Amtech (ASYS)

Semiconductor production equipment provider Amtech Systems (NASDAQ:ASYS) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales fell by 26.9% year on year to $19.56 million. On the other hand, next quarter’s revenue guidance of $18 million was less impressive, coming in 1.4% below analysts’ estimates. Its non-GAAP profit of $0.06 per share was significantly above analysts’ consensus estimates.

Company Overview

Focusing on the silicon carbide and power semiconductor sectors, Amtech Systems (NASDAQ:ASYS) produces the machinery and related chemicals needed for manufacturing semiconductors.

Companies offering competing semiconductor production equipment include Centrotherm, CVD Equipment (NASDAQ:CVV), Vitronics Soltec, and Rehm Thermal Systems.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Amtech’s 3.5% annualized revenue growth over the last five years was sluggish. This was below our standard for the semiconductor sector and is a tough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Amtech’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 15.8% annually.

This quarter, Amtech’s revenue fell by 26.9% year on year to $19.56 million but beat Wall Street’s estimates by 15%. Despite the beat, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 25.3% year-on-year decline in sales next quarter.

We also like to judge companies based on their projected revenue growth, but not enough Wall Street analysts cover the company for it to have reliable consensus estimates.

Days 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 171, which is 18 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.

Gross profit margin is a key metric to track because it shows how much money a semiconductor company gets to keep after paying for its raw materials, manufacturing, and other input costs.

Amtech’s gross margin is one of the worst in the semiconductor industry, signaling it operates in a competitive market and lacks pricing power. As you can see below, it averaged a 33.3% gross margin over the last two years. Said differently, Amtech had to pay a chunky $66.73 to its suppliers for every $100 in revenue.

Amtech’s gross profit margin came in at 46.7% this quarter, up 10.2 percentage points year on year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Although Amtech was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 7.5% over the last two years. Unprofitable semiconductor companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, Amtech’s operating margin decreased by 10 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Amtech’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q2, Amtech generated an operating margin profit margin of 4.7%, up 1.5 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Amtech, its EPS declined by 17.8% annually over the last five years while its revenue grew by 3.5%. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

Diving into the nuances of Amtech’s earnings can give us a better understanding of its performance. As we mentioned earlier, Amtech’s operating margin expanded this quarter but declined by 10 percentage points over the last five years. Its share count also grew by 1.1%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q2, Amtech reported adjusted EPS at $0.06, down from $0.08 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Amtech has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.8%, lousy for a semiconductor business.

Taking a step back, an encouraging sign is that Amtech’s margin expanded by 12.6 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Amtech’s five-year average ROIC was negative 3.1%, meaning management lost money while trying to expand the business. Its returns were among the worst in the semiconductor sector.

Amtech reported $15.56 million of cash and $18.96 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $3.57 million of EBITDA over the last 12 months, we view Amtech’s 1.0× net-debt-to-EBITDA ratio as safe. We also see its $65,000 of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Amtech blew past analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue guidance for next quarter slightly missed. Overall, this print was mixed but still had some key positives amid low expectations. The stock traded up 7.1% to $4.80 immediately following the results.

Updated: December 3, 2025 at 9:28 PM EST

Are you wondering whether to buy Amtech or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

We cheer for all companies solving complex technology issues, but in the case of Amtech, we’ll be cheering from the sidelines. For starters, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its rising cash profitability gives it more optionality, the downside is its relatively low ROIC suggests management has struggled to find compelling investment opportunities. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Amtech’s P/E ratio based on the next 12 months is 66.5x. At this valuation, there’s a lot of good news priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $6 on the company (compared to the current share price of $8.75), implying they don’t see much short-term potential in Amtech.