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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: June 30, 2020

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: 0-11412

 

AMTECH SYSTEMS, INC.

 

(Exact name of registrant as specified in its charter)

 

Arizona

 

86-0411215

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

131 South Clark Drive, Tempe, Arizona

 

85281

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: 480-967-5146

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

ASYS

 

NASDAQ.Global Select Market

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. Yes No

 

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). Yes No

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

 

 

Accelerated Filer

Non-Accelerated Filer

 

 

Smaller Reporting Company

 

 

 

 

Emerging Growth Company

 

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 July 31, 2020, there were outstanding 14,048,172 shares of Common Stock.

 

 


AMTECH SYSTEMS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

Page

Cautionary Statement Regarding Forward-Looking Statements

3

PART I. FINANCIAL INFORMATION

4

Item 1. Condensed Consolidated Financial Statements

4

Condensed Consolidated Balance Sheets June 30, 2020 (Unaudited) and September 30, 2019

4

Condensed Consolidated Statements of Operations (Unaudited) Three and Nine Months Ended June 30, 2020 and 2019

5

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three and Nine Months Ended June 30, 2020 and 2019

6

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) Three and Nine Months Ended June 30, 2020 and 2019

7

Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended June 30, 2020 and 2019

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Overview

21

Results of Operations

23

Liquidity and Capital Resources

27

Off-Balance Sheet Arrangements

28

Contractual Obligations

28

Critical Accounting Policies

28

Impact of Recently Issued Accounting Pronouncements

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

29

Item 4. Controls and Procedures

29

PART II. OTHER INFORMATION

30

Item 1. Legal Proceedings

30

Item 1A. Risk Factors

30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3. Defaults Upon Senior Securities

31

Item 4. Mine Safety Disclosures

31

Item 5. Other Information

31

Item 6. Exhibits

32

SIGNATURES

33

 

2


 

Cautionary Statement Regarding Forward-Looking Statements

Unless otherwise indicated, the terms “Amtech,” the “Company,” “we,” “us” and “our” refer to Amtech Systems, Inc. together with its subsidiaries.

Our discussion and analysis in this Quarterly Report on Form 10-Q, our Annual Report on 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 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. 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,” “likely,” “future,” “target,” “forecast,” “goal,” “observe,” and “strategy” or the negative thereof or variations thereon or similar terminology. 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; whether continued technological advances and emerging industries will sustain our long-term performance; business interruptions, including those related to the novel strain of coronavirus (COVID-19); the potential impacts of the COVID-19 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, and on commercial activity and demand across our and our customers’ businesses; difficulties in successfully executing our growth initiatives; our ability to take part in the growth of the SiC industry through investments in capacity, product development and people; our ability to expand our customer base and realize future revenue growth from our 300 mm silicon horizontal thermal reaction product solution; our ability to realize further growth within BTU by making investments in product innovation; our ability to identify strong acquisition targets in the semiconductor and SiC growth environment and successfully execute transactions and integrate such targets; the effects of semiconductor trends on our annual goodwill impairment analysis; 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; 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; and other circumstances and risks identified in this Quarterly Report or referenced from time to time in our filings with the SEC. 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 Annual Report on Form 10-K that we filed with the SEC for the year ended September 30, 2019 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 the Annual Report on 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 Annual Report on 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.

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)

 

 

 

June 30,

2020

 

 

September 30,

2019

 

Assets

 

(Unaudited)

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,436

 

 

$

52,982

 

Restricted cash

 

 

 

 

 

101

 

Accounts receivable (less allowance for doubtful accounts of $138 and $172 at

   June 30, 2020, and September 30, 2019, respectively)

 

 

10,297

 

 

 

12,873

 

Inventories

 

 

19,385

 

 

 

17,532

 

Notes and other receivables

 

 

1,250

 

 

 

 

Income taxes receivable

 

 

150

 

 

 

 

Held-for-sale assets

 

 

 

 

 

22,755

 

Other current assets

 

 

3,066

 

 

 

2,027

 

Total current assets

 

 

80,584

 

 

 

108,270

 

Property, Plant and Equipment - Net

 

 

10,438

 

 

 

10,217

 

Right-of-Use Assets - Net

 

 

5,162

 

 

 

 

Intangible Assets - Net

 

 

674

 

 

 

870

 

