AMTECH SYSTEMS INC

Previous wording

We provide equipment, consumables and services for semiconductor wafer fabrication and device packaging. Our products are used in fabricating semiconductor devices, such as silicon carbide (SiC) and silicon (Si) power devices, digital and analog devices, power electronic packages, advanced semiconductor packages and electronic assemblies. We sell these products to semiconductor device and module manufacturers worldwide, particularly in Asia, North America and Europe.

Current wording

We provide equipment, consumables and services for semiconductor device packaging, wafer production and device fabrication. Our products are used to fabricate and package semiconductor devices, such as graphic processing units (GPU’s) used in AI applications, silicon carbide (SiC) and silicon (Si) power devices and other optical, analog and digital devices. We sell these products to semiconductor device packaging, electronic assembly and device fabrication companies worldwide.

Previous wording

We operate in two reportable segments, based primarily on the industries they serve: (i) Thermal Processing Solutions (formerly called Semiconductor) and (ii) Semiconductor Fabrication Solutions (formerly called Material and Substrate). Our thermal processing solutions include reflow equipment for chip packaging and electronic assembly, diffusion furnaces and furnaces used to produce ceramic based power semiconductor packages and passive electronic components. Our semiconductor fabrication solutions include consumables, equipment and services for wafer polishing, cleaning, slicing and dicing.

Current wording

We operate in two reportable segments, based primarily on the industries they serve: (i) Thermal Processing Solutions and (ii) Semiconductor Fabrication Solutions. Our thermal processing solutions include reflow equipment for chip packaging and electronic assembly, diffusion furnaces and furnaces used to produce ceramic based power semiconductor packages and passive electronic components. Our semiconductor fabrication solutions include consumables, equipment and services for wafer polishing, cleaning, slicing and dicing.

Previous wording

Artificial Intelligence - With Artificial Intelligence (AI), our reflow oven systems are the favored choice for Outsourced Semiconductor Assembly and Test Services (OSATS) providers who perform advanced packaging of the AI chips.

Current wording

Artificial Intelligence - With Artificial Intelligence (AI), we believe our reflow oven systems have leading market share with Outsourced Semiconductor Assembly and Test Services (OSATS) providers who perform advanced packaging of the AI chips.

Previous wording

Supply Chain Resiliency - There is a global trend of creating supply chain resiliency by expanding and/or relocating operations outside of mainland China. These new facilities will create demand for new equipment and services in growing regions like Mexico and Southeast Asia.

Current wording

Supply Chain Resiliency- There is a global trend of creating supply chain resiliency by expanding and/or relocating operations outside of mainland China. We believe these factories will create demand for new equipment and services in growing regions like Southeast Asia and Mexico.

Previous wording

Advanced Mobility - Advanced Mobility encompasses both the development and adoption of electric vehicles and charging infrastructure, including both EV and HEV, as well as advanced automotive electronics including Advanced Driver Assistance Systems (ADAS), infotainment and telematics. Our products intersect these markets in multiple ways: CMP consumables and wafer cleaning systems for the SiC substrates used in the EV power invertors; thermal processing systems for producing EV battery cooling systems and ceramic substrates for HEV power semiconductor packaging; and reflow ovens for ADAS, infotainment and telematics component assemblies.

Current wording

Advanced Mobility - Advanced Mobility encompasses both the development and adoption of electric vehicles and charging infrastructure, including both electric vehicle (EV) and hybrid electric vehicles (HEV), as well as advanced automotive electronics including Advanced Driver Assistance Systems (ADAS), infotainment and telematics. Our products intersect these markets in multiple ways: CMP consumables and wafer cleaning systems for the SiC substrates used in the EV power inverters; thermal processing systems for producing EV battery cooling systems and ceramic substrates for HEV power semiconductor packaging; and reflow ovens for ADAS, infotainment and telematics component assemblies.

