Good day, everyone, and welcome to the Amtech Systems Fiscal First Quarter 2026 Earnings Call. Please note that this call is being recorded and simultaneously webcast. I would now like to turn the call over to Jordan Darrow, of Darrow Associates Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Appreciate you joining us for the Amtech Systems Fiscal 2026 First Quarter Conference Call and Webcast. With me today on the call are Bob Daigle, Chairman and Chief Executive Officer, and Mark Weaver, Interim Chief Financial Officer. After close of market today, Amtech released its financial results for 2026. The earnings release is posted on the company's website at www.amtechsystems.com in the Investors section. Before we begin, I'd like to remind everyone that the Safe Harbor disclaimer in our public filings covers this call and the webcast. Some of the comments we make during today's call will contain forward-looking statements and assumptions that are subject to risks and uncertainties, including, but not limited to, those contained in our SEC filings, all of which are posted in the Investors section of our corporate website. The company assumes no obligation to update any such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of today. 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 forward-looking statements are changes in technologies used by customers and competitors, changes in volatility and the demand for products, the effect of changing worldwide political and economic conditions including trade sanctions, and the effect of overall market conditions, including equity and credit markets and market acceptance risks, ongoing logistics, supply chain and labor matters, and capital allocation plans. Other risk factors are detailed in our SEC filings, including our Form 10-Ks and Form 10-Q. Additionally, in today's conference call, we will be referencing non-GAAP financial measures as we discuss the financial results for the first quarter. You will find a reconciliation of those non-GAAP measures to our actual GAAP results included in the press release issued today. I will now turn the call over to Amtech's Chief Executive Officer, Bob Daigle.

Thank you, Jordan, and welcome to everyone joining our call today. Before I provide commentary on the quarter and recent developments, I'd like to introduce Mark Weaver, our Interim CFO. Mark joined us on December 16 to help us with our CFO transition until we appoint a permanent CFO. While we are making progress in our search, I'm confident we are in terrific hands with Mark. I had the privilege of having him as a colleague when he served as the Chief Accounting Officer and Corporate Controller of Rogers Corporation. Among other senior financial roles, he was the Chief Accounting Officer of NXP Semiconductors. We're very pleased to have someone with his experience assist us during this transition. Now on to my review of the quarter. Revenue for the quarter was $19 million, at the midpoint of our guidance, and our adjusted EBITDA was $1.4 million, also within our guidance range. The quarter benefited from strength in demand for AI-related products, which accounted for 35% of revenue for our Thermal Processing Solutions segment in the first quarter, up from about 30% in the fourth quarter. Another highlight is that our bookings were strong for the quarter. Our overall book-to-bill ratio was 1.1, driven by performance of our Thermal Processing Solutions segment due to strength in AI equipment orders. We have the ability to deliver the majority of this equipment in the second quarter due to our short lead times, but customers have requested some deliveries in the third quarter to align with their factory build-outs. As broadly reported, semiconductor OEMs and OSATs continue to increase investments to expand capacity to support strong AI infrastructure demand. We expect demand for the equipment we produce for AI applications to continue to increase in the third and fourth quarters. In addition to traditional…

Great. Thank you, Bob. It really is a pleasure to be working with you again, even if it's for a short period of time. Now on to my review of the financials for the fiscal 2026 first quarter. For proper perspective, net revenues of $19 million in 2026 do not represent a meaningful comparison to the prior year period. This is due to the company's product line rationalization that began two years ago. For these periods, the only perspective worth noting is for AI-related demand, which grew year over year. You'll see in a moment the benefits of this rationalization today when I address AI revenues as part of our TPS segment, and when I talk about our consolidated gross margin as a percentage of revenues and other improvements in the company's operating performance, cash flow generation, and balance sheet. Back to the discussion on revenues. A more appropriate comparison is to the fourth quarter. Total revenues were positively influenced by growth in AI product demand within the TPS segment. AI revenues contributed approximately 35% of TPS revenue versus 30% in Q4. The increase was approximately 10% on a sequential basis. Bookings for AI applications remain strong. Other areas of TPS and SFS sales offset this growth on a consolidated basis, which is attributable to general weakness in non-AI areas of the semiconductor industry, in particular for mature node semiconductors used in the automotive electronics industry. Circling back to the benefits of the company's transformation, gross margin as a percentage of sales increased in 2026 sequentially from the fourth quarter and year over year from the first quarter of last year. Importantly, the increase in gross margin was achieved on lower sales volume. Gross margin as a percentage of sales increased to 44.8% in 2026 from 38.4% in the same…

Ladies and gentlemen, at this time, we'll begin the question-and-answer session. To withdraw your questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Again, that is star and then 1. And our first question today comes from George Marema from Pareto Ventures. Please go ahead with your question.

