Amtech Systems Inc 2026 Q3 Earnings Call

Please go ahead. Thank you, good afternoon, everyone.

We appreciate you joining us for the Amtech Systems fiscal 2026 third quarter conference call and webcast. With me on the call today are Bob Daigle, Chairman and Chief Executive Officer; Guy Shechter, President and Chief Operating Officer; and Thomas Sabol, Chief Financial Officer. After close of market today, Amtech released its financial results for the third quarter of fiscal 2026. The earnings release is posted on the company's website at www.amtechsystems.com in the Investors section. We issued a second press release after the market closed today, also available on the website, addressing executive appointments and transitions, which will be discussed during today's conference call as well. Before we begin, I'd like to remind everyone that safe harbor disclaimer in our public filings cover this call and the webcast.

Some of the comments we make during today's call 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 on the Investors section of our corporate website. The company assumes no obligation to update any such forward-looking statements. You are cautioned to not place undue reliance on forward-looking statements, which speak only as of today. These statements are not guarantees of future performance, actual results could differ materially from current expectations.

Among the important factors which could cause actual results to differ materially from those in forward-looking statements are changes in technology used by customers and competitors, change in volatility and the demand for products, the effect of changing worldwide political and economic conditions, including trade sanctions, and the effect of overall market conditions, including equity and credit markets and market acceptance risks, ongoing logistics, supply chain and labor matters, 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 referencing non-GAAP financial measures as we discuss the financial results for the third quarter. You will find a reconciliation of those non-GAAP measures to our actual GAAP results included in the press release issued today. I will now turn the call over to Amtech's Chief Executive Officer, Bob Daigle.

Hello. Thank you, Jordan. As Jordan mentioned, we made two announcements after the market closed today. The first was our third quarter earnings, highlighted by continued strong AI-related growth. The other announcement was in connection with the Chief Executive Officer transition for the company. I'll start by addressing our third quarter results. Revenue for the quarter was $22.4 million, up 14% year-over-year, and at the top end of our guidance range. Strong AI-related demand within our Thermal Processing Solutions segment drove growth during the quarter that was partially offset by weaker sales in our Semiconductor Fabrication Solutions segment. AI-related revenue for our Thermal Processing Solutions segment was very strong, up by approximately 120% from the prior year period. Profitability exceeded guidance due to the strong operating leverage generated by our semi-fabless model and other enhancements made during the past 2+ years.

Gross margin increased to 50% for the quarter, and adjusted EBITDA of $3.3 million approached 15% of sales. The combination of higher revenue margins and disciplined execution also continued to support strong cash generation. Our Thermal Processing Solutions segment delivered excellent results for the quarter. Year-over-year revenue grew by almost 25% due to robust demand for AI-related equipment, which accounted for more than 40% of segment revenue. Parts and services revenue increased by approximately 30% compared to the same quarter last year, reflecting the continued success of our customer outreach initiatives. As broadly reported, semiconductor manufacturers, OSATs, and other participants in the AI supply chain continue to expand capacity to support significant AI infrastructure investments. Advanced packaging continues to serve as a critical enabler of artificial intelligence by supporting increasingly complex semiconductor architectures.

Capital equipment capable of delivering high yields, excellent throughput, and highly repeatable process performance remains essential to supporting this growth. Demand for our advanced packaging equipment and AI server board assembly solutions remains exceptionally strong due to our differentiated capabilities, including true-flat technology and an industry-leading temperature uniformity. The book-to-bill ratio for our Thermal Processing Solutions segment approached 1.4 in the quarter, driven by AI-related equipment demand. This is our third consecutive quarter where our book-to-bill exceeded one. Despite our relatively short lead times, we are seeing a significant increase in bookings scheduled for shipment in future quarters, providing confidence that AI-driven demand will continue to be a meaningful growth driver. An exciting new development during the quarter was the receipt of our first order for equipment used in the production of cooling components for AI semiconductors.

