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Semiconductor production equipment provider Amtech Systems (NASDAQ:ASYS) reported results ahead of analysts' expectations in Q2 CY2024, with revenue down 13% year on year to $26.75 million. On the other hand, next quarter's revenue guidance of $23.5 million was less impressive, coming in 17.7% below analysts' estimates. It made a GAAP profit of $0.03 per share, improving from its loss of $0.07 per share in the same quarter last year.
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Amtech (ASYS) Q2 CY2024 Highlights:
- Revenue: $26.75 million vs analyst estimates of $24.15 million (10.8% beat)
- Adjusted Operating Income: $1.50 million vs analyst estimates of -$1.15 million (230% beat)
- EPS: $0.03 vs analyst estimates of -$0.09 ($0.12 beat)
- Revenue Guidance for Q3 CY2024 is $23.5 million at the midpoint, below analyst estimates of $28.55 million
- Gross Margin (GAAP): 36.5%, in line with the same quarter last year
- Inventory Days Outstanding: 154, down from 168 in the previous quarter
- EBITDA Margin: 5.8%, up from 1.4% in the same quarter last year
- Free Cash Flow was -$4.43 million compared to -$884,000 in the previous quarter
- Market Capitalization: $74.74 million
Focusing on the silicon carbide and power semiconductor sectors, Amtech Systems (NASDAQ:ASYS) produces the machinery and related chemicals needed for manufacturing semiconductors.
Semiconductor ManufacturingThe semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
Sales GrowthAmtech's revenue growth over the last three years has been mediocre, averaging 15.7% annually. But as you can see below, its revenue declined from $30.74 million in the same quarter last year to $26.75 million. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Even though Amtech surpassed analysts' revenue estimates, this was a slow quarter for the company as its revenue dropped 13% year on year. This could mean that the current downcycle is deepening.
Amtech may be headed for an upturn. Although the company is guiding for a year-on-year revenue decline of 15.2% next quarter, analysts are expecting revenue to grow 3% over the next 12 months.
Product Demand & Outstanding InventoryDays Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business' capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Amtech's DIO came in at 154, which is one day above its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.
Key Takeaways from Amtech's Q2 ResultsWe were impressed by how significantly Amtech blew past analysts' EPS expectations this quarter. We were also glad its operating margin improved. On the other hand, its revenue guidance for next quarter missed analysts' expectations. Overall, we think this was a decent quarter with some key metrics above expectations. The areas below expectations seem to be driving the stock move, and shares traded down 2.6% to $5.15 immediately after reporting.
