Good day, and welcome to the Amtech Systems' First Quarter 2021 Earnings Conference Call. Please note that this event is being recorded. I'd now like to turn the call over to Erica Mannion of Sapphire Investor Relations.

Good afternoon, and thank you for joining us for Amtech Systems' Fiscal First Quarter 2021 Conference Call. With me today on the call are Michael Whang, Chief Executive Officer; and Lisa Gibbs, Chief Financial Officer. After the close of market today, Amtech released its financial results for the fiscal first quarter 2021. The earnings release is posted on the company's website at www.amtechsystems.com in the Investors section. During today's call, management will make forward-looking statements. All such forward-looking statements are based on information available as of this date, and the company assumes no obligation to update 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 customers and competitors; changes in volatility and the demand for 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; capital allocation plans; and the worldwide COVID-19 pandemic. Other risk factors are detailed in the company's SEC filings, including its Form 10-K and Form 10-Q. Now I will turn the call over to Michael Wang, Chief Executive Officer.

Thank you, Erica. Amtech delivered strong results in the first quarter with revenue of $18 million, coming in at the high end of our expectations, driving a return to overall profitability and cash flow generation. Activity within the semiconductor markets continued at a strong pace, most notably with our customers in the Asia Pacific region, who are continuing to make capacity investments. Within this market, advanced packaging applications remain a primary driver of demand. Current market forecasts indicate a strong outlook for the broader semiconductor industry in 2021, and we are seeing this translate to order activity in our products. At this point, demand is approaching capacity at our Shanghai facility, and we are exploring options to add incremental manufacturing capacity as needed. While this market is performing very well for Amtech, it is worth noting that this only comprises a portion of demand within our overall semiconductor segment. For the other two core product lines within the segment, principally our custom high-temperature furnaces, which are used for a variety of thermal processing applications, and a horizontal diffusion furnace for power chip applications, dialogue with customers tended to increase along with quoting activity. For these markets, we are seeing an increase in activity in both the Asia Pacific and North American regions as global economies adjust to operating within the ongoing pandemic and move forward with capital investment plans. Within the power semiconductor market, our customers are looking forward with their capacity expansion plans, including our continued transition from 200-millimeter to 300-millimeter process lines. In the first quarter, we shipped the follow-on order for a clustered 300-millimeter horizontal diffusion furnace system and are now in the process of bringing that system online. In addition, we are starting to see supply chain shortages for automotive semiconductors translate to an increase in quoting activity. While many of these projects are multiyear initiatives that were already in the planning phase late last year, the timeline of some of these have begun to accelerate. However, these products often carry a multi-quarter lead time, and thus, we would not expect to see meaningful revenue contribution until the second half of calendar 2021. We are very pleased with the performance of our semiconductor segment so far this year. Following the strong growth in advanced semiconductor packaging applications in 2020, we are seeing demand continue into 2021 with the layering of incremental high-temperature furnace and power semiconductor orders helping to drive the upside. Moving on to our silicon carbide and LED segment, we continue to maintain healthy dialogue with our customers as they execute their capacity expansion plans in the coming years. As we discussed on prior calls, to date, device manufacturers have been able to grow device output and service near-term demand by breaking bottlenecks and improving yields throughout their manufacturing process, limiting the need for investments in wafering capacity where Amtech participates. While this has caused our near-term results to remain flat versus growing in line with the overall device output, this dynamic is only temporary. With the planned fab expansion initiatives currently underway to address a burgeoning electric vehicle, industrial, and communication demand forecast in years ahead, silicon carbide wafer manufacturers will be required to make significant investments in their wafering capacity to meet growing demands. Translating this to demand for Amtech, as the lead times for our products are often shorter than those of the device manufacturing equipment, we would expect to see an uptick in demand once new production volume in wafering capacity is brought online to service the needs of new device manufacturing facilities. Given our market position in consumables roadmap for new equipment platforms and recently completed capacity expansion investments for our silicon carbide manufacturing operations, we are well positioned to capture this opportunity when it emerges. We continue to remain as excited as ever about the mid- to long-term opportunities in front of us. We believe our leadership in the market segments exposed to several secular tailwinds creates a significant opportunity to drive increased profitability and shareholder value as demand accelerates, and we realize the operating leverage built into our current business model. And now I turn the call over to Lisa to review our first quarter financial results.