Previous wording

In June 2022, we completed the sale of the real property where our manufacturing facility in Massachusetts is located. In connection with this sale, we entered into a two-year leaseback of the facility. This sale-leaseback transaction resulted in a net cash inflow of approximately $14.9 million, after repayment of the existing mortgage and settlement of related sale expenses. In September 2023, we signed a lease for a new location with less square footage and completed the move to this location in June 2024. As we expand our use of contract manufacturers, we will continue to look for ways to reduce our real estate footprint. In March 2024, we completed the sale of our corporate headquarters real property in Arizona. The sale resulted in a net cash inflow of approximately $2.5 million, after settlement of related sale expenses. Following the closing of this transaction, we entered into a lease agreement for a new office for our corporate headquarters, which commenced during the third quarter of fiscal year 2024. In addition, we are evaluating business continuity and resiliency within our operations, our management information systems, and our needs to allow for greater efficiencies and to ensure our infrastructure can support our future growth plans. As a capital equipment manufacturer, we will continue to invest in our business to drive future growth.

Current wording

In June 2022, we completed the sale of the real property where our manufacturing facility in Massachusetts is located and entered into a two-year leaseback of the facility. This sale-leaseback transaction resulted in a net cash inflow of approximately $14.9 million, after repayment of the existing mortgage and settlement of related sale expenses. In September 2023, we signed a lease for a new location with less square footage and completed the move to this new location in June 2024. As we expand our use of contract manufacturers, we will continue to look for ways to reduce our real estate footprint. In March 2024, we completed the sale of our corporate headquarters real property in Arizona. The sale resulted in a net cash inflow of approximately $2.5 million, after settlement of related sale expenses. Following the closing of this transaction, we entered into a lease agreement for a new office for our corporate headquarters, which commenced during the third quarter of fiscal year 2024. In addition, we are evaluating business continuity and resiliency within our operations, our management information systems, and our needs to allow for greater efficiencies and to ensure our infrastructure can support our future growth plans. As a capital equipment manufacturer, we will continue to invest in our business to drive future growth.

Previous wording

We evaluated our organizational structure and concluded that we have two reportable segments; Thermal Processing Solutions (formerly called Semiconductor) and Semiconductor Fabrication Solutions (formerly called Material & Substrate). Our Semiconductor Fabrication Solutions segment includes Entrepix beginning at the date of acquisition.

Current wording

We evaluated our organizational structure and concluded that we have two reportable segments; Thermal Processing Solutions and Semiconductor Fabrication Solutions.

Previous wording

Net revenue for the years ended September 30, 2024 and 2023 were $101.2 million and $113.3 million, respectively, a decrease of $12.1 million or 11%. Revenue from the Thermal Processing Solutions segment decreased $8.4 million, or 11%, over the prior year period. Our Thermal Processing Solution results for 2024 reflect decreases in belt furnace shipments partially offset by increases in shipments of our horizontal diffusion furnaces. We continue to experience softness in shipments of our advanced packaging and SMT equipment, primarily related to a slowdown in global demand in the consumer markets. Revenue from our Semiconductor Fabrication Solutions segment decreased $3.7 million, or 10%, due to decreases in shipments of our polishing equipment, which was eliminated at the end of 2023, with final shipments in 2024. Additionally, we experienced declines in our wafer cleaning equipment, partially offset by increases in our consumables shipments.

Current wording

Net revenue for the years ended September 30, 2025 and 2024 were $79.4 million and $101.2 million, respectively, a decrease of $21.9 million or 22%. Revenue from the Thermal Processing Solutions segment decreased $11.1 million, or 16%, over the prior year period. Our Thermal Processing Solution results for 2025 reflect decreases in belt furnace shipments and horizontal diffusion furnaces shipments, partially offset by increases in shipments of our parts and service business. We are also seeing year-over-year growth in our advanced packaging SPG reflow oven business due to AI chip demand. Revenue from our Semiconductor Fabrication Solutions segment decreased $10.7 million, or 34%, due to decreases in shipments of our polishing equipment. Additionally, we experienced declines in our wafer cleaning equipment, partially offset by increases in shipments of our consumables. Our chemical consumable business, which produces solutions for the semiconductor and medical industries experienced year-over-year growth.

