AMTECH SYSTEMS INC

Results of Operations

The following table sets forth certain operational data as a percentage of net revenue for the periods indicated:

Net Revenue

Net revenue consists of revenue recognized upon shipment or delivery of equipment. Spare parts sales are recognized upon shipment and service revenue is recognized upon completion of the service activity, which is generally ratable over the term of the service contract. Since the majority of our revenue is generated from large system sales, revenue, gross profit and operating income can be materially impacted by the timing of system shipments.

Our net revenue by reportable segment was as follows, dollars in thousands:

Total net revenue for the three months ended March 31, 2026 and 2025 was $20.5 million and $15.6 million, respectively, an increase of approximately $4.9 million or 31%. Total net revenue for the six months ended March 31, 2026 and 2025 was $39.4 million and $40.0 million, respectively, a decrease of approximately $0.5 million or 1%. Our Thermal Processing Solutions results for the second quarter increased primarily due to higher belt furnace, reflow oven diffusion furnace, and part shipments as well as an increase in our service business. Our Thermal Processing Solutions results for the six months ended decreased primarily due to lower belt furnace and horizontal diffusion furnace shipments, partially offset by higher shipments of reflow ovens and parts in addition to an increase in our service business. We are seeing year-over-year growth in our advanced packaging SPG reflow oven business due to

AI chip demand. Our Semiconductor Fabrication Solutions results for the second quarter increased primarily due to increased shipments of our polishing and wafer cleaning equipment, and increased demand for our consumables.

Orders and Backlog

New orders booked by reportable segment were as follows, dollars in thousands:

Our backlog by reportable segment was as follows, dollars in thousands:

As of March 31, 2026, one of our Thermal Processing Solutions segment customers individually accounted for 28% of our backlog. Additionally, one customer of both our Thermal Processing Solutions and Semiconductor Fabrication Solutions segments accounted for 23% of our backlog. No other customer accounted for more than 10% of our backlog as of March 31, 2026. 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 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 six months ended March 31, 2026, the increase in Thermal Processing Solutions new order bookings was primarily driven by strong demand in Asia for AI application products.

Gross Profit and Gross Margin

Gross profit is the difference between net revenue and cost of goods sold, amortization of intangibles and intangible asset impairment. Cost of goods sold consists of purchased material, labor and overhead to manufacture equipment and spare parts and the cost of service and support to customers for installation, warranty and paid service calls. Gross margin is gross profit as a percent of net revenue. Our gross profit and gross margin by business segment were as follows, dollars in thousands:

Our gross margins can be affected by capacity utilization, material costs, and the type and volume of machines and consumables sold each quarter. Gross margin for the three months ended March 31, 2026 and 2025 was $9.8 million, 48% of net revenue, and $(0.3) million, (2)% of net revenue, respectively, an increase of $10.1 million. Gross margin for the six months ended March 31, 2026 and 2025 was $18.3 million, 46% of net revenue, and $9.0 million, 23% of net revenue, respectively, an increase of $9.2 million.

Gross margin on products from both our Thermal Processing Solutions segment and our Semiconductor Fabrication Solutions segment increased in the current period ended March 31, 2026 compared to the three and six months ended March 31, 2025, due to favorable product mix and the inventory write down associated with the discontinuation of low margin product lines in the prior year periods. We experienced moderate increases in material costs across all our segments during both periods. In response, we reviewed our pricing plans and supplier agreements, sharing cost increases with 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.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses consist of the cost of employees, consultants and contractors, facility costs, sales commissions, shipping costs, promotional marketing expenses, legal and accounting expenses, bad debt expense and employee incentive accruals.

SG&A expenses for the three months ended March 31, 2026 and 2025 were $7.2 million and $7.1 million, respectively. SG&A expenses for the six months ended March 31, 2026 decreased to $14.0 million from $15.2 million for the six months ended March 31, 2025. This decrease was primarily due to lower personnel costs and variable costs partially offset by higher incentive compensation in the six months ended March 31, 2026 due to improved financial performance.

Research, Development and Engineering

Research, development and engineering (“RD&E”) expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials and supplies used in producing prototypes. RD&E expenses may vary from period to period depending on the engineering projects in process. Expenses related to engineers working on strategic projects or sustaining engineering projects are recorded in RD&E. However, from time to time we add functionality to our products or develop new products during engineering and manufacturing to fulfill specifications in a customer’s order, in which case the cost of development, along with other costs of the order, are charged to cost of goods sold. Occasionally, we receive reimbursements through governmental research and development grants which are netted against these expenses when certain conditions have been met.

RD&E expense, net of grants earned, for the three months ended March 31, 2026 and 2025 was $0.8 million, respectively, and $1.7 million in the six months ended March 31, 2026 and 2025, respectively. RD&E expenses, net of grant earned, are consistent year over year.

Goodwill Impairment

During the six months ended March 31, 2026, we recognized no impairment of our goodwill as no triggering event was identified.

In the second quarter of fiscal year 2025, 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 as a result of a triggering event identified at the end of the second fiscal quarter. See Note 6 for a description of the facts and circumstances leading to the goodwill impairment.

Intangible Asset Impairment

During the six months ended March 31, 2026, we recognized no impairment of our definite lived intangible assets.

In the second quarter of fiscal year 2025, we recognized impairment of our definite lived intangible assets of $2.6 million at our Semiconductor Fabrication Solutions segment. As disclosed above, this impairment was recorded within operating expenses in the Condensed Consolidated Statement of Operations. See Note 6 for a description of the facts and circumstances leading to the intangible asset impairments.

Severance Expense

Severance expense was $0 and $0.2 million for the three months ended March 31, 2026 and 2025, respectively. Severance expense was $0 and $0.3 million for the six months ended March 31, 2026 and 2025, respectively. For the three and six months ended March 31, 2026 and 2025, the amounts relate to staff reductions at our Thermal Processing Solutions and Semiconductor Fabrication Solutions segments.

Income Taxes

Our effective tax rate was 46.0% and (2.3%) for the six months ended March 31, 2026 and 2025, respectively. The effective tax rate for the six months ended March 31, 2026 differs from the U.S. statutory tax rate of 21% primarily due to foreign income taxed at a foreign rate different than 21%, for permanent items and changes in valuation allowances. For the three months ended March 31, 2026 and 2025, we recorded income tax expense of $0.5 million and $0.3 million, respectively. For the six months ended March 31, 2026 and 2025, we recorded income tax expense of $1.1 million and $0.7 million, respectively. The quarterly income tax provision is calculated using an estimated annual effective tax rate, based upon expected annual income, permanent items, statutory rates and planned tax strategies in the various jurisdictions in which we operate. However, losses in certain jurisdictions and discrete items are excluded from the determination of the estimated annual effective tax rate.

On July 4, 2025, the President signed into law significant federal tax legislation, H.R.1 (commonly known as the One Big Beautiful Bill Act or OBBBA). The legislation includes numerous changes to U.S. corporate income tax law, including but not limited to: permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m). Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions.

OBBBA is not expected to have a material impact on our consolidated financial statements due to the full valuation allowance in the US. We continue to monitor additional guidance issued relating to OBBBA and assess the impact to our financial statements.

Our future effective income tax rate depends on various factors, such as the amount of income (loss) in each tax jurisdiction, tax regulations governing each region, non-tax deductible expenses incurred as a percent of pre-tax income and the effectiveness of our tax planning strategies.