Amtech Systems, Inc.

Good day, and welcome to the Amtech Systems Fiscal Third Quarter 2021 Earnings Conference Call. Please note that this event is being recorded. I'm now going to turn the call over to Erica Mannion of Sapphire Investor Relations.

Good afternoon, and thank you for joining us for Amtech Systems Fiscal Third Quarter 2021 Conference Call. With me today on the call are Michael Wang, Chief Executive Officer, and Lisa Gipps, Chief Financial Officer. Also joining us today is Paul Lancaster, Amtech's Vice President of Sales and Customer Service. After close of market today, Amtech released financial results for the fiscal third quarter 2021. The earnings release is posted on the company's website at www.amtechsystems.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 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 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 risk, capital allocation plans, and the worldwide COVID-19 pandemic. Other risk factors are detailed in the company's SEC filings, including its Form 10-K and Form 10-Q. Now, I will turn the call over to Michael Wang, Chief Executive Officer.

Thank you, Erica. AMTEC continues to deliver strong momentum in the third quarter with revenues of $23.1 billion coming in at a high end of our expectations. Of note, this marks our third straight quarter of double-digit control growth following the demand softness we experienced during the pandemic. Activity within the semi-market continues at a strong pace, with record-booking and continued upside opportunities across our service markets. For our advanced packaging products, we are seeing strong momentum from both robust and market growth, as well as increasing adoption of our next-gen Paramax TrueFlat product across both new and existing customers. As you may recall, our TrueFlat product serves the needs of advanced packaging customers for very thin PCB substrates. delivering both increased yield and throughput. For products targeted at the SMT market, demand is strengthening across all geographies as customers gain confidence in the economic outlook and restart investments in both capacity expansion initiatives as well as ongoing replacement cycles which were placed on hold during the pandemic. As a result, market demand for our products has surpassed the capacity of our Shanghai facility, creating the need to temporarily increase intern capacity to serve our customers. Fortunately, the timing of this in-market strength aligns with our plan to move to a larger production facility later this month. Within the power semi-market, we continue to have strong engagement with our customers as they move forward with their capacity expansion plans to meet growing demand for power chips driven in part by the automotive sector. In addition to the orders we received last quarter for six 300-millimeter HDR diffusion furnaces, quoting activity has increased with both existing and potential new customers. Beyond the near-term top-line benefit, as existing orders gradually roll backlog to revenue over the next few quarters, the increase in dialogue signals a broader transition to 300-millimeter manufacturing processes for the power semi-markets. Given our leadership position as a tool of record for nearly all of the current power chip manufacturers already producing on 300mm, we believe we are well-positioned to capture additional opportunities as they emerge. Overall, we continue to be pleased with the performance of our semi-segment. Strength in demand is continuing across our silver market as customers grow increasingly confident about their own demand outlook and in turn begin to accelerate capital expansion plans. Illustrating this strength, the third quarter, our book-to-bill ratio for the semi-segment was 1.4 to 1, following a strong 1.7 to 1 in the prior quarter. As demand for our product tends to correlate with overall semi-cap-ex spending, we believe the strength and demand we are experiencing will continue to align with the broader industry. Moving on to our material and substrate segment, in the third quarter, equipment purchases, which were meaningfully impacted by the pandemic, continue to build with early orders rolling from backlog to revenue. Similar to our semi-business, we are seeing the start of a broad-based demand in industries such as silicon, optics, and ceramics as customers gain confidence in the global outlook. As these products contribute to revenue, there is the added benefit of incremental fixed-cost absorption in our PR Hoffman facility as we await the ramp of silicon carbide. Evidence of this can be seen as segment's third-quarter gross margin, which improved 17 points sequentially to 41%. As it relates to larger multi-year capacity expansion plans for silicon carbide wafer producers, we continue to maintain a healthy dialogue with our customers and wait for 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 silicon carbide manufacturing operations, we remain as excited as ever for the mid- to long-term opportunities in front of us. While we are encouraged by the strengthening of demand across all of our served markets, we remain cautious about the ongoing market of certainties which we do not directly control. Industry-wide challenges such as supply chain constraints, inflation, and significant increases to freight and logistics costs require ongoing management and vigilance. Thus far, we have been successful in navigating these challenges. However, the risk remains both to ourselves as well as our supply chain partners and customers. That said, looking beyond these near-term uncertainties, we strongly believe our leadership and market segment with exposure to several secular tailwinds create a significant opportunity to drive increased profitability and shareholder value as demand accelerates and we realize the operating leverage built into our current business model. With that, I will now turn over the call to Lisa.