Robert Hass - VP, Finance and Chief Financial Officer J.S. Whang - Executive Chairman Fokko Pentinga - President and Chief Executive Officer.

Jeff Osborne - Cowen & Company Philip Shen - Roth Capital Partners Mark Miller - Benchmark Orin Hirschman - AIGH Investment Partners.

Greetings, all participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Robert Hass, Amtech's Chief Financial Officer. Please go ahead..

Good afternoon, and thank you for joining us for Amtech's Third Quarter Fiscal 2017 Results Conference Call. On the call today are J.S. Whang, Amtech's Executive Chairman; Fokko Pentinga, our President and Chief Executive Officer; and myself, Robert Hass, Amtech's Chief Financial Officer.

After the close of trading today, Amtech released its financial results for the third quarter fiscal year 2017 ended June 30, 2017. That earnings release will be posted on the company's website at amtechsystems.com. During today's call, management will make forward-looking statements.

All such statements are based on information available to us as of this date, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees 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 our customers and competitors; change in volatility and the demand for our products; the effect of changing worldwide political and economic conditions, including government-funded solar initiatives and trade sanctions; the effect of overall market conditions, including the equity and credit markets and market acceptance risks.

Other risk factors are detailed in our Securities and Exchange Commission filings, including on our Form 10-K and Forms 10-Q. I will now turn the call over to J.S. Whang, our Executive Chairman, to begin the discussion.

J.S.?.

Thank you, Robert. I'd like to welcome everyone and again, thank you for your interest in Amtech. We appreciate you joining us as we review our Q3 fiscal year 2017 financial results and update you on our market. We are pleased with how the year is progressing as we enjoy more good orders, strong financial performance and a return to profitability.

There is strength across all our business segment solar, semi and polishing. The investment we made on technologies and products over the last several years have driven us to this return to profitability. We thank our customers, our people, our technology partners and our suppliers.

The financial result of this quarter are an indicator of what Amtech is capable of. While we are, benefiting from strong market fundamentals and we see them continuing in the near term, we all know they are cycles to the market.

We believe we are well positioned to successfully manage through this cycles ongoing research and development, innovation and new product development continued to be the fundamental strength of the solar industry.

Like the industry at Amtech, we continue to invest in the future and take pride in having industry leading customers and research partners. We are well positioned for the long-term worth [ph] our continuously evolving highly distinctive solar technology solutions.

And now I will turn the discussion over to our CEO, Fokko?.

Thank you, J.S., a warm welcome to everyone, who's joining us today on the teleconference and webcast. Thank you for your interest in Amtech Systems'. We have much to report on today. Our financial results reflect strong third quarter progress relative to previous quarters in prior year.

Revenues were up 45% sequentially and 43% year-over-year which significantly improved operating margins generating $0.25 in earnings per share, our best performance since our solar business unit peaked in the first quarter, 2011. Revenues and margins in the quarter exceeded the guidance we provided beginning of the quarter.

Our performance relative to the guidance we provided in May, 10 is the result of Amtech's engine firing in all cylinders. All business segments report strong results with favorable product mix.

We are very pleased to report this return to profitability made possible by continuously improved market place, strong orders converting in a timely way to improve revenue plus the dedicated effort of our global team. We took in approximately $80 million of orders in the June quarter including $54 million in our solar segment.

This is the highest level of total orders since first quarter, 2011. Orders for the nine months ended June 30, totaled $183 million a significant increase of 65% relative to the $111 million in the same period last year.

Our backlog at June 30 stood at $126 million again the highest level since Q3, 2011 providing a very good foundation for the coming quarters. Our n-type bi-facial solar cell technologies are driving our participation in what appears to be a technology focused buying cycle in the solar industry.

With our ongoing investment in both n-type and PERC we have continuously improved cell efficiency and production throughput with our products and technologies. During the June quarter, our solar subsidiary Tempress Systems received follow-on order to our n-type bi-facial technology which includes our high throughput PECVD and diffusion systems.

The first and second phase of this multi-phased 1 gigawatt project are designed to manufacture high efficiency anti-bi-facial solar cells and modules having attractive cost per watt. The second turnkey order is similar in size to the first phase, we announced in January from this new customer in China.

Operationally we shipped part of this first phase in the June quarter and together with our vendors and partners, we're making good progress in the continued manufacturing of the equipment and planning for the installation and start-up of the first phase of this very important project. Now let's discuss our semiconductor and polishing segments.

Our semiconductor segment produced both good volume and margins in the third quarter, reflecting a solid demand in broader semiconductor, packaging and electronic assembly marketplace for our reflow [indiscernible] and diffusion brand.

