleaning equipment.
In the first quarter of fiscal 2025 our GAAP gross margin decreased by $0.4 million sequentially compared to last quarter due to a less favorable product mix, GAAP to its margin increased by $1.1 million compared to a year ago. This is driven by better margin profiles and cost save despite lower revenue and due to intangible asset impairment last year by $0.8 million selling general and administrative expenses decreased by $0.7 million. Sequentially from last quarter and decreased $0.5 million from a year ago.
The decrease across both periods are primarily due to fixed cost reductions by our efforts, research development and engineering expenses decreased by $0.1 million. Sequentially from last year and decreased by $0.7 million from a year ago. The sequential decrease is primarily due to the timing of purchases related to specific R&D projects.
The decrease from a year ago is attributable to development efforts in our semiconductor fabrication solution segment that did not reoccur GAAP net income for the first quarter of fiscal 2025 was $0.3 million or $0.02 per share. This compares to GAAP net loss of $0.5 million or $0.04 per share for the preceding quarter and GAAP net loss of $9.4 million or $0.60 per share for the first quarter of fiscal 2024 non-GAAP net income for the first quarter of fiscal 2025 was $0.8 million or $0.06 per share. This compares to non-GAAP net loss of 7,000 or $0.00 per share for the preceding quarter. A non-GAAP net loss of $0.6 million or $0.04 per share for the first quarter of fiscal 2024.
Unrestricted cash and cash equivalents at December 31st, 2024 was $13.2 million compared to $11.1 million at September 30th 2024 due to stronger accounts receivable, collection and inventory management effort. During the quarter now turning to our outlook for the second fiscal quarter ending March 31st, 2025 we expect revenues in the range of 21 to 23 million with adjusted EBITA nominally positive.
Although the near term outlook for revenue and earnings remains challenging, we remain confident that our long term future prospects are strong for both our consumables and equipment serving advanced mobility and advanced packaging applications. We continue to optimize and reduce Amtech structural costs. These steps should significantly improve results and enhance profitability through market cycles. Operating results can be significantly impacted positively or negatively by timing of orders, system shipments, logistical challenges and the financial results of semiconductor manufacturers.
Additionally, semiconductor equipment industries can be cyclical and inherently impacted by changes in market demand. Actual results may differ materially in the weeks and months ahead. A portion of AMTECH'S results is denominated in RMBS A Chinese currency. The outlet provided is based on an assumed exchange rate between the United States dollar and the RMB. Changes in the value of the RMB related to the US dollar could cause actual results to differ from expectations.
I will now turn the call over to the operator for questions, operator.

Question and Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Kevin Garrigan from Rosenblatt security.

Yeah. Hey guys, great speaking with you again and congrats on the, on the results. So just the first one, you guys have done a great job with the restructuring plan. Are there still additional costs that you can kind of take out of the business? And if so, what areas would those kind of be in?

Robert Daigle

Yeah. Hi, Kevin. Thanks for joining the call. Yeah. You know, we're continuing to work on things. There's a lot in supply chain management and,that we've basically have in the pipeline right now where, where we've found and it takes a lot of work through because we do have some inventory in place, but that we can through better sourcing practices, better supply chain management able to significantly reduce the input costs for some of the some of the equipment in our business. I'd say the other area we're looking at in terms of footprint, utilization is where there's opportunities to really free up some space. We're trying to do that reduce some of the fixed cost there as well. So there's always, there are always things, our teams,it's been very good in terms of identifying these opportunities and, and converting them into you know, real savings for us and we'll continue to make that a focus in 2025.

Got it, Okay. That makes sense. And then, so second question, we've throughout this kind of earning season, we've heard mixed outlook so far, especially with regards to the automotive market. So can you just kind of talk a little bit more about what you're seeing in the market? I mean, has it gotten better or worse versus kind of three months ago?

Robert Daigle

Yeah, I mean, our guidance as we pointed out that the 21 to 23 reflects the fact that I think, we're continuing to see softness in that segment and I'd say it's particularly, it's been particularly weak in the equipment side of things that are automotive related. So I don't, again, I don't, I haven't heard anything, suggesting that, that there's a sharp recovery. A couple of the O EMS are reported that they think we've passed bottom. A couple are still saying things are very weak. So we're assuming things will stay, stay soft and, I did maybe a little bit of color on, you know, our growth initiatives, kind of the philosophy we've operated on the focus of the past year frankly, has been on, improving our cost structure, operating leverage. And now the pivot is really, I'm, I'm accustomed to, you control your own destiny on growth as well as costs.
And, we're starting to resource efforts to, to really broaden what we do in the marketplace, in these markets so that, the hope and the approach we're taking is really, eventually you get market recovery, but we really want to drive organic growth that's beyond just market recovery. And then, and I think that that's really our focus right now is, is, you know, get a little bit more control over our own destiny and then the markets are cyclical, they'll come back. But in the meantime, there's work work we can do to improve revenue.

Okay. Yeah, that, that makes.

Robert Daigle

Yes.

Yes, it does. Thank you. And then just as my final question you had mentioned that you were, you're seeing more activity in the advanced patch packaging space. Can you just kind of give us a little more color on what you're seeing in that area? And as a I kind of moves from training to inference and more towards the edge where companies are looking for more efficient chips. You know, do you guys expect to see stronger growth from this trend?

Robert Daigle

Yeah, and let me give you a little bit of the, we talked about the past couple of quarters that we've been seeing strengthening in the advanced packaging area and our customer base. Generally it, it's the OSATS in a lot of cases. So, it's the guys who are, are packaging, the chip sets for, for the AI data centers. But I do believe we're going to, we're going to start to see you know, proliferation of more hardware out there to support AI on the edge. And I, and I think they'll drive more volume which should, should bode well for the advanced packaging equipment side of things. So it's been a couple of quarters where we've seen some meaningful strengthening versus where we were sitting in 2024 for you know, our equipment and it is, and it is the players we're dealing with are, the ones who are are have been successful in the industry.

Okay, perfect. I appreciate the color. Thanks guys.

Robert Daigle

All right. Thanks, Kevin.

Operator

As a reminder. If you have a question, please press star one on your telephone keypad.
There are no further questions at this time. I will now turn the call back to Bob Daigle. Please continue.

Robert Daigle

Well, thank, thank you for joining our conference call today and, and we look forward to updating you on the progress we're making in the months to come and have a good afternoon. Good evening.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.