This application expands our participation in AI infrastructure build-out beyond advanced packaging and server board assembly, and represents another attractive growth opportunity for our business. To accelerate growth beyond 2027, our teams are developing new equipment platforms and process capabilities designed to support emerging semiconductor applications and higher density packaging requirements. We plan to introduce some of these new products and capabilities at the SEMICON Taiwan Trade Show in early September. We believe these new capabilities and products should significantly expand our addressable market and help support sustainable growth in the years ahead. Turning to our Semiconductor Fabrication Solutions segment, the year-over-year revenue decline was primarily driven by a significant reduction in demand for our PR Hoffman templates used in silicon carbide substrate manufacturing. Unfortunately, due to structural changes in the silicon carbide industry, we do not expect meaningful recovery in demand.

To revitalize growth in this segment, our strategy remains focused on serving customers and applications that are underserved within the industry. We're continuing to invest in customer outreach and engagement initiatives to grow our parts and services business, and new product development to grow our specialty chemicals business. At Entrepix, our parts and service business delivered another strong quarter with revenue increasing 19% year-over-year. While we invest in revitalizing growth, the SFS business is making some contribution to our overall profitability by covering a portion of our corporate overhead costs. Across Amtech, the operating leverage and working capital efficiencies created through our product line rationalization efforts and transition to a semi-fabless operating model over the past two-plus years continues to deliver meaningful value.

We ended the quarter with $83.1 million of cash, including $56.5 million of net proceeds from an oversubscribed public offering of nearly 3 million shares of common stock, which was essentially done at market price. Excluding the capital raise, cash at the end of the quarter was up $2.2 million from the prior quarter, and $11 million from the prior year. While we weren't pursuing additional growth capital, we felt the timing was right to opportunistically bolster our balance sheet in anticipation of opportunities to supplement organic growth with synergistic acquisitions. Before Tom provides more details concerning our financial performance, I'd like to briefly address the leadership transition we announced today. After serving as Chairman and Chief Executive Officer for the past 3 years, I will transition to the role of Executive Chairman, and Guy Shechter will assume the position of Chief Executive Officer.

Guy has also been appointed to our company's board of directors. This transition is a result of a thoughtful, successful planning process led by our board of directors, and reflects a commitment to strong corporate governance, leadership continuity, and long-term value creation. As Executive Chairman, I will be working closely with Guy to ensure a seamless transition, and remain actively involved in supporting our long-term growth strategy. Since joining Amtech earlier this year as President and Chief Operating Officer, Guy has quickly established strong connections with our customers, partners, and employees while helping to further align our operations, growth initiatives, and product development efforts. I will now turn the call over to Guy so he can introduce himself and provide some additional background.

Thank you, Bob. I appreciate the confidence that you and the board have placed in me, and I'm honored to lead Amtech as we enter this next phase of growth. I look forward to working with you, the board, and the Amtech team to build on the company's strong foundation and continue advancing our strategy. I bring more than 25 years of leadership experience in semiconductors and advanced packaging equipment industries, including product management, operations services, and general management. Prior to joining Amtech, I held senior leadership roles at Yield Engineering Systems and Veeco Instruments, where I focused on developing high-performing teams, delivering differentiated products and services, and driving profitable growth. Since joining Amtech earlier this year, I've spent time across our global operations and with customers around the world.

Those discussions have reinforced my confidence in the strength of Amtech's brand, the depth of our customer relationships, and the opportunities we have to expand our presence in attractive growth markets. We see strong demand for technologies that enable AI-driven semiconductor manufacturing and advanced packaging. Amtech is well-positioned to capitalize on these trends by strengthening its core businesses, expanding the technology portfolio, and increasing our participation in key process steps across customers' manufacturing roadmaps. I'm excited about the opportunities ahead and confident in our ability to execute, support our customers, and create long-term value for our shareholders. With that, I'll turn the call back to Bob.