Previous wording

At the end of 2024, two customers individually accounted for 25% and 20% of our total backlog. No other customer accounted for more than 10% of our backlog as of September 30, 2024. The orders included in our backlog are generally credit approved customer purchase orders believed to be firm and are generally expected to ship within the next twelve months. Our backlog at any particular point in time is not necessarily representative of actual sales for succeeding periods, nor is backlog any assurance that we will realize profit from completing these orders. During the three months ended June 30, 2024, a horizontal diffusion customer notified us of the cancelation of a furnace project for $4.5 million, which we believe is due to the slow-down in electric vehicle adoption. Also during this period, the improvement in lead times across all of our product lines favorably contributed to the decline in our backlog.

Current wording

At the end of 2025, two customers individually accounted for 29% and 11% of our total backlog. No other customer accounted for more than 10% of our backlog as of September 30, 2025. The orders included in our backlog are generally credit approved customer purchase orders believed to be firm and are generally expected to ship within the next twelve months. Our backlog at any particular point in time is not necessarily representative of actual sales for succeeding periods, nor is backlog any assurance that we will realize profit from completing these orders. During 2025, the improvement in lead times across all of our product lines favorably contributed to the decline in our backlog.

Previous wording

Gross profit for the years ended September 30, 2024 and 2023 was $36.2 million and $35.6 million, respectively, representing an increase of $0.7 million, or 2%. Gross margin for 2024 and 2023 was 36% and 31%, respectively. Gross margin for the Thermal Processing Solutions segment decreased to 35% in 2024, compared to 38% in 2023, due primarily from product mix with decreases in shipments of our high-temperature furnaces, surface-mount technology (“SMT”) and packaging equipment, partially offset by increases in shipments of our horizontal diffusion furnaces. Gross margin for the Semiconductor Fabrication Solutions segment, increased to 37% in 2024, compared to 18% in 2023 due primarily to the 2023 impairment charge of $4.6 million for intangible assets and a charge in the amount of $1.5 million related to the write-off of inventory for our polishing machine products, partially offset by an additional intangible asset impairment charge in 2024 of $0.8 million. We are experiencing moderate material costs increases across all our segments. In response to such increased costs, we continually review our pricing plans and supplier agreements, with the objective of passing these increased costs to our customers where possible; however, we continue to experience pricing pressure from our customers. We are also continuing to explore additional partnerships with contract manufacturers, who can leverage their buying power on a larger scale. Throughout fiscal 2024, we made targeted labor reductions as a result of the shift to contract manufacturing and the continuing slowdown in the broader semiconductor industry.

Current wording

Gross profit for the years ended September 30, 2025 and 2024 was $27.0 million and $36.2 million, respectively, representing a decrease of $9.2 million, or 26%. Gross margin for 2025 and 2024 was 34% and 36%, respectively. Gross margin for the Thermal Processing Solutions segment stayed consistent at 35% in 2025 and 2024, due primarily to inventory obsolescence expense and unfavorable product mix with decreases in shipments of our lower margin profile high-temperature furnaces and BDF equipment partially offset by the employee retention credit (ERC) which reduced expenses. In addition, we had an increase in shipments of our higher margin profile advanced packaging SPG equipment. Gross margin for the Semiconductor Fabrication Solutions segment, decreased to 30% in 2025, compared to 37% in 2024 due primarily to inventory obsolescence expense caused by a decline in the mature node semiconductor market slightly offset by the ERC which reduced expenses. We experienced moderate material costs increases across all our segments. In response to such increased costs, we reviewed our pricing plans and supplier agreements, with the objective of passing along these increased costs to our customers where possible; however, we continue to experience pricing pressure from our customers. We are also continuing to explore additional partnerships with contract manufacturers, who can leverage their buying power on a larger scale. Throughout fiscal 2025, we made targeted labor reductions as a result of the shift to contract manufacturing and the continuing slowdown in the broader semiconductor industry.

Previous wording

Total SG&A expenses for the years ended September 30, 2024 and 2023 were $33.8 million and $42.0 million, respectively, representing a decrease of $8.2 million or 19.4%. This decrease was primarily due to staff reductions across all of our locations during 2024, resulting in lower employee expenses and employee-related expenses, such as travel, commissions and bonuses. Non-segment related SG&A expense includes $1.5 million and $1.3 million of non-cash stock-based compensation expense for 2024 and 2023, respectively.

