Good afternoon, and welcome to Amtech Systems Third Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to Lisa Gibbs, Chief Financial Officer. Please go ahead, ma’am.

Good afternoon, and thank you for joining us for Amtech Systems third quarter fiscal year 2019 results conference call. With me on the call today are J.S. Whang, Amtech’s Executive Chairman and Chief Executive Officer; Robert Hass, Amtech’s Executive Vice President; and Michael Whang, our Chief Operating Officer. After the close of trading today, Amtech released its financial results for the third quarter ending June 30, 2019. That earnings release will be posted on the company’s website at amtechsystems.com. During today’s call, management will make forward-looking statements. All such forward-looking statements are based on information available to us as of this date. And we assume no obligation to update any such forward-looking statements. These statements are not a guarantee of future performance, and actual results could differ materially from current expectations. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are changes in the technologies used by our customers and competitors; changes in volatility and the demand for our products; the effect of changing worldwide political and economic conditions, including trade sanctions; the effect of overall market conditions, including the equity and credit markets; and market acceptance risks. Other risk factors are detailed in our Securities and Exchange Commission filings, including our Form 10-K and Form 10-Q. I will now turn the call over to J.S. Wang, our Executive Chairman and Chief Executive Officer, to begin the discussion. J.S.?

Thank you, Lisa. Thank you for joining our call today. As we shift our focus from the solar business to semiconductor, we continue to work on the initiatives within our plan to more fully optimize our global opportunities in the evolving and growing semiconductor market. Although we have a very positive outlook for the long-term. From a near-term perspective, we are feeling the impact of the weakened semiconductor market, which continued to be impacted by the extended trade and tariff uncertainties. However, we like our fundamentals. And again, we are focused on the long-term growth opportunities and continue to invest to be well-positioned to participate in the next semi growth cycle, particularly in both the silicon and silicon carbide power chip sectors. This business is a site clicker. But the drivers of our long-term performance potential are clear. The power devices market plays a critical role in our technological evolution and is a future will be fueled by multiple factors within this mobility, speed and data-driven world, 5G, IoT, AI, especially the continuously expanding use of silicon carbide power chips. As the automotive industry evolves to electric vehicles, assisted driving and eventually, autonomous driving and industrial applications. Undoubtedly, technologies are evolving and increasing capable power devices are the essential foundations. We fully expect these factors will create increased demand for our products and services. And we will position ourselves to more fully participate in new and longer-term growth opportunities. I will now turn the call to our Chief Operating Officer, Michael Whang. He will discuss our continuing operations. Mike?

Thank you, J.S. Given the market environment and our efforts to stay current, we are in constant communications with our customers and suppliers. Although visibility of an upturn is limited at this time, all signs lead to a recovery in mid calendar 2020. We will continue to closely monitor our costs while ensuring that we can be responsive to our customers, even if we see a quick wrap in activity at the next growth cycle. While being very prudent with our investment dollars, we recently announced plans to move our PR Hoffman business to a much needed larger facility. We continue to be on schedule with our plan to begin operations in the new facility in early calendar 2020. Not only will this move add to the capacity that we need, there are also changes being made to improve our operational capability, efficiency and customer responsiveness. Investments are being planned and made to enable our participation in growth areas of the industry and to ensure that we operate from a position of competitive advantage in the next upcycle and sustain that position over time. Additionally, we just announced that our subsidiary, Bruce technologies, received a significant new order for its 300-millimeter high temp diffusion furnace from a top-tier power semi customer. This order, which is expected to ship in fiscal Q1 2020 establishes another top-tier 300-millimeter power chip customer relationship, strengthening our currently enlarged 300-millimeter installed base and will expand our 300-millimeter technology and opportunity. The order validates our segment strategy to further our position as a market leader in the fast-growing high-end power chip market. We believe the long-term outlook for the industry remains positive, and we will be ready to capitalize on the return to growth in the market. I will now turn over the call to Lisa to review our third quarter financials. Lisa?