As the result, the semi segment had very good quarter, we're making targeted investments in the semi product improvements and new features that are being well received by our customers in order to remain a leading supplier in the market we serve and assure our semi business continues to be a steady contributor to our overall business.

This demand for our semiconductor and electronic products was driven primarily by customers across multiple industries including electronics and automotive. Also this quarter, our polishing business continued to provide good margins and profits, and they continue to do so on a very consistent basis.

As the leading global supplier of production equipment and consumables for solar, semiconductor and LED markets, we continue to invest in our future by executing our strategy of growing our solar, also our semi and polishing business. And now Robert will go over our third quarter fiscal 2017 financial results and our Q4 expectations.

Robert?.

Thank you, Fokko. Let us now review our third quarter fiscal year 2017 financial results. At June 30, 2017 our total order backlog was $125.7 million of which $98.2 million was solar and that compares to a total backlog as of March 31, 2017 of $87.4 million of which solar comprised $66.9 million.

Backlog includes deferred revenue in customer orders that are expected to ship within the next 12 months. Net revenue for the third quarter of fiscal 2017 was $47.8 million compared to $32.9 million in the preceding quarter and $33.3 million in the third quarter of fiscal 2016.

The sequential increase and the increase from the prior year quarter are primarily due to shipments relating to the large turnkey order, as well as increased shipments of our semiconductor equipment. Gross margin in the third quarter of fiscal 2017 was 32% compared to 25% in the preceding quarter and 29% in the third quarter of fiscal 2016.

Sequentially gross margin increased primarily due to the higher sales volume, favorable product mix and a lower net deferral of profit. The higher gross margin compared to a year ago is primarily due to the higher sales volume and improved product mix slightly offset by lower usage of previously reserved inventory.

Selling general and administrative expenses in the third quarter of fiscal 2017 were $10.1 million compared to $8.3 million in the preceding quarter and $8.7 million in the third quarter of fiscal 2016.

Sequentially and compared to the prior year the increase in selling general and administrative expenses results primarily from severance, higher commissions and other employee related expenses.

Depreciation and amortization in the third quarter of fiscal 2017 was $0.6 million compared to $0.6 million in the preceding quarter and $0.7 million in the third quarter of fiscal 2016.

Income tax expense in the third quarter of fiscal 2017 was $1 million compared to $0.2 million in the preceding quarter and $0.1 million in the third quarter of fiscal 2016.

Net income for the third quarter of fiscal 2017 was $3.3 million or $0.25 per diluted share compared to a net loss of $1.4 million or $0.11 per share in the preceding quarter and a net loss of $1.2 million or $0.09 per share in the third quarter of fiscal 2016.

Unrestricted cash and cash equivalents at June 30, 2017 were $39.2 million compared to $38.9 million at March 31, 2017. Now let's take a look at the outlook. The company expects revenue for the quarter ending September 30, 2017 to be in the range of $45 million to $48 million.

Gross margin for the quarter ending September 30, 2017 is expected to be in the mid-to-high 20% range, with positive operating margin both influenced by product mix and revenue deferral.

Operating results could be impacted by the timing of system shipment, particularly the first shipment, the follow-on shipment of the equipment for the turnkey order and an impact of revenue deferral for those shipment and recognition of revenue based on customer acceptance [ph]. All which can have a significant effect on operating results.

A substantial portion of Amtech revenues are denominated in Euro. The revenue outlook provided in this press release is based on and assumed exchange rate between United States Dollar and the Euro. A significant decrease in the value of Euro in relationship to the United States Dollar could cause actual results to be lower than anticipated.

I'll now turn the call over to the operator to take questions..

[Operator Instructions] the first question comes from Jeff Osborne of Cowen. Please go ahead..

Fokko, I was wondering if you can touch on the diversification of revenue certainly the turnkey n-type bi-facial customer that you talked about the new entrant in China is very encouraging and presents a nice runway ahead of us.

But I'm just trying to get a sense of how diversified the order trends have been in recent quarters and this quarter as well and then I guess how much of the backlog is attributed to that one customer..

Jeff thanks for asking your questions.

First of all about the diversification, if we look at last quarter I think it was if you look at the solar part of it was, part of it was just before the turnkey the rest was the individual equipment, so these were relatively balanced I think, for the next quarter I guess that's going to be about the same, so that's not - it's completely unbalanced and only going to the n-type - not give any specific number for each of those phases.

So it also depends of course the little bit further end in the future quarters how much individual equipment is coming in, but there will be periods to more biased to this turnkey project that sometimes come to in one quarter, but it's certainly not, it's only the turnkey n-type part.

But individual equipment quite a bit of that is on the n-type as well, that's been our strengths, it was part of PSG and boron. So if you look at n-type as a whole I would say that's still vast majority and the rest of it is in the general expenses and PERC related expenses with the ALDs for example..

