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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: March 31, 2021

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 April 30, 2021, there were outstanding 14,245,764 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 March 31, 2021 (Unaudited) and September 30, 2020

4

Condensed Consolidated Statements of Operations (Unaudited) Three and Six Months Ended March 31, 2021 and 2020

5

Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three and Six Months Ended March 31, 2021 and 2020

6

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) Three and Six Months Ended March 31, 2021 and 2020

7

Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended March 31, 2021 and 2020

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

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

20

Overview

20

Results of Operations

22

Liquidity and Capital Resources

25

Off-Balance Sheet Arrangements

26

Contractual Obligations

26

Critical Accounting Policies

27

Impact of Recently Issued Accounting Pronouncements

27

Item 3. Quantitative and Qualitative Disclosures About Market Risk

27

Item 4. Controls and Procedures

27

PART II. OTHER INFORMATION

28

Item 1. Legal Proceedings

28

Item 1A. Risk Factors

28

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

29

Item 3. Defaults Upon Senior Securities

29

Item 4. Mine Safety Disclosures

29

Item 5. Other Information

29

Item 6. Exhibits

30

SIGNATURES

31

 

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 2020 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 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. 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. 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 efforts with respect to our silicon carbide/polishing business segment; 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 and the cybersecurity incident; the potential impacts of the COVID-19 pandemic 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; the resolution of our cybersecurity incident and related costs; 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, 2020 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 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)

 

 

 

March 31,

2021

 

 

September 30,

2020

 

Assets

 

(Unaudited)

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

40,399

 

 

$

45,070

 

Accounts receivable (less allowance for doubtful accounts of $194 and $159 at

   March 31, 2021, and September 30, 2020, respectively)

 

 

16,980

 

 

 

11,243

 

Inventories

 

 

16,389

 

 

 

17,277

 

Income taxes receivable

 

 

1,057

 

 

 

1,362

 

Other current assets

 

 

1,735

 

 

 

1,617

 

Total current assets

 

 

76,560

 

 

 

76,569

 

Property, Plant and Equipment - Net

 

 

12,025

 

 

 

11,995

 

Right-of-Use Assets - Net

 

 

6,016

 

 

 

5,124

 

Intangible Assets - Net

 

 

912

 

 

 

609

 

Goodwill - Net

 

 

11,150

 

 

 

6,633

 

Deferred Income Taxes - Net

 

 

566

 

 

 

566

 

Other Assets

 

 

707

 

 

 

602

 

Total Assets

 

$

107,936

 

 

$

102,098

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,878

 

 

$

2,676

 

Accrued compensation and related taxes

 

 

2,157

 

 

 

2,066

 

Accrued warranty expense

 

 

414

 

 

 

380

 

Other accrued liabilities

 

 

1,421

 

 

 

751

 

Current maturities of long-term debt

 

 

388

 

 

 

380

 

Contract liabilities

 

 

295

 

 

 

1,224

 

Total current liabilities

 

 

10,553

 

 

 

7,477

 

Long-Term Debt

 

 

4,601

 

 

 

4,798

 

Long-Term Lease Liability

 

 

5,803

 

 

 

5,064

 

Income Taxes Payable

 

 

3,471

 

 

 

3,240

 

Other Long-Term Liabilities

 

 

67

 

 

 

 

Total Liabilities

 

 

24,495

 

 

 

20,579

 

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: 14,221,865 and 14,063,172 at March 31, 2021

   and September 30, 2020, respectively

 

 

142

 

 

 

141

 

Additional paid-in capital

 

 

125,513

 

 

 

124,435

 

Accumulated other comprehensive loss

 

 

(276

)

 

 

(646

)

Retained deficit

 

 

(41,938

)

 

 

(42,411

)

Total shareholders’ equity

 

 

83,441

 

 

 

81,519

 

Total Liabilities and Shareholders’ Equity

 

$

107,936

 

 

$

102,098

 

 

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 March 31,

 

 

Six Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues, net of returns and allowances

 

$

19,790

 

 

$

14,460

 

 

$

37,765

 

 

$

35,152

 

Cost of sales

 

 

12,062

 

 

 

9,102

 

 

 

22,525

 

 

 

21,620

 

Gross profit

 

 

7,728

 

 

 

5,358

 

 

 

15,240

 

 

 

13,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

5,688

 

 

 

5,415

 

 

 

10,901

 

 

 

11,330

 

Research, development and engineering

 

 

1,869

 

 

 

915

 

 

 

3,114

 

 

 

1,537

 

Operating income (loss)

 

 

171

 

 

 

(972

)

 

 

1,225

 

 

 

665

 

Loss on sale of subsidiary

 

 

 

 

 

 

 

 

 

 

 

(2,793

)

Interest income (expense) and other, net

 

 

73

 

 

 

595

 

 

 

(182

)

 

 

525

 

Income (loss) from continuing operations

   before income taxes

 

 

244

 

 

