UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended:
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________ to ________________
Commission File Number:
(Exact name of registrant as specified in its charter)
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incorporation or organization) |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large Accelerated Filer |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
At February 3, 2023, there were outstanding
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
2
Cautionary Statement Regarding Forward-Looking Statements
Our discussion and analysis in this Quarterly Report on Form 10-Q ("Quarterly Report"), our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (the “2022 Form 10-K”), our other reports that we file with the Securities and Exchange Commission (the “SEC”), our press releases and in public statements of our officers and corporate spokespersons contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements give our or our officers’ current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current events. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. We have tried, wherever possible, to identify such statements by using words 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 thereof or variations thereon or similar terminology relating to the uncertainty of future events or outcomes. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors. Some factors that could cause actual results to differ materially from those anticipated include, among others, future economic conditions, including changes in the markets in which we operate; changes in demand for our services and products; our revenue and operating performance; difficulties in successfully executing our growth initiatives; difficulties in executing on our strategic initiatives with respect to our material and substrate business segment; our ability to effectively integrate our acquisition of Entrepix, Inc., which we acquired in January 2023; the effects of competition in the markets in which we operate, including the adverse impact of competitive product announcements or new entrants into our markets and transfers of resources by competitors into our markets; the cyclical nature of the semiconductor industry; pricing and gross profit pressures; control of costs and expenses; risks associated with new technologies and the impact on our business; legislative, regulatory, and competitive developments in markets in which we operate; possible future claims, litigation or enforcement actions and the results of any such claim, litigation proceeding, or enforcement action; business interruptions, including those related to the COVID-19 pandemic, the potential impacts of the COVID-19 pandemic, including ongoing logistical and supply chain challenges, and any future pandemic on our business operations, financial results and financial position; the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, including any future Chinese government mandated shutdown in Shanghai; risks of future cybersecurity incidents; and other circumstances and risks identified in this Quarterly Report or referenced from time to time in our filings with the SEC. The occurrence of the events described, and the achievement of expected results, depend on many events, some or all of which are not predictable or within our control. These and many other factors could affect Amtech’s future operating results and financial condition and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by Amtech or on its behalf.
You should not place undue reliance on these forward-looking statements. We cannot guarantee that any forward-looking statement will be realized, although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this Quarterly Report. Achievement of future results is subject to events out of our control, risks, uncertainties and potentially inaccurate assumptions. The 2022 Form 10-K listed various important factors that could affect Amtech’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 “Item 1A. Risk Factors” in our 2022 Form 10-K and investors should refer to them as well as the additional risk factors identified in this Quarterly Report. 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.
The Company undertakes no obligation to update or publicly revise any forward-looking statement whether as a result of new information, future developments or otherwise. All subsequent written or oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this paragraph. You are advised, however, to consult any further disclosures we make on related subjects in our subsequently filed Form 10-Q and Form 8-K reports and our other filings with the SEC. As noted above, we provide a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our business under “Item 1A. Risk Factors” of our 2022 Form 10-K. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand it is not possible to predict or identify all such factors.
Unless the context indicates otherwise, the terms “Amtech,” the “Company,” “we,” “us” and “our” refer to Amtech Systems, Inc., an Arizona corporation, together with its subsidiaries.