I was hoping that, the diversification was there. I wanted to better understand the gross margin strength in the quarter, so you talked about mix, is there a way that you can translate that because I thought I heard two countervailing things.

One you said, mix was positive but then you also said the deferred portion which is usually very profitable revenue to my understanding was not there, but maybe I misheard that and there was a large tranche of deferred revenue that flowed through that you had previously had all of the cost of goods associated with that in the prior quarters P&L, can you just talk about what actually the mix was that drove the favorable balance to have the gross margin strength and then the moving pieces and why would that go down a 200 basis points next quarter?.

Certainly, Jeff. This is Robert, just a couple points. The volume of course meant that we were spreading semi fixed and fixed manufacturing cost over a large volume, so that certainly helped.

And then relative to the outlook that we provided last quarter, we were expecting the acceptance of a low margin deferred piece that looks to be accepted and that's been pushed out. It was basically a zero margin contract, that we take to get an inference into the market, with our 300-millimeter diffusion burners.

So we didn't have that and that helped us beat our forecast..

Got it and maybe just around deferred, so 300-millimeter I assume that's on the semi side on the house, not the solar side..

That's correct..

Perfect and then for the turnkey, n-type bi-facial customer. My understanding is, you're kind of prime vendor and there's some third-party equipment that you're selling.

Can you just talk about would all of the pieces of equipment be accepted simultaneously or is there an expectation that the Amtech equipment will be accepted faster and then maybe a future period, the third party equipment which would carry lower margin, to begin with would flow through I'm just trying to get a sense of, as that large customer flows through the P&L, what the deferred impact is?.

Yes, I don't think - the machines, of course, the installation that's one of the first phases different acceptance phases and the machines that go in there, we start them up at the same time as our own equipment, so they'll come online probably in the same period of time.

It could be differ a couple of weeks and if it's at the end of the quarter it may have an influence but all in all that should be the same. And once that is done, well the equipment is running and doing what's it's supposed to do and again this is all very first class equipment, so it is not much risk in that.

Then we're going to do the integrated process and turn on basis from front to back end get the good sales out of it, but also we've been done before and we had help from many people that have a lot of experience with this, so also there you don't see too much of an issue.

But then of course the third phase is that, years [ph] to go and we had a total factory running and operating at certain yield and then that's typically the area when the supply chain is probably something that could give some hiccups here and there, so that's a little bit further out but that's not a huge amount.

So all in all we structured it, so all of these on a normal circumstances it's very well doable and neither for our customer nor for us it would make a lot of sense, but such a huge project to take too much risk, make sure you get it running and that's been typical for the solar, once you get it running, you get your volumes through that's when the tuning happens and then when the engine runs you can really tune up everything, but you got to get through these first.

And all of the equipment is well known and so I don't see too much difficulty there. And therefore also the difference between the third-party equipment and our own should be in the same range of timing..

Perfect, okay. And the last question I had is, just in light of the Section 201 International Trade Commission investigation there's been press report that is suggested that the Chinese are possibly evaluating the facilities to make cells in the United States.

I was just curious, if you were having any conversations qualitatively with people potentially exploring that, should that ruling go through later this year?.

Well, frankly there's - yes there is exploring and we're talking but then again I don't think decisions will be made in the short-term. And making solar panel at a good price here is a bit of a challenge, so I think they will not go over - make decisions very quickly.

I think that it will take some time; it's not something that I expect in the short-term..

Makes sense. Appreciated. Congratulations again. Thank you..

The next question comes from Philip Shen of Roth Capital Partners. Please go ahead..

As in related to your pipeline, we have a good feel for what your backlog is - but in your business development activity beyond the backlog, how is that shaping up? When I look to our 2017 capacity position tracker, we were looking at on the order of for 18 gigawatts between tier 1 and tier 2 of capacity expansion globally with all the announcements that have been made over the past year or so.

Looking at 2018, the number is not nearly as large, but was wondering if you guys are in discussions with folks, does this technology CapEx cycle continue as we go through 2018?.

Phil, this large number that's been happening over the last year 2017, yes that's probably not going to go on next year and the other side if you look, what is, what China is planning they're not really slowing down either, so that is a help. Then again for these large capacity expansions, these require really low cost machines most of the times.

So we didn't participate large in that, we participate for a certain part of it. And I think we've been improving on our cost, so I think we'll be doing a little bit better on that in 2018.

And also we expect of course that the project that we work along will continue to give us a little bit more our next phases - still possible for our n-type project. So on the general expansion, yes we will be part of it definitely and we will see some growth there.

And it maybe last than in 2017, but I think we're better positioned for that in 2018 than we were for this..

