Amtech Systems, Inc. ("Amtech") (NASDAQ: ASYS), a manufacturer of thermal processing, wafer cleaning and chemical mechanical polishing (CMP) capital equipment and related consumables used in semiconductor, advanced mobility and renewable energy manufacturing applications, today reported results for its fourth quarter and fiscal year ended September 30, 2023.

Fourth Quarter Fiscal 2023 Financial and Operational Results:

• Net revenue of $27.7 million
• GAAP operating loss of $11.7 million, inclusive of $5.2 million intangible asset impairment charge
• Non-GAAP operating loss of $3.0 million ⁽¹⁾
• GAAP net loss of $12.0 million
• Non-GAAP net loss of $2.5 million ⁽¹⁾
• GAAP net loss per diluted share of $0.85
• Non-GAAP net loss per diluted share of $0.18 ⁽¹⁾
• Customer orders of $18.2 million
• Book to bill ratio of 0.7:1

Fiscal 2023 Financial and Operational Results:

• Net revenue of $113.3 million
• GAAP operating loss of $15.0 million, inclusive of $5.2 million intangible asset impairment charge
• Non-GAAP operating loss of $0.2 million ⁽¹⁾
• GAAP net loss of $12.6 million
• Non-GAAP net loss of $0.3 million ⁽¹⁾
• GAAP net loss per diluted share of $0.89
• Non-GAAP net loss per diluted share of $0.02 ⁽¹⁾
• Customer orders of $103.9 million
• Book to bill ratio of 0.9:1
• Backlog of $51.8 million.

(1) See GAAP to non-GAAP reconciliation in schedules following this release.

“We experienced continued softness in demand across several of our end markets during the fourth quarter and have taken actions to reduce fixed costs and expenses. These actions include a reduction in force at each of our businesses, as well as a decision to exit the legacy PR Hoffman polishing product lines and focus on their consumable products going forward. The long-term opportunities for Amtech’s products remain strong, and the actions we are taking will allow us to significantly improve profitability as demand recovers,” commented Mr. Bob Daigle, Chief Executive Officer of Amtech.

GAAP and Non-GAAP Financial Results

(1) See GAAP to non-GAAP reconciliation in schedules following this release.

Net revenues decreased 10% sequentially and 14% from the fourth quarter of fiscal 2022. The decrease from prior year is primarily attributable to lower shipments from our Shanghai manufacturing facility partially offset by an increase in shipments of our high temperature belt furnaces and the addition of Entrepix in fiscal 2023. The sequential decrease is primarily due to a decrease in equipment shipments across our business segments. We are experiencing lower bookings in multiple areas of our business due to the softness in the semiconductor market.

Gross margin decreased sequentially and compared to the prior year due primarily to one-time charges and lower equipment volumes in our Material & Substrate segment. These charges include an intangible asset impairment of $4.6 million and an inventory write down of $1.5 million for our polishing machine products.

During the fourth quarter, we recorded $5.2 million of intangible asset impairment charges in our Material and Substrate segment, of which $4.6 million is recorded within gross profit and the remainder is recorded within operating expenses. This charge was due primarily to the prolonged downturn and general economic conditions in the semiconductor market and customer delays in the adoption of next-gen polishing tools, both of which reduced our projections for the segment.

Selling, General & Administrative (“SG&A”) expenses increased $0.8 million on a sequential basis and increased $3.8 million compared to the prior year period. The sequential increase is due primarily to $0.6 million of additional equity compensation expense primarily related to the change in leadership of the Company. Compared to the prior year, the increase is due primarily to added Entrepix SG&A of $1.8 million, as well as increased equity compensation, consulting, audit, and ERP project expenses.

Research, Development and Engineering expenses increased $0.8 million sequentially and increased $1.2 million compared to the same prior year period, with $0.5 million associated with customer delays in the adoption of next-gen polishing tools at PR Hoffman.

GAAP operating loss was $11.7 million, compared to GAAP operating loss of $1.1 million in the third quarter of fiscal 2023 and GAAP operating income of $3.9 million in the same prior year period.

Non-GAAP operating loss was $3.0 million, compared to non-GAAP operating income of $0.4 million in the third quarter of fiscal 2023 and non-GAAP operating income of $4.0 million in the same prior year period.

GAAP net loss for the fourth quarter of fiscal 2023 was $12.0 million, or 85 cents per share. This compares to GAAP net loss of $1.0 million, or 7 cents per share, for the preceding quarter and GAAP net income of $4.2 million, or 30 cents per share, for the fourth quarter of fiscal 2022.