Goodwill - Net

 

 

6,633

 

 

 

6,633

 

Other Assets

 

 

565

 

 

 

487

 

Total Assets

 

$

104,056

 

 

$

126,477

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,933

 

 

$

4,371

 

Accrued compensation and related taxes

 

 

1,983

 

 

 

2,717

 

Accrued warranty expense

 

 

401

 

 

 

556

 

Other accrued liabilities

 

 

1,478

 

 

 

1,274

 

Current maturities of long-term debt

 

 

376

 

 

 

371

 

Contract liabilities

 

 

1,645

 

 

 

1,378

 

Income taxes payable

 

 

 

 

 

1,434

 

Held-for-sale liabilities

 

 

 

 

 

18,547

 

Total current liabilities

 

 

9,816

 

 

 

30,648

 

Long-Term Debt

 

 

4,894

 

 

 

5,178

 

Long-Term Lease Liability

 

 

5,088

 

 

 

 

Income Taxes Payable

 

 

2,007

 

 

 

3,199

 

Total Liabilities

 

 

21,805

 

 

 

39,025

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Preferred stock; 100,000,000 shares authorized; none issued

 

 

 

 

 

 

Common stock; $0.01 par value; 100,000,000 shares authorized; shares

   issued and outstanding: 14,048,172 and 14,268,797 at June 30, 2020

   and September 30, 2019, respectively

 

 

140

 

 

 

143

 

Additional paid-in capital

 

 

124,289

 

 

 

125,098

 

Accumulated other comprehensive loss

 

 

(1,792

)

 

 

(11,233

)

Retained deficit

 

 

(40,386

)

 

 

(26,556

)

Total shareholders’ equity

 

 

82,251

 

 

 

87,452

 

Total Liabilities and Shareholders’ Equity

 

$

104,056

 

 

$

126,477

 

 

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)

 

 

 

Three Months Ended June 30,

 

 

Nine Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues, net of returns and allowances

 

$

15,227

 

 

$

21,003

 

 

$

50,379

 

 

$

64,861

 

Cost of sales

 

 

9,276

 

 

 

13,153

 

 

 

30,896

 

 

 

40,064

 

Gross profit

 

 

5,951

 

 

 

7,850

 

 

 

19,483

 

 

 

24,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

4,804

 

 

 

5,718

 

 

 

16,134

 

 

 

18,137

 

Research, development and engineering

 

 

899

 

 

 

746

 

 

 

2,436

 

 

 

2,325

 

Restructuring charges

 

 

217

 

 

 

35

 

 

 

217

 

 

 

1,072

 

Operating income

 

 

31

 

 

 

1,351

 

 

 

696

 

 

 

3,263

 

Loss on sale of subsidiary

 

 

 

 

 

 

 

 

(2,793

)

 

 

 

Interest (expense) income and other, net

 

 

(13

)

 

 

249

 

 

 

512

 

 

 

511

 

Income (loss) from continuing operations before

   income taxes

 

 

18

 

 

 

1,600

 

 

 

(1,585

)

 

 

3,774

 

Income tax provision

 

 

90

 

 

 

707

 

 

 

297

 

 

 

1,621

 

(Loss) income from continuing operations, net of tax

 

 

(72

)

 

 

893

 

 

 

(1,882

)

 

 

2,153

 

Income (loss) from discontinued operations, net of tax

 

 

 

 

 

1,154

 

 

 

(11,816

)

 

 

(8,113

)

Net (loss) income

 

$

(72

)

 

$

2,047

 

 

$

(13,698

)

 

$

(5,960

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income Per Basic Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per share from continuing

   operations

 

$

(0.01

)

 

$

0.06

 

 

$

(0.13

)

 

$

0.15

 

Basic income (loss) per share from discontinued

   operations

 

$

 

 

$

0.08

 

 

$

(0.83

)

 

$

(0.57

)

Net (loss) income per basic share

 

$

(0.01

)

 

$

0.14

 

 

$

(0.96

)

 

$

(0.42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income Per Diluted Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) income per share from continuing

   operations

 

$

(0.01

)

 

$

0.06

 

 

$

(0.13

)

 

$

0.15

 

Diluted income (loss) per share from discontinued

   operations

 

$

 

 

$

0.08

 

 

$

(0.83

)

 

$

(0.57

)