3
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share data)
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December 31, |
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September 30, |
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Assets |
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(Unaudited) |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable (less allowance for doubtful accounts of $ |
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Inventories |
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Other current assets |
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Total current assets |
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Property, Plant and Equipment - Net |
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Right-of-Use Assets - Net |
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Intangible Assets - Net |
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Goodwill |
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Deferred Income Taxes - Net |
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Other Assets |
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Total Assets |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current Liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued compensation and related taxes |
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Other accrued liabilities |
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Current maturities of finance lease liabilities and long-term debt |
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Current portion of long-term operating lease liabilities |
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Contract liabilities |
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Income taxes payable |
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Total current liabilities |
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Finance Lease Liabilities and Long-Term Debt |
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Long-Term Operating Lease Liabilities |
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Income Taxes Payable |
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Other Long-Term Liabilities |
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Total Liabilities |
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Shareholders’ Equity |
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Preferred stock; |
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Common stock; $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained deficit |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
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Three Months Ended December 31, |
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2022 |
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2021 |
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Revenues, net |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative |
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Research, development and engineering |
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Severance expense |
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Operating (loss) income |
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( |
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Interest expense and other, net |
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( |
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( |
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(Loss) income before income tax provision |
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( |
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Income tax (benefit) provision |
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( | ) |
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Net (loss) income |
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$ |
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$ |
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(Loss) Income Per Share: |
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Net (loss) income per basic share |
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$ |
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$ |
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Net (loss) income per diluted share |
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$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(in thousands)
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Three Months Ended December 31, |
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2022 |
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2021 |
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Net (loss) income |
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$ |
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$ |
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Foreign currency translation adjustment |
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Comprehensive (loss) income |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
(Unaudited)
(in thousands)
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Common Stock |
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Treasury Stock |
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Accumulated |
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Total |
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Shares |
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Par Value |
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Shares |
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Cost |
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Additional Paid- |
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Comprehensive |
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Retained |
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Shareholders' |
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Balance at September 30, 2021 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Repurchase of treasury stock |
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— |
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— |
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( |
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( |
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— |
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— |
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— |
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( |
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Retirement of treasury stock |
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( |
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( |
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( |
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— |
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( |
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— |
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Stock options exercised |
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— |
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— |
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— |
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— |
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— |
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Balance at December 31, 2021 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Balance at September 30, 2022 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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— |
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— |
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— |
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Balance at December 31, 2022 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
7
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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Three Months Ended December 31, |
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2022 |
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2021 |
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Operating Activities |
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Net (loss) income |
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$ |
( |
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$ |
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Adjustments to reconcile net income to net cash (used in) provided by |
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Depreciation and amortization |
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Write-down of inventory |
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Deferred income taxes |
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— |
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Non-cash stock compensation expense |
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Provision for (reversal of) allowance for doubtful accounts |
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( |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Inventories |
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( |
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( |
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Other assets |
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( |
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Accounts payable |
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( |
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Accrued income taxes |
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( |
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Accrued and other liabilities |
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( |
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Contract liabilities |
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( |
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Net cash (used in) provided by operating activities |
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( |
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Investing Activities |
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Purchases of property, plant and equipment |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Financing Activities |
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Proceeds from the exercise of stock options |
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Repurchase of common stock |
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— |
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( |
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Payments on long-term debt |
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( |
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( |
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Net cash provided by (used in) financing activities |
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( |
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Effect of Exchange Rate Changes on Cash, Cash Equivalents and |
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Net Decrease in Cash, Cash Equivalents and Restricted Cash |
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( |
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( |
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Cash and Cash Equivalents, Beginning of Period |
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Cash, Cash Equivalents and Restricted Cash, End of Period |
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$ |
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$ |
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Supplemental Cash Flow Information: |
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Income tax payments, net |
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$ |
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$ |
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Interest paid |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
8
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021
(UNAUDITED)
1. Basis of Presentation and Significant Accounting Policies
Nature of Operations and Basis of Presentation – Amtech Systems, Inc. (the “Company,” “Amtech,” “we,” “our” or “us”) is a leading, global manufacturer of capital equipment, including thermal processing and wafer polishing, and related consumables used in fabricating semiconductor devices, such as silicon carbide (“SiC”) and silicon power devices, analog and discrete devices, electronic assemblies and light-emitting diodes (“LEDs”). We sell these products to semiconductor device and module manufacturers worldwide, particularly in Asia, North America and Europe.
We serve niche markets in industries that are experiencing technological advances, and which historically have been very cyclical. Therefore, our future profitability and growth depend on our ability to develop or acquire and market profitable new products and on our ability to adapt to cyclical trends.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), and consequently do not include all disclosures normally required by accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments necessary, all of which are of a normal and recurring nature, to present fairly our financial position, results of operations and cash flows. Certain information and note disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. The condensed consolidated balance sheet at September 30, 2022, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022.
Our fiscal year is from October 1 to September 30. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending or ended September 30, and the associated quarters, months, and periods of those fiscal years.
The consolidated results of operations for the three months ended December 31, 2022, are not necessarily indicative of the results to be expected for the full fiscal year.
In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization, and the outbreak became increasingly widespread, including in all of the markets in which we operate. We continue to monitor the impact of COVID-19 on all aspects of our business. We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. Consistent with federal guidelines and with foreign government, state and local orders to date, we have continued to operate across our footprint throughout the COVID-19 pandemic. There remain many unknowns and we continue to monitor the expected trends and related demand for our products and services and have and will continue to adjust our operations accordingly.
