Amtech Systems, Inc.

Good day and welcome to Amtech Systems' Fiscal Second Quarter 2025 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 2025 Conference Call. With me today on the call are Bob Daigle, Chairman and Chief Executive Officer, and Wade Janke. Chief Financial Officer. After close of market today, Amtek released its financial results for the fiscal second quarter of 2025. The earnings releases 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 the webcast. Some of the comments to be made during this call today 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 Investors 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 the equity in credit markets and market acceptance risks, ongoing logistics, supply chain and labor challenges, and capital allocation plans. 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 fiscal second quarter financial results. you'll find a reconciliation of these non-GAAP measures to our actual GAAP results included in this press release today. I will now turn the call over to AMTEC's Chief Executive Officer, Bob Daigle.

Thank you, Erica. Good afternoon, and thank you for joining us today. As previously disclosed, on April 9th, revenue for the second fiscal quarter came in below our guidance range. This shortfall was primarily driven by a shipment delay in our thermal processing solutions segment related to a customer dispute involving a previously canceled order. The situation resulted in a delay of a separate shipment valued at approximately $4.9 million. While the matter remains ongoing, we are in contact with the customer and continue to expect that the equipment will ship once the issue is resolved. Outside of this dispute, during the second quarter, we began to see a broader softening in demand within the mature node semiconductor market, affecting both equipment and consumables. The softness contributed to the overall revenue shortfall, which in turn impacted profitability, resulting in an adjusted EBITDA loss of $1.4 million for the quarter. While operating expenses were in line with expectations, the ongoing demand headwinds in select markets reinforced the importance of focusing on what we can control, namely driving operational efficiency and broadening our customer and application base. Expanding on the dynamics within our end markets, as we indicated last quarter, demand for the front end equipment and consumables tied to mature node applications including industrial and automotive, remains weak. These trends are consistent with broader commentary from the semiconductor OEMs and reflects the sustained downturn in capital investment across these sectors. Given the prolonged softness, we recorded an impairment charge of $22.9 million and an inventory write-off of $6 million in the second fiscal quarter. The equipment product lines associated with the charges and write-offs serve mature node and EV-related applications. While disappointing, these actions were necessary to align our asset base with the capital equipment demand environment in these market segments. The charge is non-cash in nature and has been excluded from our non-GAAP financial results. Despite these near-term challenges in the mature node markets, We continue to be very encouraged by demand trends in backend semiconductor markets. Orders for our advanced packaging equipment, particularly those supporting AI applications, remain very strong. Notably, in the second quarter, our bookings for this product line exceeded our total bookings for all of fiscal 2024. This momentum is being driven by secular investments in AI infrastructure and provides meaningful tailwinds for our advanced packaging equipment. As we look ahead, we are closely monitoring the evolving tariff and macroeconomic landscape. Orders for reflow equipment in the US during the quarter were weak due to high tariffs. However, tariff-related headwinds were more than offset by strength in Asia for AI-related advanced packaging equipment. We continue to invest in market development initiatives, particularly within our semiconductor fabrication solution segment. Our focus is on expanding reoccurring revenue streams, including consumables, parts, and services, which offer higher margins and more stable, less cyclical revenue. We're working to grow our footprint with existing customers, capture share at additional sites, and introduce our products to new customers. In addition, We are leveraging our proven technologies to address similar challenges in adjacent applications. While these efforts will take time to contribute meaningfully to our top line, we believe they are fundamental to long-term growth. In parallel, we continue to optimize our cost structure in response to the demand environment. During the third fiscal quarter, we executed additional site consolidations and workforce adjustments. These efforts are expected to yield incremental EBITDA savings of $1 million per quarter starting in the fourth fiscal quarter. Combined with the cost reduction actions we've already implemented, we now anticipate total annualized savings of $11 million on a run rate basis as we exit the fiscal year. Fortunately, we are navigating this dynamic environment from a position of financial strength. We ended the quarter with a solid cash position of $13.4 million and no outstanding debt, providing us with the flexibility to continue to invest in our strategic initiatives. Looking forward, we remain optimistic about our long-term outlook. First, our streamlined cost structure positions us to benefit from strong operating leverage as market demand recovers. Over the past year, we have taken meaningful steps to reduce fixed costs, consolidate operations, and improve manufacturing efficiency. These actions not only enhance our ability to generate positive EBITDA at lower revenue levels, but also allows us to scale profitably as demand returns. Second, investments in AI infrastructure continue to drive increased demand for advanced packaging. We are experiencing very strong demand for our advanced packaging equipment. The strength in the second quarter bookings reinforces our belief that this trend is durable and continues to present a significant growth opportunity for our business. Finally, within our semiconductor fabrication solution segment, we are focusing on driving sustainable higher margin growth by expanding reoccurring revenue streams. Consumables, parts, and services not only provide more predictable revenue, but also support deeper customer relationships and reduce exposure to capital spending cycles. Our efforts to broaden our footprint with existing customers, expand into new sites, and apply proven solutions to adjacent opportunities are expected to strengthen our long-term competitive position and enhance our margin profiles. While the near-term environment remains dynamic, we are confident with the structural changes we've made over the past year, and we believe they position us well to navigate this cycle and capitalize on the growth opportunities ahead. With that, I'll turn it over to Wade for further details on our financial results.