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Amtech (ASYS) Q4 Earnings Beat, Revenues Match Estimates

Zacks Equity Research

Amtech Systems, Inc. ASYS reported fourth-quarter fiscal 2019 adjusted earnings per share (EPS) of 7 cents, topping the Zacks Consensus Estimate of a loss of a penny. The bottom line also increased from a loss of 23 cents per share reported in the prior-year quarter.

The company’s revenues of $20.2 million were down 12.6% from the year-ago quarter. However, the figure matched the Zacks Consensus Estimate. Uncertain macroeconomic conditions and trade tensions continued to negatively impact the semiconductor industry, thus affecting Amtech’s top line.

Amtech Systems, Inc. Price, Consensus and EPS Surprise

Amtech Systems, Inc. Price, Consensus and EPS Surprise
Amtech Systems, Inc. Price, Consensus and EPS Surprise

Amtech Systems, Inc. price-consensus-eps-surprise-chart | Amtech Systems, Inc. Quote

Quarter in Detail

In the semiconductor segment, revenues of $15.2 million fell 20.8% year over year due to weaker semiconductor demand owing to the U.S.-China trade dispute.

The silicon carbide LED segment witnessed a 46.7% year-over-year jump, reaching $4.4 million in the fiscal fourth quarter. The surge was driven by favorable timing of machine shipments.

Amtech’s automation segment, which recorded $0.6 million in revenues, witnessed a 22.7% year-over-year plunge.

As of Sep 30, 2019, the company’s total backlog was $17.3 million, inching up 0.6% sequentially.

Moreover, customer orders of $20.3 million were recorded during the quarter.

Notably, the company announced that it will be divesting its automation unit in France, R2D, as part of its strategy to improve focus on semiconductor and silicon carbide businesses.

Moreover, Amtech continued its efforts to divest its solar business, Tempress, which it expects to conclude by the calendar year-end.

Gross margin in the fiscal fourth quarter was 42%, up 700 basis points from the prior-year quarter. This was driven by higher sales mix of parts and upgrades.

Balance Sheet and Cash Flow

Amtech exited the quarter with cash and cash equivalents of $53 million compared with $49.7 million in the previous quarter.

Net cash from operating activities totaled $0.2 million.

Full-Year Highlights

In the full fiscal year, Amtech’s revenues came at $85 million, down 15.1% year over year.

Adjusted EPS of 22 cents also declined 52.3% to 22 cents.

Outlook

For the first quarter of fiscal 2020, ending Dec 31, 2019, Amtech expects revenues to be in the range of $16 million to $18 million.

Weakness in the semiconductor business is expected due to continued trade tensions and the semiconductor equipment industry downcycle.

Gross margin for the fiscal first quarter is estimated to be in the mid-30% range. Moreover, operating margin is expected at breakeven or slightly positive.

The guidance considers an assumed exchange rate between the U.S. dollar and Renminbis, a Chinese currency. Notably, part of Amtech's revenues is denominated in Renminbis.

Amtech also expects a headwind of approximately $3 million related to the divestiture of R2D in the first quarter of fiscal 2020.

Zacks Rank and Stocks to Consider

Amtech currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Alteryx, Inc. AYX, Cirrus Logic, Inc. CRUS and Fortinet, Inc. FTNT, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Cirrus Logic and Fortinet is currently pegged at 39.85%, 15% and 14%, respectively.

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