On March 28, 2022, the Chinese government issued a mandatory shutdown in Shanghai, the location of one of our manufacturing facilities. The factory was allowed to partially reopen in May 2022 and was fully reopened on June 1, 2022. Upon reopening on June 1, 2022, the factory was able to operate at near full capacity for the entire month of June. We were able to make up the shipments missed in the fourth quarter of fiscal 2022 and are now operating at normal capacity levels. Additionally, given the uncertainty surrounding the COVID-19 pandemic and the emergence of variations thereof, there can be no assurance that this facility will be allowed to remain open on a consistent basis in the future.
9
Principles of Consolidation – The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Contract Liabilities – Contract liabilities are reflected in current liabilities on the Condensed Consolidated Balance Sheets as all performance obligations are expected to be satisfied within the next 12 months. Contract liabilities relate to payments invoiced or received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations. Contract liabilities consist of customer deposits as of December 31, 2022 and September 30, 2022. Of the $
Warranty – A limited warranty is provided free of charge, generally for periods of
Shipping Expense – Shipping and handling fees associated with outbound freight are expensed as incurred and included in selling, general and administrative expenses. Shipping expense was $
Concentrations of Credit Risk – Our customers consist of semiconductor manufacturers worldwide, as well as the lapping and polishing marketplace. Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable. Credit risk is managed by performing ongoing credit evaluations of the customers’ financial condition, by requiring significant deposits where appropriate, and by actively monitoring collections. Letters of credit are required of certain customers depending on the size of the order, type of customer or its creditworthiness, and country of domicile.
As of December 31, 2022, one Semiconductor segment customer individually represented
We maintain our cash and cash equivalents in multiple financial institutions. Balances in the United States, which account for approximately
Refer to Note 9 to Condensed Consolidated Financial Statements for information regarding major customers, foreign sales and revenue in other countries subject to fluctuation in foreign currency exchange rates.
10
Impact of Recently Issued Accounting Pronouncements
There were no new accounting pronouncements issued or effective as of December 31, 2022 that had or are expected to have a material impact on our consolidated financial statements.
Correction of Immaterial Misstatements
During the preparation of the condensed consolidated financial statements for the period ended June 30, 2022, the Company identified certain immaterial misstatements related to the classification of sales discounts to distributors within our semiconductor reportable segment. The Company previously presented these sales discounts as part of selling, general and administrative expenses instead of as a reduction of revenues in its unaudited condensed consolidated statements of operations for the three-month period ended December 31, 2021, and the three and six-month periods ended March 31, 2022, which resulted in overstatements of revenue and selling, general and administrative expenses for those periods.
In accordance with Staff Accounting Bulletin No. 99, “Materiality,” the Company evaluated the misstatements and determined that the related impact was not material to the Company’s financial statements for any interim period. Accordingly, the Company revised the unaudited condensed consolidated statements of operations for the periods ended December 31, 2021 and March 31, 2022, including the related notes presented herein, as applicable. The misstatements did not impact operating income or net income in the condensed consolidated statements of operations, or the condensed consolidated balance sheets or the condensed consolidated statements of cash flows for any of those periods.
A summary of the corrections to previously reported condensed consolidated statements of operations is as follows:
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Six Months Ended March 31, 2022 |
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|||||||||
|
|
As Reported |
|
|
Adjustment |
|
|
As Corrected |
|
|||
Revenues, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Gross profit |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Selling, general and administrative |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
Three Months Ended March 31, 2022 |
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|||||||||
|
|
As Reported |
|
|
Adjustment |
|
|
As Corrected |
|
|||
Revenues, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Gross profit |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Selling, general and administrative |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
Three Months Ended December 31, 2021 |
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|||||||||
|
|
As Reported |
|
|
Adjustment |
|
|
As Corrected |
|
|||
Revenues, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Gross profit |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Selling, general and administrative |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
2. Earnings Per Share
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly to basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued. In the case of a net loss, diluted earnings per share is calculated in the same manner as basic EPS.
For the three months ended December 31, 2022 and 2021, options for
11
A reconciliation of the components of the basic and diluted EPS calculations follows, in thousands, except per share amounts:
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Three Months Ended December 31, |
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2022 |
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2021 |
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||
Numerator: |
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||
Net (loss) income |
|
$ |
( | ) |
|
$ |
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||
Denominator: |
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||
Weighted-average shares used to compute basic EPS |
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|
|
|
|
|
||
Common stock equivalents (1) |
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|
— |
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|
|
|
|
Weighted-average shares used to compute diluted EPS |
|
|
|
|
|
|
||
|
|
|
|
|
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|
||
(Loss) income per share: |
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|
|
|
|
|
||
Net (loss) income per basic share |
|
$ |
( |
) |
|
$ |
|
|