Amtech Systems, Inc.

Good day and welcome to the Amtech Systems Fiscal First Quarter 2023 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.

Good afternoon and thank you for joining us for Amtech Systems Fiscal First Quarter 2023 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, Amtek released its financial results for the fiscal first quarter of 2023. The earnings release is posted on the company's website at www.amteksystems.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 risks 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 technologies used by customers and competitors, change in volatility and the demand for our 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, capital allocation plans, the worldwide COVID-19 pandemic, and our ability to effectively integrate our acquisition of Intrepix Inc., which we acquired in January 2023. Other risk factors are detailed in our SEC filings, including our 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 for joining us today. In the fourth quarter, we generated $21.6 million in revenue, representing a year-over-year decrease of 19%. As we discussed last quarter, driving this expected decrease was the softening of demand in our both advanced packaging and SMT products following two strong years of capacity expansion and as customers are currently evaluating capital spending projects due to the changing market conditions. Helping offset this, we continue to see very strong demand for our high temperature belt furnaces for EV applications. Overall, we remain excited and steadfast about our long-term opportunities across all of our businesses. Within the semi-division, While we are currently transitioning through a downturn in the spending cycle for some of our products, our competitive position in the industry remains strong, which creates an opportunity to capture additional upside in the next investment cycle. Fortunately, we are concurrently experiencing a record surge in demand for high temperature built furnaces with EV applications as a driving force. While still early, repeat orders like the recent press release today makes us optimistic regarding the scale of the opportunity ahead. Adding to this EV tailwind, we continue to see strong demand for silicon carbide consumable products as the industry undergoes its multi-year capacity expansion cycle. Turning to our strategic growth initiatives, three weeks ago we announced the acquisition of Entrepix. a globally recognized expert in CMP and wafer cleaning. With the addition of Entrepix, Amtek now offers one of the industry's broadest sets of substrate processing solutions, providing robust cross-selling opportunities across the combined customer basis. To provide additional perspective, I'd like to take a moment to discuss Entrepix's business in greater detail. Starting with the engineered products, These are upgrades, obsolescence, and replacement parts developed by Entrepix for the most popular 200 millimeter and below CMP systems and cleaners. And together represents roughly half of the business on an LTM basis. Utilizing Entrepix's engineered products, customers are able to maintain their existing CMP and cleaning tools and ensure they are operating at peak performance. As the OEMs for these legacy tools tend to focus on 300-millimeter platforms and are often not well-resourced to support 200-millimeter and below tools in high volume, Entrepix fulfills the need for customers and OEMs alike. In fact, given the improved performance, reliability, and lower operating costs created by replacing legacy parts with Entrepix's modernized engineered products, many OEMs have become both customers and a referral source. With a very large install base of these tools in the market, the replacement and upgrade opportunities are very robust. Drawing from these advancements and experience, Entrepix has additionally become the OEM for the new OnTrack double-sided scrubber, the most cost-effective wafer cleaning system for wafers from 100 to 200 millimeter, which is very well suited for many applications, including compound semiconductor materials, like silicon carbide and gallium nitride. Given the wafer size and volumes of these applications relative to the scale and volume of 300-millimeter silicon processes, many cleaning tools on the market today are ill-suited to meet the specific demands and needs of the compound semiconductor processes. As a result, there has been a strong demand in the market for a new on-track double-sided scrubber, driven in large part by the investments in silicon and silicon carbide front-end manufacturing. In addition to the equipment and engineered products, Entrepix also provides field service and training, as well as CMP foundry services. Field service and training enables Entrepix to maintain in-depth contact with customers, creating stickiness, and promoting the sales of engineered products, Yontrek double-sided scrubbers, and other products and services from Entrepix. CMP Foundry services, in turn, provides Entrepix the unique perspective of being both the end user and supplier, further enhancing the quality and efficacy of the CMP-related products, processes, and services provided. Additionally, the CMP Foundry has been qualified by several leading IDMs and foundries to backfill their existing capacity. As we look ahead to the opportunities for Entrepix as part of Amtec Group, we see meaningful synergy potential. On the customer front, overlap with existing customers allows us to further cement our relationships in the substrate market while expanding our process into the device manufacturing market. Similarly, in areas with no current customer overlap, several cross-selling opportunities exist. Lastly, while Intrepix has built a solid foundation in the U.S., international expansion has been an area of focus as the company scales. Leveraging the footprint in channel and resources Amtech has established overseas, we believe Intrepix can cost-effectively accelerate these expansion efforts. Our companies share a culture of technical leadership combined with deep domain expertise and unparalleled customer service. Macro themes of EV adoption and compound semiconductor proliferation are driving growth across the entire portfolio. As existing and future customers make the necessary capacity investments to address these opportunities, we expect to strongly benefit in the years ahead given our respective position in the market. In closing, we are very confident that our strategy to align our divisions to high-growth megatrend markets such as EV and the greater pursuit of energy efficiency, is gaining traction. We believe that a strategic alignment to megatrend growth areas across multiple product and customer touchpoints creates a strong and durable foundation for value creation in the coming years. I will now turn over the call to Paul Lancaster to go into more detail on our end markets.