Thank you, Michael. Let’s now review our third quarter fiscal year 2019 financial results. Net revenue for the third quarter of fiscal 2019 was $21 million compared to $20.6 million in the preceding quarter and $28.7 million in the third quarter of fiscal 2018. We continue to see weaker demand, primarily due to the economic conditions resulting from the trade dispute. Sequentially, semiconductor revenue increased by approximately $0.2 million and silicon carbide LED revenue decreased by approximately $0.2 million. Compared to prior year, semi net revenues decreased by approximately $7.2 million. Silicon carbide LED revenue decreased by approximately $0.5 million due primarily to the timing of machine shipments. Unrestricted cash and cash equivalents at our continuing operations at June 30, 2019, were $49.1 million compared to $45.9 million at September 30, 2018. At June 30, 2019, our total backlog was $17.2 million compared to total backlog of $22 million at March 31, 2019. Backlog includes customer orders that are expected to ship within the next 12 months. Gross margin in the third quarter of fiscal 2019 was 37% compared to 38% in the preceding quarter and 35% in the third quarter of fiscal 2018. Compared to prior year, gross margins increased primarily due to product mix, most notably stronger sales of our higher-margin machines. Selling, general and administrative expense or SG&A in the third quarter of fiscal 2019 was $5.7 million compared to $5.8 million in the preceding quarter and $6.8 million in the third quarter of fiscal 2018. Sequentially, SG&A decreased slightly due to lower stock compensation expense. Compared to prior year, SG&A decreased primarily due to lower headcount, lower employee-related expenses and lower commissions on lower revenue. Income tax expense in the third quarter of fiscal 2019 was $0.7 million compared to $0.3 million in the preceding quarter…

Thank you, Lisa. At the end of the third quarter, we announced the sale of our SoLayTec business and the continued expectation to sell our Tempress business. The sale of SoLayTec is a key first step in our efforts to divest our solar business and focus our energy and resources on our semiconductor and silicon carbide businesses. We continue to be actively engaged with our advisers in the Netherlands on the sale of Tempress, who are making good progress and engaging in discussions with interested parties, including both private equity and strategic investors. Looking at our fiscal Q3 2019 results, income from discontinued operations for the quarter ended June 30, 2019, was $1.2 million, which included a gain on the sale of SoLayTec of $1.6 million, an income tax benefit of $1.3 million, partially offset by an operating loss of $1.7 million. We continue to focus on how we can reduce the losses from our discontinued operations until Tempress is sold. There could be no assurance of finding a buyer or recovering the carrying value of the subsidiary. With one of the 2 solar divisions divested, we are moving in the right direction with our divestiture plan. And more importantly, we are devoting our resources and investments to our profitable semiconductor and fast-growing SiC/LED segments. Now let’s turn the call over to the operator for questions. Operator?

Thank you. [Operator Instructions] And today’s first question comes from Jeff Osborne of Cowen and Company. Please go ahead.

Great. Wondering if you can give us an update on where Tempress stands in negotiations with multiple parties. And with it we’re not busy so what would the accounting treatment be?

Thank you, Jeff, for the question. So we have several parties under NDAs, and we are sharing information with them. A few of them have already expressed an interest in Tempress. But we’ll see how those negotiations go as we progress. So I’d say we’re maybe midway through the process. But as you know, the due diligence, timing and final negotiations can extend and really cannot be predicted with accuracy. As far as the accounting treatment, it would – the accounting treatment would just be normal gain or loss on sale of those assets, net of liabilities held for sale.

Got it. And then you mentioned the PR Hoffman expansion. Can you just talk about – are you in discussions with any sort of framework agreements with people over like a multi-quarter or multi-year rollout. Just, I guess, what gives you the visibility that you need that added capacity.

Jeff, can you repeat that question again, please?