Current wording

Total SG&A expenses for the years ended September 30, 2025 and 2024 were $29.0 million and $33.8 million, respectively, representing a decrease of $4.9 million or 14%. This decrease was primarily due to planned cost reduction efforts around overhead expenses and staff reductions during 2025, resulting in lower insurance expenses, professional fees, salaries and employee-related expenses, such as travel, commissions and bonuses. In addition, the ERC reduced expenses contributing to the lower SG&A. Non-segment related SG&A expense includes $1.2 million and $1.5 million of non-cash stock-based compensation expense for 2025 and 2024, respectively.

Previous wording

RD&E expenses for the years ended September 30, 2024 and 2023 were $4.2 million and $7.3 million, respectively, a decrease of $3.1 million. The decrease in RD&E expense is due to the timing of purchases related to specific strategic-development projects at our Thermal Processing Solutions and Semiconductor Fabrication Solutions segments. Additionally, the prior year period included expenditures related to new product development projects at our Semiconductor Fabrication Solutions segment, which were terminated in the fourth quarter of 2023.

Current wording

RD&E expenses for the years ended September 30, 2025 and 2024 were $2.6 million and $4.2 million, respectively, a decrease of $1.5 million. The decrease in RD&E expense is due to the timing of purchases related to specific strategic-development projects at our Thermal Processing Solutions and Semiconductor Fabrication Solutions segments. In addition we had lower overhead expenses due to cost saving initiatives and the ERC which reduced expenses.

Previous wording

Gain on sale of fixed assets consists of the gain on the sale of our corporate headquarters in Arizona in March 2024. This sale resulted in a net gain of approximately $2.2 million, after settlement of related sale expenses and disposal of assets. The sale price for our BTU building in Massachusetts was $20.6 million, of which $0.7 million was deducted at closing for commission and other closing expenses. In connection with the sale, we recognized a pre-tax gain on sale of $12.5 million in the year ended 2022.

Current wording

Gain on sale of fixed assets consists of the gain on the sale of our corporate headquarters in Arizona in March 2024. This sale resulted in a net gain of approximately $2.2 million, after settlement of related sale expenses and disposal of assets.

Previous wording

In the first quarter of fiscal year 2024, we recognized impairment of our definite lived intangible assets of $1.3 million at our Semiconductor Fabrication Solutions segment. Of the $1.3 million, $0.8 million of this impairment was recorded in cost of goods sold, and the remainder was recorded within operating expenses in our Consolidated Statement of Operations. Additionally, during the year ended September 30, 2023, we recognized impairment of our definite lived intangible assets of $5.2 million at our Semiconductor Fabrication Solutions segment. Of the $5.2 million, $4.6 million of this impairment was recorded in cost of goods sold, and the remainder was recorded within operating expenses in our Consolidated Statement of Operations. See Note 9 for a description of the facts and circumstances leading to the intangible asset impairment events.

Current wording

In the first quarter of fiscal year 2024, we recognized impairment of our definite lived intangible assets of $1.3 million at our Semiconductor Fabrication Solutions segment. Of the $1.3 million, $0.8 million of this impairment was recorded in cost of goods sold, and the remainder was recorded within operating expenses in our Consolidated Statement of Operations. See Note 8 for a description of the facts and circumstances leading to the intangible asset impairment events.

Previous wording

In the first quarter of fiscal year 2024, we recognized impairment of our goodwill of $6.4 million at our Semiconductor Fabrication Solutions segment as a result of a triggering event identified at the end of the first quarter.

Current wording

In the first quarter of fiscal year 2024, we recognized impairment of our goodwill of $6.4 million at our Semiconductor Fabrication Solutions segment as a result of a triggering event identified at the end of the first quarter. See Note 9 for a description of the facts and circumstances leading to the goodwill impairment.

Previous wording

Our effective tax rate was (13.0)% and 17.1% in 2024 and 2023, respectively. The effective tax rate is the ratio of total income tax expense to pre-tax income. The effective tax rates for 2024 and 2023 were lower than the U.S. statutory rate of 21%. The 2024 effective tax rate was negatively impacted by non-deductible expenses, including goodwill impairment, includible foreign income, foreign withholding tax and losses for which no tax benefit can be recognized. The 2023 effective tax rate was negatively impacted by non-deductible expenses, includible foreign income, foreign withholding tax and losses for which no tax benefit can be recognized. The 2023 effective tax rate was favorably impacted by the recognition of previously unrecognized tax benefits and the release of a portion of our valuation allowance in connection with a deferred tax liability related to the Entrepix acquisition.