Good afternoon.

Hello, George. Afternoon.

So I was curious on this, you discussed in the call about this panel-level business. Could you elaborate a little bit on what that is? A little more color on that?

Yeah. Traditionally, chip packaging has been pretty discrete components, and the drive is really from a cost-effectiveness and throughput perspective to start to produce packaging really in large panel formats and then, you know, basically dice them up later like they do with semiconductor wafers. Our sense is this is really the future of advanced packaging. So it was important for us to demonstrate that, again, we were in a position of process of record with the key OEMs and OSATs. So the variety of customer orders that we received for that technology in this quarter, I think, was good validation about future demand.

And, during 2025, you were talking about perhaps in 2026 fiscal, you may have some new products. Does this have anything to do with that? Some new capabilities?

The new products are more around addressing higher density packaging requirements, not panel processing uses very similar technology to what we're providing today. So and, again, what I mentioned earlier is, we've built equipment, we're processing samples for customers for these higher density packaging applications. But we're still in the relatively early stages. At this stage, I'm thinking, George, that you're looking at probably 2027 before we would see any meaningful demand from that next-generation equipment.

Okay. And, I was happy to hear you got a win in the specialty chemical business. Are there any other qualifications underway in the services and chemicals businesses?

Yeah. We have a variety of active engagements right now. Again, as I mentioned in the commentary, I've been very pleased with the level of customer engagement and pull for these collaborative development efforts. So I think we're starting to get a sense that this business model that we've developed around addressing these niche applications looks very promising in terms of developing a pipeline of these recurring revenue streams.

Okay. That's great to hear. Thanks, Bob.

All right. Thank you, George.

Our next question comes from Gary DeStefano from Titan Partners. Please go ahead with your question.

Yes. Hey, Bob. Congrats on the very solid quarter.

Thank you, Gary.

No problem. Listen, just a quick macro question level for me. Given the growing backlog, customer orders, consistent operating cash flow, continued customer engagement, what are you most encouraged about here as you move through fiscal 2026?

I think the two areas that are strong bookings and as I mentioned in the commentary, right, we have short lead times on the equipment we provide for AI packaging. So we had a very solid booking quarter. Some of it stretches into Q3. But at least based on our channel checks and what we're hearing from the field, we're seeing continued strong demand, and what we're hearing is we should continue to see strength that goes into the third quarter and fourth quarter as well. Because there's always been the question of how long the demand is going to continue, and we're getting continued evidence that we've got better visibility out to a few quarters now, which gives us some comfort. As I mentioned, being process of record for panel-level packaging also gives us some comfort in terms of driving future demand because we do think that's going to be a key part of where the industry is going. And I'd say the third area, which George explored earlier, is really the evidence that both the win with the customer and the strength of the pipeline we're seeing for our specialty chemicals, I think, puts us in a position where, in terms of visibility towards growth and increasing confidence about growth, we're in a good place. And, again, the fact that we continue to see as we see this revenue flow through, the margin profile continues to strengthen, which is what we anticipated. But ultimately, we needed to see it in our results, and we are seeing it.

That makes sense. I appreciate you taking the question, Bob. Thank you.

Thank you.

Our next question comes from Craig Irwin from ROTH Capital Partners. Please go ahead with your question.

Thank you. Good evening. So Bob, I know you've worked so hard over the last several quarters to bring down your frictional costs, right? Downsizing the footprint, adjusting your spending to your highest priority projects and customers. This quarter, we saw a $700,000 increase quarter over quarter on the SG&A and R&D lines combined. I know you're not going to be spending that much money unless you're very intentional about it. Can you maybe call out any items in there that you think are particularly interesting or projects or customers or general areas of commitment? Is this AI, or is this something for the broader semiconductor industry? Anything you could share.