Yes, I was asking about the PR Hoffman expansion? And why – why you’re doing that now in such a weak macro. Do you have any type of longer-term discussions with people about the multi-quarter, multi-year needs that they might have for that capacity?

We’re in close contact with our customers in regards to their planning and such. And right now, even during the down cycle, we have to make select strategic investments in our capacity to participate in the upturn debt that we all expect.

Got it. That’s all I had. Thank you.

And the next question today comes from Craig Irwin of Roth Capital Partners. Please go ahead.

Good evening, and thanks for taking my questions. So first question I want to ask is about the order you press released yesterday, the 300-millimeter east yard furnace. There’s a few fabs that are in the process of being built, few new fabs and a couple of expansions going on. Can you maybe give us a little bit of color. Is this maybe 1 in let’s just say, Southern Europe, the chatter is that it’s a little bit further along than some of the others? Or is it potentially kind of the couple in North America that’s in the process of booking equipment?

Well, Craig, we’ve always been tight-lipped about our customers, particularly new customers, this is one of the major players in the power semiconductor space. And we are very excited for this order, and we see great, great opportunities ahead of us.

So new customer, can you tell us whether or not it’s going into a new fab, a pre standing fab where we’re maybe looking at expanding into silicon carbide mass production capabilities from silicon? Or is this someone with the legacy business, a new business? I mean, any color you can give us would be helpful.

This won’t be silicon carbon because it’s 300-millimeter. So it is a silicon power chip customer. In terms of where exactly this expansion will occur unfortunately, I’m not at liberty to divulge that right now.

Okay. Understood. Understood. In the quarter, your polishing business was a little bit weak. You made multiple references in the prepared remarks to macro. I understand that there are different segments that, that serves, obviously, it serves LED, it serves silicon carbide and some other polishing applications. Can you maybe give us a little bit more color, specifically on the silicon carbide side of the business, have you seen customers pull back from the market? Or do you continue to see the same amount of momentum with the handful of customers that have been leading the charge?

So in terms of our silicon carbide customers, we have not seen any pullback, right? There are still a lot of momentum going forward. We’ve seen announcements of deals being made downstream, then that will be the catalyst for the upstream value chain to also prepare for the coming expansion. So we still feel good. We’re still very positive about the future outlook for silicon carbide power devices overall. But this is an evolving industry, it’s still relatively immature compared to silicon. So every part of the value chain, they are getting ready. There are some factors with the macro uncertainties that has some weight. And also, we see some seasonal inventory adjustments from the prior years where we saw large order volumes.

Okay, understood. And then if we could talk a little bit about the gross margin progression into the fourth quarter. How much of your margin guidance really is the factoring of the weak macro versus some of the more favorable margin attributes of the products that are becoming a slightly larger piece of the mix?

Craig, I think that it’s a combination of the weak macro as well as some of the product mix, which can certainly affect our gross margin in terms of the mix of the machines versus consumables, that has an impact as well. So it’s a combination of those factors.

Okay, excellent. And the assets that have been marked for disposal, when would you expect the final transaction to potentially be completed? Is this something that will be done by the end of the year? Or is it something where there’s a little bit more uncertainty than that?

I would say there’s more uncertainty than that. Of course, we are targeting as near-term as possible. But yes, there’s a lot of uncertainty as to how quickly that can be achieved.

Great. Thanks, again for taking my questions.

Thank you, Craig.

[Operator Instructions] Today’s next question comes from Mark Miller of the Benchmark Company. Please go ahead.

Your bookings in all 3 segments were down double digits sequentially year-over-year, was it linear in the quarter? Or was it stronger or weaker at the beginning or the end of the quarter in terms of your bookings?

I think it’s fairly linear. So a lot of it is this macro environment. Some of it is the timing of some of our large furnace orders as well. So we’re seeing that combination there.

Thank you.

And ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to the management team for any final remarks.

Thank you for your time today and for your interest in Amtech. This concludes today’s call.

Thank you, Ma’am. Today’s conference has now concluded. We thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day.