Current wording

Our effective tax rate was (8.3)% and (13.0)% in 2025 and 2024, respectively. The effective tax rate is the ratio of total income tax expense to pre-tax income. The effective tax rates for 2025 and 2024 were lower than the U.S. statutory rate of 21%. The 2025 effective tax rate was negatively impacted by non-deductible expenses, including goodwill impairment, foreign income taxed at different rates, foreign withholding tax and losses for which no tax benefit can be recognized.

Previous wording

In 2024 and 2023, we recorded income tax expense and (benefit) of $1.0 million and $(2.6) million, respectively. The income tax provisions are based upon estimates of annual income, annual permanent differences, statutory tax rates and credits in the various jurisdictions in which we operate. Significant judgments and estimates are required in the determination of the consolidated income tax expense.

Current wording

In 2025 and 2024, we recorded income tax expense of $2.3 million and $1.0 million, respectively. The income tax provisions are based upon estimates of annual income, annual permanent differences, statutory tax rates and credits in the various jurisdictions in which we operate. Significant judgments and estimates are required in the determination of the consolidated income tax expense.

Previous wording

Generally accepted accounting principles of the United States (“GAAP”) require that a valuation allowance be established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s performance, the market environment in which the company operates and the length of carryback and carryforward periods. According to those principles, it is difficult to conclude that a valuation allowance is not needed when the objective negative evidence includes cumulative losses in recent years. Such objective negative evidence limits the ability to consider other subjective evidence, such as future projections. Based on the consideration of all available evidence, we have concluded that we will maintain a full valuation allowance for all net deferred tax assets related to the carryforwards of U.S. net operating losses and tax credits. We will continue to monitor our cumulative income and loss positions in the U.S. and foreign jurisdictions to determine whether full valuation allowances on U.S. net deferred tax assets are appropriate.

Current wording

Generally accepted accounting principles of the United States (“GAAP”) require that a valuation allowance be established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s performance, the market environment in which the company operates and the length of carryback and carryforward periods. According to those principles, it is difficult to conclude that a valuation allowance is not needed when the objective negative evidence includes cumulative losses in recent years. Such objective negative evidence limits the ability to consider other subjective evidence, such as future projections. Based on the consideration of all available evidence, we have concluded that we will maintain a full valuation allowance for the net deferred tax assets in the U.S. We will continue to monitor our cumulative income and loss positions in the U.S. and foreign jurisdictions to determine whether full valuation allowances on U.S. net deferred tax assets are appropriate.

Previous wording

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. ASC 740, "Income Taxes", states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. In 2023, we recognized $1.0 million of previously unrecognized tax benefits, and as of September 30, 2024, we have no unrecognized tax benefits recorded within our financial statements. We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available.

Current wording

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. ASC 740, "Income Taxes", states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. As of September 30, 2025, we have no unrecognized tax benefits recorded within our financial statements. We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available.

Previous wording

We expect to pay minimal U.S federal cash taxes for the foreseeable future as a result of our U.S. net operating losses that are carried forward.

Current wording

We expect to pay minimal U.S federal cash taxes for the foreseeable future as a result of our U.S. net operating losses and tax credits that are carried forward.

Previous wording

The success of our investment and growth strategy is dependent upon the availability of additional capital resources on terms satisfactory to management. Our sources of capital in the past have included a loan and security agreement with UMB Bank, the sale of equity securities, which includes common stock sold in private transactions and public offerings, and cash generated from operations. There can be no assurance that we can raise such additional capital resources when needed or on satisfactory terms. We believe that our principal sources of liquidity discussed above are sufficient to support operations for at least the next twelve months.