Thank you, Michael. Net revenues increased 19% sequentially, primarily attributed to the shipment of our 300-millimeter clustered high-temperature diffusion furnace to a top-tier global power semiconductor customer, as announced previously. While our book-to-bill was roughly equal in the first quarter, it is important to note that revenue in the first quarter included these large diffusion furnace shipments. Adjusting for this, our book-to-bill ratio would have been closer to 1.2:1, demonstrating the strength we are seeing in the power semiconductor market. Gross margin increased in the first quarter of fiscal 2021 to 42% compared to 33% in the fourth quarter of fiscal 2020. This was primarily due to favorable product mix, most notably strong shipments of our larger advanced packaging products. Selling, general, and administrative expenses decreased $0.1 million sequentially and $0.7 million compared to the same prior year period. The decrease compared to the same prior year period was primarily due to legal costs incurred in fiscal Q1 2020 relating to our solar divestiture. Operating income in the first fiscal quarter of 2021 was $1.1 million compared to an operating loss of $1.2 million in the fourth quarter of fiscal 2020 and an operating income of $1.6 million in the same prior year period. Income tax provision was $0.1 million for the 3 months ended December 31, 2020, and includes a benefit of approximately $0.3 million related to the reversal of previously recorded uncertain tax positions. Income from continuing operations net of tax for the first quarter of fiscal 2021 was $0.7 million or income of $0.05 per share. This compares to a loss from continuing operations of $1.3 million or $0.09 per share for the first quarter of fiscal 2020, and a loss of $2 million or $0.14 per share in the preceding quarter. Unrestricted cash and cash equivalents as of December 31, 2020, were $45.6 million compared to $45.1 million at September 30, 2020. Approximately 88% of our cash balance is held in the United States. After a challenging 2020, we are pleased to see a return to profitability this quarter and are encouraged by our strong booking trends and customer quoting activities. We continue our focus on executing our longer-term strategy and achieving our capital allocation goals, including capacity expansion, product development, management information systems, and M&A. As it relates to capacity expansion, our building lease for our Shanghai facility expired and was not renewed, and we are excited to relocate to a larger building later this summer. This building will increase capacity and support our Pyramax product line, serving our advanced packaging and other semiconductor packaging and SMT customers. Now turning to our outlook. For the quarter ending March 31, 2021, our fiscal second quarter, revenues are expected to be in the range of $18 million to $20 million. Gross margin for the fiscal second quarter is expected to be approximately 40% with operating margin positive. The semiconductor equipment industry is cyclical and inherently impacted by changes in market demand. The global pandemic may also have impacts on our customers and supply chain. The shortage of shipping containers and the related delays for goods shipped from China may also impact our operating results. Additionally, operating results can be significantly impacted positively or negatively by the timing of orders, system shipments, and the financial results of semiconductor manufacturers. A portion of Amtech's results are denominated in RMB, a Chinese currency. The outlook provided in this press release is based on an assumed exchange rate between the United States dollar and the RMB. Changes in the value of the RMB in relation to the United States dollar could cause actual results to differ from expectations. Now let's turn the call over to the operator for questions.

And we'll take our first question today from Jeff Osborne with Cowen & Company.

Great to hear about the quoting activity picking up. And congratulations on the results. A couple of questions on my end. I was wondering if you can just touch on the urgency of the conversations around capacity and the impact of the semiconductor shortage as it relates to auto and other industries out there?

Jeff, thanks for joining us. Thanks for your question. There is a certain degree of urgency and frequency that we have been experiencing starting from last quarter and on to the current period. So I'm heartened and also encouraged with what's in the pipeline. I can't wait to see what comes about in the future.

Got it. Can you discuss the gross margin outcome for the quarter in relation to your guidance? I believe it was originally expected to be in the mid-30s. I assumed you were aware the big order was on its way, so what other factors contributed to reaching close to 42% instead of the mid-30s guidance?

Thanks, Jeff. It really was not necessarily that order. We certainly knew that order was going out this quarter. It was a product mix that occurred a little bit later in the quarter of our much larger advanced packaging products that have a very nice margin profile for us.

Got it. And then I'm trying to understand, you had a good 8 to 10 quarters in a row of sort of mid-30s gross margin to low 40s for the LED and silicon carbide segment. And then last quarter, in September, it was 15% and then 25%. Is that because of the expansion that you did in Pennsylvania at PR Hoffman that there's some production or yield issues or what's going on there? Or is this a new normal?

It's a combination of the increased capacity. We have some additional rent expense and some new equipment and depreciation that's impacting that. And certainly, as that growth occurs, we expect the gross margins to return to normalized levels.

So that might take a few quarters? Is that a safe assumption?

That is a safe assumption.

Got it. And then how should we be thinking about with the relocation in Shanghai with the old BTU facility? How do we think about OpEx? Are you hiring a lot of people to gear up for this growth? Is there any new products that require any incremental expenses that we should be thinking about?

From an OpEx perspective, we'll keep that very contained, and we're doing this with a lot of our internal talent. We have some great people over there that can help manage and we have some external help as well. I don't expect significant impact on the OpEx side. There will be some CapEx that will happen in kind of that mid- to late summer timeframe as we do a fairly significant build-out. When you lease the building in China, you lease it empty. So there will be some significant CapEx. I think in total for the year, I would expect it to be on par with what we had last year, in the range of $2.5 million.

At this time, we will conclude today's call. Thank you for your participation. You may now disconnect.