Amtech Systems, Inc.

Good day, and welcome to the Amtech Systems second quarter 2021 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 second quarter 2001 conference call. With me on the call today are Michael Wang, Chief Executive Officer, and Lisa Gibbs. Chief Financial Officer. Also joining us is Paul Lancaster, Amtek's Vice President of Sales and Customer Service. After close of market today, Amtek released its financial results for the fiscal second quarter of 2021. The earnings release is posted on the company's website at www.amteksystems.com in the Investors section. During today's call, management will make forward-looking statements. All such forward-looking statements are based on information available as of this date and the company assumes no obligation to update any such forward-looking statements. These statements are not a guarantee of future performance and actual results may 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 the 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, capital allocations plans, and the worldwide COVID-19 pandemic. Other risk factors are detailed in the company's SEC filings, including its Form 10-K and Forms 10-Q. I will now turn the call over to Michael Wang, Chief Executive Officer.

Thank you, Erica. AMTEC continued to deliver strong momentum in the second quarter with revenues of $19.8 million coming in at the high end of our expectations. Activity within the semi-market continues at a strong pace with record bookings and with continued upside opportunities across our served markets. For our advanced packaging products, market forecasts continue to point to a strong outlook in 2021, and we have seen this translate to continued order activity. At this point, we are approaching near 100% capacity utilization at our Shanghai facility, given the increased business demand and have taken steps to both increase interim capacity as well as move to a larger facility later this summer. Within the power semi-market, our customers have moved forward with their capacity expansion plans that were previously placed on hold due to the pandemic. In the second quarter, we received orders for six 300-millimeter diffusion furnaces from one customer that pulled in their capacity expansion project due in part to the strong global demand of power chips particularly for automotive applications. These tools are scheduled to ship the second half of Candler 2021. In addition, the dialogue with our other customers remain very robust as they evaluate their multi-year expansion plans. Overall, we continue to be pleased with the performance of our semi-segment. Following a year of strong growth in advanced packaging applications in 2020, we are seeing demand continue into 2021 as industry shortages continue to accelerate capital expansion plans. Illustrating this strength in the second quarter, our book-to-bill ratio for the semi-segment grew to over 1.7 to 1. Since growth rates for our products tend to correlate with the overall Semi-CapEx spending, we believe the strength in demand we are experiencing will continue in line with the broader industry. Moving on to our silicon carbide and LED segment, In the second quarter, we completed the acquisition of IDI, a small technology token to bolster our offering in the substrate consumable space and incorporate wafer processing coolants and chemicals to our existing consumable machine product lines. While early from a product development standpoint, we believe that over the mid to long term, there is great opportunity to expand our SAM and generate meaningful synergies for both the integration of product roadmaps and cross-selling with existing customers. By leveraging Amtek's and IDI's strong customer relationships and products, we believe we can introduce differentiated consumable solutions into the silicon, optics, and ceramics market and increase both our share of wallet as well as the value we deliver to customers. We expect IDI to contribute approximately $400,000 to $500,000 of revenue per quarter as it continues to sell to existing products. As I develop additional products and take advantage of synergies on joint product roadmaps, that number will grow, which we anticipate will be early in our fiscal year 2022. As part of this expansion of our product offering, we have realigned our silicon carbide and LED segment, now called material and substrate, to better reflect the opportunities we are targeting moving forward. As part of this change, we have recently promoted George Mazur to lead the new material and substrate segment. George began his career at Gear Systems focused on wafering and silicon materials. And after a long and tender career, transitioned to sales leadership roles in several high technology companies, including those focused on processing tools for silicon carbide applications. It's George's combination of deep technical experience within the wafer processing industry, as well as his proven track record of building and leading highly effective organizations that we believe make him a great fit to drive growth in this segment going forward. Related to near-term customer demand dynamics within the material and substrate segment, discussions with customers remain active. Customer orders for equipment have begun to roll into backlog with an expectation of shipments in the next six months. It is important to note that these orders are not directly related to soap and carbide but rather are a resumption of demand from other industries such as silicon, optics, and ceramics. During the pandemic, these customers were greatly impacted as new machine purchases decreased significantly for all of 2020. We are encouraged to see this portion of our business return as it signals a broad-based recovery is underway across many of our served markets. It helps absorb the incremental fixed costs in our PR Hoffman facility as we weight the ramp of silicon carbide. As it relates to the larger multi-year capacity expansion plans of silicon carbide wafer producers, we continue to maintain a healthy dialogue with our customers and await the finalization of their plans to increase wafer output. As a reminder, the lead times for our products are often shorter than those of device manufacturing equipment, and as such, we would expect to see an uptick in demand once new production volume wafering capacity is brought online to service the needs of new device manufacturing facilities. Given our market-leading position in consumables, roadmap for new machine platforms, and recently completed capacity expansion investments for our silicon carbide manufacturing operations, we remain as excited as ever about the mid- to long-term opportunities in front of us. We believe in our leadership in the market segments with exposure to several secular tailwinds creates significant opportunity to drive increased profitability and shareholder value as demand accelerates and we realize the operating leverage built into our current business model. Before turning the call over to Lisa to discuss our second quarter financial results, I would like to take a moment to address the recent cybersecurity event we experienced. As we previously announced on forums AK on April 12th, we detected a data incident in which attackers acquired data and disabled some of the technology systems used by one of our subsidiaries. Upon learning of the incident, we engaged external counsel retained a team of third-party forensics, incidents response, and security professionals to investigate and determine the full scope of this incident. We also alerted law enforcement. Previously disabled technology systems are back up and running, and our network is safe and secure. Despite this disruption, production continued in our facilities. I would like to take this moment to thank our employees and our team of professionals who worked tirelessly during the recovery operations and continue to serve our customers in a safe and secure way. With that, I'll now throw the call to Lisa.