Current wording

The success of our investment and growth strategy is dependent upon the availability of additional capital resources on terms satisfactory to management. Our sources of capital in the past have included a credit facility with a regional bank, the sale of equity securities, which includes common stock sold in private transactions and public offerings, and cash generated from operations. There can be no assurance that we can raise such additional capital resources when needed or on satisfactory terms. We believe that our principal sources of liquidity discussed above are sufficient to support operations for at least the next twelve months.

Previous wording

Our capital allocation strategy focuses on building shareholder value. We do this by first investing in ourselves and growing our capabilities. We then look to supplement and strengthen our capabilities through acquisitions and strategic investments. And finally, we provide the return realized by the investments to our stockholders. These three priorities are detailed as follows:

Current wording

Our capital allocation strategy focuses on building shareholder value. We do this by first investing in ourselves and growing our capabilities. We then look to supplement and strengthen our capabilities through acquisitions and strategic investments. And finally, we provide the return realized by our investments to our stockholders. These three priorities are detailed as follows:

Previous wording

Once the above priorities have been met, we evaluate the return of capital to shareholders, as we have done in the past. We have never paid dividends on our common stock, and we do not expect to pay dividends on common stock in the foreseeable future. However, our Board has from time to time authorized annual stock repurchase plans.

Current wording

Once the above priorities have been met, we evaluate the return of capital to shareholders, as we have done in the past. We have never paid dividends on our common stock, and we do not expect to pay dividends on common stock in the foreseeable future. However, our Board from time to time has authorized annual stock repurchase plans.

Previous wording

The decrease in cash and cash equivalents from September 30, 2023 of $2.0 million was primarily due to the full repayment of our term loan and revolving credit agreement with UMB Bank, which was funded with cash generated in operations. We maintain a portion of our cash and cash equivalents in Renminbis, a Chinese currency, at our operations in China; therefore, changes in the exchange rates have an impact on our cash balances.

Current wording

The increase in cash and cash equivalents from September 30, 2024 of $6.8 million was primarily due to cash generated in operations slightly offset by investing activities and the effect of exchange rates on cash. We maintain a portion of our cash and cash equivalents in Renminbis, a Chinese currency, at our operations in China. As a result, changes in the exchange rates have an impact on our cash balances.

Previous wording

Cash provided by operating activities was $9.8 million in 2024 compared to cash used in operating activities of $7.7 million in 2023 and cash provided by operating activities of $5.2 million in 2022. During 2024, we decreased our accounts receivable, inventory, and contract asset balances as we completed shipments throughout the year, reducing our backlog. These cash inflows were partially offset by decreases in accounts payable and accrued liabilities as our purchasing activity decreased and the related liabilities were paid. During 2023, we used cash to increase our inventory balances in preparation for shipments scheduled over the next four quarters and to pay the related accounts payable. During 2022, we received several large customer deposits, primarily related to orders of our horizontal diffusion and high temp furnaces, which were expected to ship over the next four quarters.

Current wording

Cash provided by operating activities was $7.9 million in 2025 compared to cash provided by operating activities of $9.8 million in 2024. In 2025, we decreased our accounts receivable, inventory, and contract asset balances as we completed shipments throughout the year, reducing our backlog. These cash inflows were partially offset by decreases in accrued liabilities and contract liabilities as our purchasing activity decreased and the related liabilities were paid. During 2024, we decreased our accounts receivable, inventory, and contract asset balances as we completed shipments throughout the year, also reducing our backlog. These cash inflows were partially offset by decreases in accounts payable and accrued liabilities as our purchasing activity decreased and the related liabilities were paid.

Previous wording

Cash used in investing activities was $2.2 million in 2024, primarily consisting of $4.9 million in capital expenditures, partially offset by $2.7 million of proceeds from the sale of our real property in Arizona. Cash used in investing activities was $37.8 million in 2023, primarily consisting of $34.9 million in cash paid for the acquisition of Entrepix. Cash provided by investing activities was $18.8 million in 2022, primarily consisting of $19.9 million in proceeds from the sale of our real property in Massachusetts. Investing activities in 2024, 2023 and 2022 included capital expenditures of $4.9 million, $2.9 million and $1.1 million, respectively. We expect capital expenditures to decrease slightly in 2025, as we have completed our relocation projects but begain projects to implement new technology across our divisions.