Yeah. No. The R&D increases are really in two categories. We are investing and have increased investments in the next-generation packaging equipment for AI applications. So being able to handle higher density, we increased investments really to move more quickly. And I thought that was important for us. It's a huge opportunity for us that we need to capitalize on. And, again, I think the commentary around the semi-fab solutions traction, now we've seen some validation, so we have increased resources a bit in that area and really trying to build that momentum behind growth in that business as well. On the more of the G&A side, there were consulting costs. There's also some variable comp costs that were in the quarter that I think will be ongoing. I'm not so sure that the consulting costs, some of that could come down a bit as well in future quarters. But those were the main drivers for the differences quarter over quarter.

Understood. Thank you for that. Then the next thing is, you know, business momentum. Right? I know we're kind of in a choppy environment. You know, you've been climbing a set of stairs as far as your AI revenue mix, you know, 25%, 30%, 35%. That's awesome. Can you really, do you have confidence that that mix is likely to continue to increase over the next couple of quarters? And I know that there's not a whole lot of order visibility per se given the fast book and burn nature of a lot of your business. You know, one-to-one book-to-bill is great, but do you feel like the sort of general tempo of that base business is healthy and potentially accelerating to where we can see different growth than what we've had over the last couple of quarters?

So let me start with the AI. I think our visibility has improved on the AI part of the business. Customers are more open around what they have planned for expansion these days because, obviously, with the rapid ramps, people are more concerned about making sure their supply chains, their supply base can support that. So we're feeling pretty good around, you know, it's not great visibility. It's not like the orders are placed, but in terms of forecast and what we're hearing in terms of the tempo and the build-outs. Right? Because I think if you characterized prior quarters, the equipment for the most part we were providing for AI chip packaging was, I'll call it, squeezing equipment into existing facilities. But you're now seeing new facilities being built and starting to be outfitted with equipment. And that's part of when I commented on the strong book-to-bill in the first quarter, but some of these orders in the third quarter, that's tied to that, right? They're going to finish the facilities in the second quarter, do some of the installation work in the third quarter. In terms of visibility on the balance of the semiconductor market, you know, I read the same things and pay attention probably to the same sources as you do. There's some inklings of maybe some improvement in the more traditional mature node markets. But the clarity is definitely not as good in that space as it is in AI. I do expect the momentum to continue around AI. Those other parts of the business we're less certain about, and that was reflected frankly in our guidance for the second quarter.

Understood. Last question, if I may. Sometimes GAAP earnings can be important. So given the different data services out there in the market, this quarter, you had an 83% tax rate. That doesn't strike me as a natural or normal tax rate for you. Can you maybe talk us through what this was, and what you think a fair tax rate could be for this year? I realized last year actually was a tax benefit. So I wouldn't be surprised if we saw one again. But this kind of thing does sometimes create a little volatility in smaller names.

Yeah. Let me ask Mark to jump in here.

Yeah. So Craig, this is because our US entities are in a loss position. And so with them being in a loss position, there is no tax benefit that's recognized as a result of them being in a loss position because we have a valuation allowance against our deferred tax assets. So what you're seeing is the tax is coming through that's on our foreign entities. And although the foreign entities have income, that's probably twice as much as the loss in the US, but the loss in the US, because that benefit doesn't come through because we have a valuation allowance, it ends up being that you're showing a larger tax expense on the bottom line in relation to the overall income because that income is reduced on a book basis because of the US. Does that help?

That makes complete sense to me. I've seen this many times in the past. And, you know, as we watch this US super cycle play out, hopefully, we end up having to pay a lot of tax at a low rate, but a lot of taxes in the future. Right. So congratulations on the progress this quarter. I'll hop back in the queue.

All right. Thanks, Craig.

And with that, we'll be ending today's question and answer session. I would like to turn the floor back over to Bob Daigle for closing remarks.

All right. Well, thank you. And in closing, I want to thank everybody on the call today. We look forward to seeing some of you in March at the upcoming annual Roth Capital Conference, as well as other investor relations activities. And for everyone else, please stay tuned for updates on our continued progress and have a good evening.

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.