Non-GAAP net loss for the fourth quarter of fiscal 2023 was $2.5 million, or 18 cents per share. This compares to non-GAAP net income of $0.3 million, or 2 cents per share, for the preceding quarter and non-GAAP net income of $4.3 million, or 31 cents per share, for the fourth quarter of fiscal 2022.

At September 30, 2023, we were not in compliance with the Debt to EBITDA and Fixed Charge Coverage Ratio financial covenants under our Loan Agreement. On December 5, 2023, we entered into a Forbearance & Modification Agreement (the “Forbearance Agreement”) with UMB Bank related to such non-compliance, pursuant to which UMB Bank agreed to forbear from exercising its rights and remedies available to it as a result of such defaults. We will be operating under the terms of this Forbearance Agreement through January 17, 2025 (the “Forbearance Period”).

In discussing financial results for the three months and year ended September 30, 2023 and 2022, and the three months ended June 30, 2023, in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles ("GAAP"). All non-GAAP amounts exclude certain adjustments for stock compensation expense, severance expense, expenses related to the discontinued product line, intangible asset impairment, gain on sale-leaseback of our Massachusetts facility, amortization of acquired intangible assets, acquisition expenses, and income tax benefit related to our acquisition of Entrepix, Inc. A tabular reconciliation of financial measures prepared in accordance with GAAP to the non-GAAP financial measures is included at the end of this press release.

Outlook

Operating results can be significantly impacted, positively or negatively, by the timing of orders, system shipments, logistical challenges, and the financial results of semiconductor manufacturers. Additionally, the semiconductor equipment industries can be cyclical and inherently impacted by changes in market demand. Actual results may differ materially in the weeks and months ahead.

For the first fiscal quarter ending December 31, 2023, we expect revenues in the range of $21 - $24 million with EBITDA nominally negative. Although the near-term outlook for revenue and earnings is challenging, we remain confident that the long-term outlook is strong for both our consumables and equipment serving advanced mobility and advanced packaging applications. We took actions during the first quarter of fiscal 2024, which will reduce Amtech's structural costs by approximately $4 million annually and better align product pricing with value. These steps will significantly improve results and enhance profitability through market cycles.

A portion of Amtech's results is denominated in Renminbis, a Chinese currency. The outlook provided in this press release is based on an assumed exchange rate between the United States Dollar and the Renminbi. Changes in the value of the Renminbi in relation to the United States Dollar could cause actual results to differ from expectations.

About Amtech Systems, Inc.

Amtech Systems, Inc. is a leading, global manufacturer of thermal processing, wafer cleaning and chemical mechanical polishing (CMP) capital equipment and related consumables used in semiconductor, advanced mobility and renewable energy manufacturing applications. We sell process equipment and services used in the fabrication of semiconductor devices, such as silicon carbide (SiC), silicon power, electronic assemblies and modules to semiconductor device and module manufacturers worldwide, particularly in Asia, North America and Europe. Our strategic focus is on growth opportunities which leverage our strengths in thermal and substrate processing. Amtech's products are recognized under the leading brand names BTU International, Entrepix, Inc., PR Hoffman™ and Intersurface Dynamics, Inc.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this press release is forward-looking in nature. All statements in this press release, or made by management of Amtech Systems, Inc. and its subsidiaries ("Amtech"), other than statements of historical fact, are hereby identified as "forward-looking statements" (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995). The forward-looking statements in this press release relate only to events or information as of the date on which the statements are made in this press release. Examples of forward-looking statements include statements regarding Amtech's future financial results, operating results, business strategies, projected costs, products under development, competitive positions, plans and objectives of Amtech and its management for future operations, efforts to improve operational efficiencies and effectiveness and profitably grow our revenue, and enhancements to our technologies and expansion of our product portfolio. In some cases, forward-looking statements can be identified by terminology such as "may," "plan," "anticipate," "seek," "will," "expect," "intend," "estimate," "believe," "continue," "predict," "potential," "project," "should," "would," "could", "likely," "future," "target," "forecast," "goal," "observe," and "strategy" or the negative of these terms or other comparable terminology used in this press release or by our management, which are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. The Form 10-K that Amtech filed with the Securities and Exchange Commission (the "SEC") for the year-ended September 30, 2022, listed various important factors that could affect the Company's future operating results and financial condition and could cause actual results to differ materially from historical results and expectations based on forward-looking statements made in this document or elsewhere by Amtech or on its behalf. These factors can be found under the heading "Risk Factors" in the Form 10-K and in our subsequently filed Quarterly Reports on Form 10-Qs, and investors should refer to them. Because it is not possible to predict or identify all such factors, any such list cannot be considered a complete set of all potential risks or uncertainties. Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.