Current wording

Cash used in investing activities was $0.9 million in 2025, primarily consisting of $1.0 million in capital expenditures made to improve operations and systems. Cash used in investing activities was $2.2 million in 2024, primarily consisting of $4.9 million in capital expenditures, partially offset by $2.7 million of proceeds from the sale of our real property in Arizona. We expect capital expenditures to decrease slightly in 2026, as we have completed our relocation projects and continue to pursue optimization projects to implement new technology across our divisions to improve our business.

Previous wording

In 2024, cash used in financing activities was $10.6 million, comprised primarily of $10.7 million payments on long-term debt. Our UMB term loan and revolving credit agreement has been paid in full and our remaining debt is a small amount of financing leases. In 2023, cash provided by financing activities was $11.7 million, comprised of $12.0 million in borrowings on our term loan and $1.2 million of proceeds received from the exercise of stock options partially offset by $1.5 million in payments on long-term debt. In 2022, cash used in financing activities was $8.3 million, comprised of $4.1 million of cash used for the repurchase of common stock and payments on long-term debt of $4.9 million, partially offset by $0.7 million of proceeds received from the exercise of stock options. Payments in long-term debt in 2022 include the full repayment of the $4.5 million mortgage balance on the real property in Massachusetts.

Current wording

In 2025, cash provided by financing activities was $0.3 million, comprised primarily of $0.4 million proceeds from the exercise of stock options. In 2024, cash used in financing activities was $10.6 million, comprised primarily of $10.7 million payments on long-term debt. Our bank term loan and revolving credit agreement has been paid in full and our remaining debt is a small amount of financing leases.

Previous wording

Our business strategy includes the possible acquisition of or investments in other businesses to expand or complement our operations. The magnitude, timing and nature of any future acquisitions or investments will depend on a number of factors, including the availability of suitable acquisition candidates, the negotiation of acceptable terms, our financial capabilities and access to capital, and general economic and business conditions. Financing for future transactions would result in the utilization of cash, incurrence of additional debt, issuance of stock or some combination of the foregoing.

Current wording

Our business strategy includes the possible acquisition of or investments in other businesses to expand or complement our operations. The magnitude, timing and nature of any future acquisitions or investments will depend on a number of factors, including the availability of suitable acquisition candidates, the negotiation of acceptable terms, our financial capabilities and access to capital, and general economic and business conditions. Financing for future transactions would result in the utilization of cash, incurrence of additional debt, issuance of equity securities or some combination of the foregoing.

Previous wording

Income Taxes. We file consolidated federal income tax returns in the United States for all subsidiaries except those in China, Singapore and the UK, where separate returns are filed. The calculation of tax liabilities for all jurisdictions involves significant judgment in identifying uncertain tax positions, estimating the amount of deferred tax assets that will be realized in the future and the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our operations and financial condition. For the years ended September 30, 2024 and 2023, we had no unrecognized tax benefit.

Current wording

Income Taxes. We file consolidated federal income tax returns in the United States for all subsidiaries except those in China, Singapore, Malaysia and the UK, where separate returns are filed. The calculation of tax liabilities for all jurisdictions involves significant judgment in identifying uncertain tax positions, estimating the amount of deferred tax assets that will be realized in the future and the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our operations and financial condition. For the years ended September 30, 2025 and 2024, we had no unrecognized tax benefit.

Previous wording

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. It is difficult to conclude that a valuation allowance is not needed when the negative evidence includes cumulative losses in recent years. If we were to determine that it is more likely than not that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination is made. Likewise, if we later determine that it is more likely than not that all or part of the net deferred tax assets would be realized, a tax benefit would be realized when all or part of the previously provided valuation allowance would be reversed. As of September 30, 2024, we have significant U.S. deferred tax assets that have a full valuation allowance and foreign deferred tax assets that have a partial valuation allowance. Any changes to the judgments related to our valuation allowance could have a material impact on our results of operations. For the years ended September 30, 2024 and 2023, we had net deferred tax assets of $0.2 and $0.1 million.