 

(377

)

 

 

1,043

 

 

 

(1,603

)

Income tax provision

 

 

490

 

 

 

166

 

 

 

570

 

 

 

207

 

(Loss) income from continuing operations,

   net of tax

 

 

(246

)

 

 

(543

)

 

 

473

 

 

 

(1,810

)

Loss from discontinued operations, net of tax

 

 

 

 

 

(11,151

)

 

 

 

 

 

(11,816

)

Net (loss) income

 

$

(246

)

 

$

(11,694

)

 

$

473

 

 

$

(13,626

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income Per Basic Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per share from

   continuing operations

 

$

(0.02

)

 

$

(0.04

)

 

$

0.03

 

 

$

(0.13

)

Basic loss per share from discontinued

   operations

 

$

 

 

$

(0.79

)

 

$

 

 

$

(0.83

)

Net (loss) income per basic share

 

$

(0.02

)

 

$

(0.83

)

 

$

0.03

 

 

$

(0.96

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income Per Diluted Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) income per share from

   continuing operations

 

$

(0.02

)

 

$

(0.04

)

 

$

0.03

 

 

$

(0.13

)

Diluted loss per share from discontinued

   operations

 

$

 

 

$

(0.79

)

 

$

 

 

$

(0.83

)

Net (loss) income per diluted share

 

$

(0.02

)

 

$

(0.83

)

 

$

0.03

 

 

$

(0.96

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

14,151

 

 

 

14,150

 

 

 

14,121

 

 

 

14,193

 

Weighted average shares outstanding - diluted

 

 

14,151

 

 

 

14,150

 

 

 

14,217

 

 

 

14,193

 

 

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

(Unaudited)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

Six Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net (loss) income

 

$

(246

)

 

$

(11,694

)

 

$

473

 

 

$

(13,626

)

Foreign currency translation adjustment

 

 

(225

)

 

 

(459

)

 

 

370

 

 

 

622

 

Reclassification adjustment for net foreign

   currency translation losses included in net loss

 

 

 

 

 

7,205

 

 

 

 

 

 

8,797

 

Comprehensive (loss) income

 

$

(471

)

 

$

(4,948

)

 

$

843

 

 

$

(4,207

)

 

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, 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

 

 

 

 

 

 

 

 

 

78

 

Balance at

   March 31, 2020

 

 

14,041

 

 

$

140

 

 

 

 

 

$

 

 

$

124,145

 

 

$

(1,814

)

 

$

(40,314

)

 

$

82,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

   September 30, 2020

 

 

14,063

 

 

$

141

 

 

 

 

 

$

 

 

$

124,435

 

 

$

(646

)

 

$

(42,411

)

 

$

81,519

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

719

 

 

 

719

 

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

595

 

 

 

 

 

 

595

 

Stock compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

 

 

 

 

 

 

65

 

Stock options

   exercised

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

135

 

 

 

 

 

 

 

 

 

135

 

Balance at

   December 31, 2020

 

 

14,091

 

 

 

141

 

 

 

 

 

 

 

 

 

124,635

 

 

 

(51

)

 

 

(41,692

)

 

 

83,033

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(246

)

 

 

(246

)

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(225

)

 

 

 

 

 

(225

)

Stock compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84

 

 

 

 

 

 

 

 

 

84

 

Stock options

   exercised

 

 

131

 

 

 

1

 

 

 

 

 

 

 

 

 

794

 

 

 

 

 

 

 

 

 

795

 

Balance at

   March 31, 2021

 

 

14,222

 

 

$

142

 

 

 

 

 

$

 

 

$

125,513

 

 

$

(276

)

 

$

(41,938

)

 

$

83,441

 

 

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)

 

 

 

Six Months Ended March 31,

 

 

 

2021

 

 

2020

 

Operating Activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

473

 

 

$

(13,626

)

Adjustments to reconcile net income (loss) to net cash (used in) provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

644

 

 

 

694

 

Write-down of inventory

 

 

230

 

 

 

330

 

Deferred income taxes

 

 

 

 

 

784

 

Non-cash share-based compensation expense

 

 

149

 

 

 

133

 

Loss on sales of subsidiaries

 

 

 

 

 

13,709

 

Provision for (reversal of) allowance for doubtful accounts, net

 

 

28

 

 

 

(32

)

Other, net

 

 

8

 

 

 

4

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(5,485

)

 

 

1,374

 

Inventories

 

 

859

 

 

 

(527

)

Other assets

 

 

(1,132

)

 

 

3,667

 

Accounts payable

 

 

3,122

 

 

 

(1,849

)

Accrued income taxes

 

 

536

 

 

 

(2,094

)

Accrued and other liabilities

 

 

1,232

 

 

 

(228

)

Contract liabilities

 

 

(929

)

 

 

(1,063

)

Net cash (used in) provided by operating activities

 

 

(265

)

 

 

1,276

 

Investing Activities

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(433

)