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ASYS' Cost Reduction Initiatives: Can it Drive Margin Expansion?
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Key Takeaways
ASYS reduced factories and costs, adopting a semi-fabless model to enhance efficiency and leverage.
Q3 fiscal 2025 margins hit 47%, with $2.2M adjusted EBITDA versus a $1.4M loss in the prior quarter.
Planned facility rentals and steady savings aim to support Q4 revenues of $17M-$19M with margin gains.
Amtech Systems (ASYS - Free Report) has been implementing cost reduction initiatives to make its business run more efficiently. Over the last 18 months, the company has reduced its manufacturing footprint by consolidating the number of factories from seven to four, while moving more production to outside partners. These changes have resulted in about $13 million in annual savings.
A core element of this transformation is Amtech Systems’ adoption of a semi-fabless manufacturing model, which lowers the company’s fixed costs while enabling it to improve its operating leverage. This matters because Amtech faces uneven market demand. Demand for AI-related equipment is very strong, with sales up five times from last year. But demand for semiconductor tools used in automotive and industrial markets is still weak. By cutting costs, Amtech can stay profitable even when some parts of the business are slow.
Amtech Systems’ cost-cutting efforts are already being reflected in its results. In the third quarter of fiscal 2025, Amtech’s non-GAAP margins were 47%, up from 36% in the prior quarter. Adjusted EBITDA came in at $2.2 million, improving significantly after a negative EBITDA of $1.4 million in the prior quarter.
Additionally, the company also plans to rent out facilities it no longer needs, which will result in additional cost savings. Looking ahead, for the fourth quarter of fiscal 2025, Amtech Systems expects revenues of $17 million to $19 million and adjusted EBITDA margins in the mid-single digits. The above factors demonstrate how Amtech Systems’ cost reduction initiatives are improving margins, while also helping the company build a stronger and more stable business over time.
How Competitors Fare Against ASYS
Amtech Systems faces competition from larger players, such as Applied Materials (AMAT - Free Report) and Lam Research (LRCX - Free Report) , that are also focused on improving their operational efficiency.
In the third quarter of fiscal 2025, Applied Materials made $7.3 billion in sales, driven by demand for advanced packaging tools used in AI. Additionally, Applied Materials lowered its administrative costs to balance higher research spending to keep margins steady.
In the fourth quarter of fiscal 2025, Lam Research posted $4.7 billion in revenues, up 24% from last year, driven by deposition and etch systems. Lam Research is using a close-to-customer manufacturing model to cut logistics costs and has lowered capital spending to drive operational efficiencies.
ASYS’ Price Performance, Valuation and Estimates
Shares of Amtech Systems have surged 70.7% year to date compared with the Zacks Semiconductor - General industry’s growth of 29.9%.
ASYS YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Amtech Systems trades at a forward price-to-sales ratio of 1.67X, lower than the industry’s average of 14.55X.
ASYS Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Amtech Systems’ fiscal 2025 is pegged at a loss of 6 cents per share. The estimate has been revised upward over the past 60 days. The Zacks Consensus Estimate for Amtech Systems’ fiscal 2026 earnings is pegged at 15 cents per share, and has remained unchanged over the past 60 days, indicating year-over-year growth of 350%.
Image: Bigstock
ASYS' Cost Reduction Initiatives: Can it Drive Margin Expansion?
Key Takeaways
Amtech Systems (ASYS - Free Report) has been implementing cost reduction initiatives to make its business run more efficiently. Over the last 18 months, the company has reduced its manufacturing footprint by consolidating the number of factories from seven to four, while moving more production to outside partners. These changes have resulted in about $13 million in annual savings.
A core element of this transformation is Amtech Systems’ adoption of a semi-fabless manufacturing model, which lowers the company’s fixed costs while enabling it to improve its operating leverage. This matters because Amtech faces uneven market demand. Demand for AI-related equipment is very strong, with sales up five times from last year. But demand for semiconductor tools used in automotive and industrial markets is still weak. By cutting costs, Amtech can stay profitable even when some parts of the business are slow.
Amtech Systems’ cost-cutting efforts are already being reflected in its results. In the third quarter of fiscal 2025, Amtech’s non-GAAP margins were 47%, up from 36% in the prior quarter. Adjusted EBITDA came in at $2.2 million, improving significantly after a negative EBITDA of $1.4 million in the prior quarter.
Additionally, the company also plans to rent out facilities it no longer needs, which will result in additional cost savings. Looking ahead, for the fourth quarter of fiscal 2025, Amtech Systems expects revenues of $17 million to $19 million and adjusted EBITDA margins in the mid-single digits. The above factors demonstrate how Amtech Systems’ cost reduction initiatives are improving margins, while also helping the company build a stronger and more stable business over time.
How Competitors Fare Against ASYS
Amtech Systems faces competition from larger players, such as Applied Materials (AMAT - Free Report) and Lam Research (LRCX - Free Report) , that are also focused on improving their operational efficiency.
In the third quarter of fiscal 2025, Applied Materials made $7.3 billion in sales, driven by demand for advanced packaging tools used in AI. Additionally, Applied Materials lowered its administrative costs to balance higher research spending to keep margins steady.
In the fourth quarter of fiscal 2025, Lam Research posted $4.7 billion in revenues, up 24% from last year, driven by deposition and etch systems. Lam Research is using a close-to-customer manufacturing model to cut logistics costs and has lowered capital spending to drive operational efficiencies.
ASYS’ Price Performance, Valuation and Estimates
Shares of Amtech Systems have surged 70.7% year to date compared with the Zacks Semiconductor - General industry’s growth of 29.9%.
ASYS YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Amtech Systems trades at a forward price-to-sales ratio of 1.67X, lower than the industry’s average of 14.55X.
ASYS Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Amtech Systems’ fiscal 2025 is pegged at a loss of 6 cents per share. The estimate has been revised upward over the past 60 days. The Zacks Consensus Estimate for Amtech Systems’ fiscal 2026 earnings is pegged at 15 cents per share, and has remained unchanged over the past 60 days, indicating year-over-year growth of 350%.
Image Source: Zacks Investment Research
Amtech Systems currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.