Amtech reports Q2 results; to intro new solar products -- Diffusion + PSG Etch + PECVD

TEMPE, USA: Amtech Systems Inc., a global supplier of production and automation systems and related supplies for the manufacture of solar cells, semiconductors, and silicon wafers, reported financial results for its fiscal 2009 second quarter ended March 31, 2009.

Q2 fnancial highlights:
* Net revenue of $10.9 million, compared to $17.6 million in the prior year quarter: approximately $3 million of shipments scheduled for Q2 were pushed into Q3 and Q4, due primarily to delays in readiness of customer facilities.
* Solar revenue of $4.6 million, compared to $11.4 million in the prior year quarter.
* Gross margin of 22 percent, compared to 23 percent in the prior year quarter.
Impairment and restructuring charges of $1.7 million relating to Bruce Technologies, an Amtech subsidiary dependent on the semiconductor industry.
* Operating loss of $2.6 million, compared to an operating loss of $82,000 in the prior year quarter.
* Net loss of $2 million, or a loss of $0.22 per share, compared to net income of $161,000, or $0.02 per diluted share, in the prior year quarter.
* Quarter-end backlog of $34.7 million (solar $32.6 million).
* Repurchased approximately 144,000 shares of Amtech common stock during the quarter.
* Ending cash balance of $37.2 million at March 31, 2009, compared to $38.4 million at December 31, 2008.

Cost reduction actions
* Consolidated workforce has been reduced 22 percent since its peak at September 30, 2008
* Amtech executive officers and outside directors have taken a reduction in salary and board meeting fees, respectively, starting April 1, 2009
* Bruce Technologies subsidiary has been restructured

J.S. Whang, President and Chief Executive Officer of Amtech, commented: "As we previously announced, fiscal second quarter revenue reflects the push-out of approximately $3 million in shipments into subsequent quarters. To date we have not had any order cancellations of significance. We continue to be proactive in managing our operations to achieve our goal of positive EBITDA in fiscal 2009 (excluding restructuring and non-cash impairment charges), as evidenced by the 22 percent reduction in our workforce and the restructuring of one of our subsidiaries. Our financial position remains solid, with essentially no debt and a strong cash balance.

"We remain focused on executing our multi-product solar growth plan, including the introduction of our new solar etch product, which we expect to launch within the current fiscal third quarter. With this launch, we will begin offering three solar products, Diffusion + PSG Etch + PECVD (continuous sequential processing steps), which will further increase the size of our served available market. We are determined to emerge as a stronger player through the current down cycle, and continue to be optimistic about the long-term growth opportunities in the solar market as all fundamentals remain intact."

Net revenue for the second quarter of fiscal 2009 totaled $10.9 million, compared to net revenue of $17.6 million for the second quarter of fiscal 2008, and reflects lower shipments to the solar industry partially offset by increased shipments to the MEMS (microelectromechanical systems) segment of the semiconductor industry and recognition of previously deferred revenue.

Total orders for the quarter ended March 31, 2009 were $5.8 million ($3.0 million solar) before foreign exchange effect on backlog. At March 31, 2009, the Company's total order backlog was $34.7 million, compared to backlog of $42.4 million at December 31, 2008. Total backlog includes $32.6 million in solar orders, compared to solar backlog of $52.6 million at March 31, 2008. The effect of foreign exchange on backlog was $2.6 million in the March quarter and contributed to the decline in the backlog. Backlog includes deferred revenue and customer orders that are expected to ship within the next 12 months.

Gross margin in the second quarter of fiscal 2009 was 22%, compared to 23% in the second quarter of fiscal 2008, primarily reflecting lower shipment volumes and the related reduction in efficiencies and plant utilization. Amtech recognized $0.5 million of previously deferred profit for the quarter ended March 31, 2009, net of deferrals, compared to a net deferral of $0.7 million for the quarter ended March 31, 2008.

Selling, general and administrative (SG&A) expenses in the second quarter of fiscal 2009 decreased $0.9 million, or 22 percent, to $3.1 million, compared to $4.0 million in the second quarter of fiscal 2008. The decrease in expense is primarily due to decreased sales commissions on lower revenue generated in regions where third party sales agents are utilized.

In the second quarter of fiscal 2009, Amtech's Bruce Technologies semiconductor operations were restructured due to the continued slowdown in the semiconductor industry. As a result of the restructuring, Amtech recorded $0.6 million in restructuring charges and $1.1 million in non-cash goodwill and intangible asset impairment charges in the second quarter.

Depreciation and amortization in the second quarter of fiscal 2009 was $385,000, compared to $386,000 in the second quarter of fiscal 2008. Included in the second quarter fiscal 2009 results is $167,000 of stock option expense, compared to $128,000 in the second quarter a year ago.

As a result of a pretax loss, an income tax benefit of $580,000 was recorded in the second quarter of fiscal 2009 compared to a tax expense of $105,000 in the second quarter of fiscal 2008. The tax benefit was lower than our historical effective tax rate due primarily to an increase to the valuation allowance and permanent differences between financial income and taxable income.

The net loss for the second quarter of fiscal 2009 was $2.0 million, or a loss of $0.22 per share, compared to net income of $161,000, or $0.02 per diluted share, for the second quarter of fiscal 2008.

Total cash and cash equivalents at March 31, 2009 were $37.2 million, compared with $38.4 million at December 31, 2008.

In December 2008, Amtech's Board of Directors approved a stock repurchase program authorizing the repurchase of up to $4 million of its common stock. During the second quarter of fiscal 2009, Amtech repurchased approximately 144,000 shares of its common stock for $0.4 million in cash and at an average cost of $3.09 per share.

Outlook
While the current global economic and credit crisis has negatively impacted growth in the solar market in the near-term and prolonged the downturn in the semiconductor market, Amtech continues to have a long-term positive outlook on both industries. With a strong balance sheet and cash position, Amtech plans to emerge from this down cycle even stronger with its multi-product solar offerings.

While there appears to be some signs of increased activity in both the solar and semiconductor markets, visibility in second half of fiscal 2009 is currently unclear as the continuing global economic downturn has caused solar cell manufacturers, Amtech's principal solar customer base, to slow or push out their capacity expansion plans. Despite the anticipated downturn in revenues, Amtech expects to generate positive EBITDA (excluding impairment and restructuring charges) in fiscal 2009.

Operating results for future periods could be impacted by the timing of system shipments, the net impact of revenue deferral on those shipments, and recognition of revenue based on customer acceptances, all of which can have a significant effect on operating results.