Net (loss) income per diluted share

 

$

(0.01

)

 

$

0.14

 

 

$

(0.96

)

 

$

(0.42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

14,155

 

 

 

14,245

 

 

 

14,195

 

 

 

14,231

 

Weighted average shares outstanding - diluted

 

 

14,155

 

 

 

14,316

 

 

 

14,195

 

 

 

14,267

 

 

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)

 

 

 

Three Months Ended June 30,

 

 

Nine Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net (loss) income

 

$

(72

)

 

$

2,047

 

 

$

(13,698

)

 

$

(5,960

)

Foreign currency translation adjustment

 

 

22

 

 

 

(904

)

 

 

644

 

 

 

(1,690

)

Reclassification adjustment for net foreign currency

   translation losses included in net (loss) income

 

 

 

 

 

487

 

 

 

8,797

 

 

 

487

 

Comprehensive (loss) income

 

$

(50

)

 

$

1,630

 

 

$

(4,257

)

 

$

(7,163

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


 

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

(in thousands)

 

 

 

Common Stock

 

 

Treasury Stock

 

 

 

 

 

 

Accumulated

Other

 

 

Retained

Earnings

 

 

Total

 

 

 

Shares

 

 

Par Value

 

 

Shares

 

 

Par Value

 

 

Additional Paid-

In Capital

 

 

Comprehensive

Income (Loss)

 

 

(Accumulated

Deficit)

 

 

Shareholders'

Equity

 

Balance at

   September 30, 2018

 

 

14,217

 

 

$

142

 

 

 

 

 

$

 

 

$

124,316

 

 

$

(9,974

)

 

$

(21,394

)

 

$

93,090

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,372

)

 

 

(2,372

)

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(576

)

 

 

 

 

 

(576

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

169

 

 

 

 

 

 

 

 

 

169

 

Stock options exercised

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

37

 

 

 

 

 

 

 

 

 

37

 

Balance at

   December 31, 2018

 

 

14,228

 

 

 

142

 

 

 

 

 

 

 

 

 

124,522

 

 

 

(10,550

)

 

 

(23,766

)

 

 

90,348

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,635

)

 

 

(5,635

)

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(210

)

 

 

 

 

 

(210

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

194

 

 

 

 

 

 

 

 

 

194

 

Stock options exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

   March 31, 2019

 

 

14,228

 

 

 

142

 

 

 

 

 

 

 

 

 

124,716

 

 

 

(10,760

)

 

 

(29,401

)

 

 

84,697

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,047

 

 

 

2,047

 

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(417

)

 

 

 

 

 

(417

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111

 

 

 

 

 

 

 

 

 

111

 

Stock options exercised

 

 

30

 

 

 

1

 

 

 

 

 

 

 

 

 

137

 

 

 

 

 

 

 

 

 

138

 

Balance at

   June 30, 2019

 

 

14,258

 

 

$

143

 

 

 

 

 

$

 

 

$

124,964

 

 

$

(11,177

)

 

$

(27,354

)

 

$

86,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

   September 30, 2019

 

 

14,269

 

 

$

143

 

 

 

 

 

$

 

 

$

125,098

 

 

$

(11,233

)

 

$

(26,556

)

 

$

87,452

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,932

)

 

 

(1,932

)

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,673

 

 

 

 

 

 

2,673

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68

 

 

 

 

 

 

 

 

 

68

 

Stock options exercised

 

 

117

 

 

 

1

 

 

 

 

 

 

 

 

 

700

 

 

 

 

 

 

 

 

 

701

 

Balance at

   December 31, 2019

 

 

14,386

 

 

 

144

 

 

 

 

 

 

 

 

 

125,866

 

 

 

(8,560

)

 

 

(28,488

)

 

 

88,962

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,694

)

 

 

(11,694

)

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,746

 

 

 

 

 

 

6,746

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

 

 

 

 

 

 

65

 

Stock repurchases

 

 

 

 

 

 

 

 

(366

)

 

 

(2,000

)

 

 

 

 

 

 

 

 

 

 

 

(2,000

)

Retirement of stock repurchases

 

 

(366

)

 

 

(4

)

 

 

366

 

 

 

2,000

 

 

 

(1,864

)

 

 

 

 

 

(132

)

 

 

 

Stock options exercised

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

78