Amtech Systems, Inc.

Good day and welcome to the Amtech Systems Fiscal First Quarter 2024 Earnings Conference Call. Please note that this call is being recorded. I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead.

Good morning and thank you for joining us for Amtech Systems Fiscal First Quarter 2024 Conference Call. With me on the call today are Bob Daigle, Chairman and Chief Executive Officer, Lisa Gibbs, Chief Financial Officer, and Paul Lancaster, Vice President of Sales and Customer Service. After close of market Friday, Amtek released its financial results for the first quarter of 2024. The earnings release is posted on the company's website at www.amteksystems.com in the investor 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 would 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, ongoing logistics, supply chain and labor challenges, capital allocation plans, and the COVID-19 pandemic. Other risk factors are detailed in our SEC filings, including our Form 10-K and Forms 10-Q. Additionally, in today's conference call, we will be referring to non-GAAP financial measures as we discuss the first quarter financial results. you'll find a reconciliation of these non-GAAP measures to our actual GAAP results included in the press release issued on Friday. I will now turn the call over to Amtech's Chief Executive Officer, Bob Daigle.

Good morning, everyone. Thank you for joining Amtech's quarterly conference call. I'm pleased with the progress we're making to improve our cost structure and position the company for strong operating results as markets recover. We remain focused on operational optimization, having achieved over $6 million in annualized cost savings through actions implemented over the past four months. Revenue of $24.9 million exceeded the high end of our guidance range, and more importantly, adjusted EBITDA of $0.2 million surpassed our expectations, marking a significant improvement from the $2.4 million adjusted EBITDA loss in the prior quarter. The macroeconomic landscape for our target end markets remains somewhat mixed, especially within the semiconductor market. In this broad sector, we continue to experience softness and near-term demand for equipment used for most wafer fabrication and back-end packaging applications as the industry digests existing capacity and evaluates expansion plans for the upcoming quarters. However, amidst this backdrop, we are seeing pockets of resilience, particularly in submarkets related to hybrid and electric vehicles. Demand has been improving for consumables used for silicon carbide semiconductor production, and we continue to experience strong demand for high-end belt furnaces used to produce power semiconductor packaging materials and diffusion furnaces used for silicon and silicon carbide wafer production. While we await for the rebound in demand in the broader markets, our organization is dedicated to optimizing every aspect of our operations to drive improved financial performance. In the first quarter, we continued our efforts to enhance our cost structure and streamline operations. Building on the $4 million in annualized cost savings discussed on our last call, we identified an additional $2 million in opportunities which we implemented in the first quarter. The combination of these actions is expected to generate over $6 million in annualized savings starting in the second quarter of 2024 when compared to the same period last year. Our primary objective continues to be aligning the organization's size with current market conditions to achieve near-term EBITDA profitability while simultaneously positioning ourselves for significant operating leverage as market demand rebounds. Beyond these completed initiatives, we are actively exploring opportunities to optimize our manufacturing operations through strategic contract manufacturing partnerships. Our overarching goal is to focus our highly skilled workforce on production of large complex systems while streamlining the manufacturing of simpler components and assemblies through outsourcing. We believe this approach will enhance our overall flexibility and throughput while optimizing our fixed cost structure. For example, building on the positive results from the initial outsourcing initiatives, we plan to expand these efforts in the third quarter by relocating one of our manufacturing facilities in the U.S. to a smaller, more cost-effective facility. This strategic move is anticipated to reduce fixed expenses while preserving and, in some instances, enhancing our production capabilities. In addition to our restructuring activities, during the first quarter, we took additional actions to refine our pricing strategy. Despite the inflationary conditions affecting input pricing over the last couple of years, we have not been as diligent in passing these increases on to our customers. With new objectives in place, we are seeing promising progress in quoting for new tools to ensure that pricing aligns more closely with current input costs. We do anticipate a lag before the full impact of these adjustments flow through as we work through the existing backlog. Shifting to the balance sheet, we are pleased to report a notable increase of $4 million in cash during the quarter. This increase primarily comes from our focused approach to managing working capital, particularly in optimizing the timing of receivables and upfront payments. Looking ahead, we are committed to identifying additional opportunities, including inventory reduction, to further enhance the strength of our balance sheet. In closing, while Amtech stands out as a unique company with differentiated exposure to several rapidly growing markets, Our current focus is on optimizing operations to increase profitability. Our performance in the first quarter highlights the initial success of these efforts with positive EBITDA and operating cash flow despite challenging market conditions. Looking ahead, we are confident that the major investments in AI-related infrastructure and and the investments that will be made to diversify global supply chains will result in strong demand for our back-end equipment. We also believe our consumables business and semiconductor manufacturing equipment will greatly benefit from strong growth in silicon carbide wafer production. As our markets recover, I'm confident that the strategic actions we're taking today to improve operational efficiency and reduce working capital will generate meaningful shareholder value. With that, I'll turn it over to Lisa for further details on the first quarter.