Amtech Systems, Inc.

Good day and welcome to the Amtech Systems Fiscal Third Quarter 2022 Earnings Conference Call. Please note that this event is being recorded. I would now like to turn the call over to Erica Mannion of Sophia Investor Relations.

Good afternoon and thank you for joining us for Amtech Systems Fiscal Third Quarter 2022 Conference Call. With me on the call today are Michael Wang, Chief Executive Officer, Lisa Gibbs, Chief Financial Officer, and Paul Lancaster, Vice President of Sales and Customer Service. After close of market today, Amtech released its financial results for the fiscal third quarter of 2022. 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 today's call will contain forward-looking statements and assumptions that are subject to risk and uncertainties, including but not limited to those contained in our SEC filings, all of which are posted within the investor 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 the demand for products, the effect of changing worldwide political and economic conditions, including trade sanctions, the effect of overall market conditions, including equity and credit markets, and market acceptance risks. ongoing logistical, supply chain, and labor challenges, 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 Forms 10-Q. I will now turn the call over to Michael Wang, Chief Executive Officer.

Thank you, Erica, and everyone else for joining us today. I want to start off by thanking the Shanghai team for their extraordinary efforts in reopening our factory. As an organization, we have turned the unparalleled challenges the past couple of years into an opportunity to increase our resilience and commitment towards our stakeholders. The robust demand for our products continued in the third quarter with bookings of $30.1 million. representing our sixth straight quarter of bookings over $30 million. Revenue was $20 million, down 14% year over year due to the impact of the Shanghai lockdown in the third quarter. As we discussed on our last call, the Chinese government mandated COVID lockdown closed our manufacturing operations in the region from the end of March through the beginning of June removing two months' worth of production. Once our facility reopened fully, we were able to ramp manufacturing quickly to begin clearing backlog, in turn enabling us to deliver revenue above the high end of our guidance range. As of today, we have successfully ramped capacity beyond pre-shutdown levels, allowing us to more quickly serve the large backlog of advanced packaging and SMT products in the fourth quarter. While we are pleased to see our facility ramp back so quickly, challenges with the supply chain and logistics still exist. From a macro perspective, we remain excited about the health of demand we are seeing in both our reporting segments. Within semiconductor, following nearly six-three quarters of strong demand for advanced packaging we are beginning to see a flattening as customers digest the capacity they already have in place. Offsetting this, we are experiencing a ramp in demand for custom high temp bulk furnaces driven by the strength in the automotive market and more specifically electric vehicles. Within the materials and substrate market, whilst they're early, our confidence around the long awaited silken carbide wafer ramp is building with consumable revenues for these applications more than doubling over the last two quarters. As we have said in the past, this will be a multi-year capacity expansion cycle with ebbs and flows as individual customers ramp wafer capacity, then digest, then ramp again. Fortunately, unlike the equipment business, where sales grow and contract along with the market, our consumables business exhibits a growth and plateau behavior allowing us to deliver feeble revenue even when customers are digesting capacity. Beyond the industry-wide challenges we have been forced to navigate in the near term, we strongly believe our leadership in select growth markets with exposure to several secular tailwinds create significant opportunity to drive increased profitability and shareholder value as demand accelerates, and we realized the operating leverage built into our current business model. I will now turn the call over to Paul to go into more detail to the end markets. Thank you, Michael. Expanding further on the demand environment within the semiconductor business, we continue to see healthy interest across geographies and surf markets in the third quarter. As Michael mentioned, we have started to see signs of softening and new order activity in the advanced packaging markets. However, this is as expected, given the cyclical nature of the industry. Offsetting this, we are seeing growth in other end markets, such as automotive, where we see strong orders for our high-temp belt furnace, with backlog extending well into fiscal 2023. Moving on to our material and substrate segment, in the third quarter, we saw bookings increase 40% year-over-year, and gross margin for this segment remained healthy at 48%, driven by increasing strength in our consumable products as our customers continue to expand manufacturing capacity. Within the silicon carbide wafer market specifically, we continue to see increases in consumable demand as our customers begin to execute capacity expansion plans in earnest. Going forward, we would expect this portion of our business to grow at or above the industry as a whole, given our position within the market. With a long history of quality and service and the significant cost of ownership benefits of our consumable products, we are the process of record for leading wafer manufacturers in the market. This is significant as changing process steps is often cumbersome, requiring requalification, which manufacturers strive to avoid. It also provides us with another advantage, namely with new vendors looking to enter this market. Given the manufacturing complexities for silicon carbide, These vendors typically prefer to use well-established and proven processes, which include anti-consumables. Related to capital equipment, we continue to have good dialogue with both existing and potential new customers, executing initial phases of wafer capacity expansion plans. I'll now turn the call over to Lisa.