Current wording

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. It is difficult to conclude that a valuation allowance is not needed when the negative evidence includes cumulative losses in recent years. If we were to determine that it is more likely than not that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination is made. Likewise, if we later determine that it is more likely than not that all or part of the net deferred tax assets would be realized, a tax benefit would be realized when all or part of the previously provided valuation allowance would be reversed. As of September 30, 2025, we have significant U.S. deferred tax assets that have a full valuation allowance. Any changes to the judgments related to our valuation allowance could have a material impact on our results of operations. For the years ended September 30, 2025 and 2024, we had net deferred tax assets of $1.0 million and $0.2 million.

Previous wording

During the year ended September 30, 2024, we recorded provisions to reduce inventories to their lower of cost and net realizable value of approximately $2.8 million compared to $2.6 million during the year ended September 30, 2023.

Current wording

During the year ended September 30, 2025, we recorded provisions to reduce inventories to their lower of cost and net realizable value of approximately $6.6 million compared to $2.8 million during the year ended September 30, 2024.

Previous wording

Goodwill. We perform an annual impairment test as of September 30, or more frequently if indicators of potential impairment exist, to determine whether the fair value of a reporting unit in which goodwill resides is less than its carrying value. We perform the first step of the goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired, and we are not required to perform additional analysis. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss would not exceed the total amount of goodwill allocated to the reporting unit).

Current wording

The first step of the goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired, and we are not required to perform additional analysis. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss would not exceed the total amount of goodwill allocated to the reporting unit).

Previous wording

At the end of December 2023, we identified a triggering event. As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value leading to a $6.4 million impairment charge in fiscal 2024. The impairment testing as of September 30, 2024, resulted in the fair value of our Thermal Processing Solutions segment exceeding its carrying value by approximately 44%, and the fair value of our Semiconductor Fabrication Solutions segment exceeding its carrying value by approximately 18%, resulting in no additional goodwill impairment. See Note 10 for additional information on goodwill by segment.

Current wording

As of March 31, 2025, the Company lowered its guidance for the second quarter of fiscal year 2025 and reset projections for future periods due to prolonged weakness in the mature node semiconductor market driven by high inventory, tepid demand, and geopolitical tensions. As a result, we recognized impairment of our goodwill of $15.4 million at our Semiconductor Fabrication Solutions segment and $5.0 million at our Thermal Processing Solutions segment. At the end of December 2023, we identified a triggering event. As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value leading to a $6.4 million impairment charge in fiscal 2024. The impairment testing as of September 30, 2024, resulted in the fair value of our Thermal Processing Solutions segment exceeding its carrying value by approximately 44%, and the fair value of our Semiconductor Fabrication Solutions segment exceeding its carrying value by approximately 18%, resulting in no additional goodwill impairment. See Note 9 for additional information on goodwill by segment.

Previous wording

As of September 30, 2024, the Company performed a qualitative impairment test on intangible assets and goodwill and concluded there was no further impairment. As of December 31, 2023, we identified a triggering event due to the decline in our stock price driving our market value materially below our book value. As a result, we recorded a $1.3 million impairment charge in fiscal 2024 to the intangible assets in our Semiconductor Fabrication Solutions segment. As of September 30, 2023, we identified a triggering event in our Semiconductor Fabrication Solutions segment primarily related to the prolonged downturn and general economic conditions in the semiconductor market, in addition to delays in the adoption of next-gen polishing tools, which reduced our cash flow projections. As a result, we recorded intangible asset impairment of $5.2 million. There were no impairments on long-lived assets during the year ended September 30, 2022. See Note 9 for additional information on intangible assets.

Current wording

As of September 30, 2025 and 2024, the Company performed a qualitative impairment test on intangible assets and goodwill and concluded there was no further impairment. As of March 31, 2025, the Company lowered its guidance for the second quarter of fiscal year 2025 and reset projections for future periods due to prolonged weakness in the mature node semiconductor market driven by high inventory, tepid demand, and geopolitical tensions. As a result, we recorded intangible asset impairment of $2.6 million in our Semiconductor Fabrication Solutions segment. As of December 31, 2023, we identified a triggering event due to the decline in our stock price driving our market value materially below our book value. As a result, we recorded a $1.3 million impairment charge in fiscal 2024 to the intangible assets in our Semiconductor Fabrication Solutions segment. See Note 8 for additional information on intangible assets.