Great. I think in the past, we've talked about the potential for a refurbishment cycle. I know a lot of these orders are currently for greenfield expansion. Can you give us an update on how that is going? If there is any opportunity for that take place sometime in 2018..

Yes, there is request and opportunities, how they will materialize that's always to be seen, but for the ones that are running multi - a lot of them are moving out, so mono, if they can get wafers, and if they have the chance to go to PERC - but you also can get into space problems, so giving upgrades for existing machines to significantly increase throughput can get some extra space and have those customers be able to move into the somewhat higher efficiency which is really needed.

How much of that already in 2018? I would more see it in the later part of it because the first part it's already our fiscal 2018 is already coming. We're particularly close, so it could be more in the later part of it..

Great and wanted to talk about the n-type trends that you guys are seeing. Clearly you have your large n-type [ph] customer. And I don't recall this was asked earlier by Jeff, perhaps it was.

But in your backlog, how much - it sounds like for - we could see some more balance with the n-type orders, but wanted to see as we get into the back half of the year and into next year, do you see the n-type adoption celebrating for example?.

Like in your report there's quite a few customers that you mentioned that already have relatively large n-type productions ramping up and they're not stopping, so more of that is coming in that area too.

So that gives opportunity for the individual equipment, so yes n-type is the majority of what we do because the customers also you mentioned in the report are important customers, we receive these and the borons are important for us and that's where the majority will be..

Great. Thank you for this wrap down and I'll pass it on..

The next question comes from Mark Miller of Benchmark. Please go ahead..

Just was wondering, in terms of deferred revenues.

Just wondering, how those are breaking out typically between solar and semi, are there much more coming from solar in terms of your deferred revenues?.

Sometimes we'll have a large deferral within semi, but generally most of our deferred revenue and recognition of that is really to the solar business..

You mentioned the auto business was contributing to the strength in semi and there has been some slowdown there, have you noticed anything so far in this quarter in terms of orders related to automotive?.

No, not really. We haven't seen - well more the opposite, I think our number one customer is only ramping up and going faster, so we didn't see that at all. Automotive requires, although the industry sometimes as period with a bit of trouble that is more and more electronics going in every car, so that growth is really, really continuing.

So we didn't see, we saw the opposite of going down, it's only growing..

URD [ph] expenses has been trending down since the last quarter of fiscal 2016, is that going to continue or going to stabilize around the current level?.

Yes, so they have trended down a little bit not a lot and part of it depends on the recognition of grant revenue. I would say that, I don't expect it to get any lower than what it is now..

And then finally, you did have some tax, you had to pay are you going future profitable quarters will the tax be relatively the same tax rate..

I think that's reasonably correct. We've used our NOLs in China, those fully used and we're making money in that segment of the business, so yes I think that's a reasonable assumption..

Okay, once again my congratulations..

[Operator Instructions] the next question comes from Orin Hirschman, AIGH Investment Partners. please go ahead..

A while back meaning a quarter two ago, I think you stated that perhaps you had fallen behind a little bit in some of the leading edge soft [ph] n-type etc.

Can we assume based on the results we're seeing that you've kind of quote off the competition at this point? And is that playing out in the big contracts that are coming up for your maybe ready to get the competition..

Well I can't quite remember saying that, we were lagging behind on the n-type, but what was the case and still is in, we're fighting our way our biz in the PERC. In the PERC we were in little bit late and both with our ALD and PECVD and we're fighting our way up.

It would be nice if we would strong and leading in both n-type and PERC, but at least got one of the two.

And the other one uses the same equipment and we were not, the first ones with the volume, so it's - but we're working our way in there and there's a lot of expenses in that area too, so that scenario where we can still grow a lot and all the equipment that we use for that as I said is the atomic layer deposition and PECVD those machines are now very mature and high throughput and the cost is good, so I think also in that section we could see some growth over the year..

Any other technological shift that you would point through? I don't know perhaps more and more use of ALD where you excel in ALD was pumping out, where it's helping you win business?.

Well for the future you will see that - in order to increase the efficiency, one has to go, to what they call passivated contact and there you need low pressure CVD, polysilicon layer with tunnel oxide and that scenario where I think we're very strong, but that is still in the R&D stage, not a R&D stage only with ourselves and our development partners.

but quite a few of the customers, I will say all of the leading customers are developing processes that use that passivated contact technology and that can be used also especially on the n-type going to really good efficiency.

So that is something we're in the latter half of 2018, one could expect some more but again before going into high volume, it always takes a little bit of time PERC took many years going from small product lines in high volume and passivated contacts will be the same.

But really it can be used both in the n-type, it can be used in the p-type, so and the future is going to be technology that will give efficiencies that can get close to the Heterojunction, but without some of the issues that Heterojunction's may have, so we think that's a very important technology for the future.

But in volume it is still limited because it's in R&D system, some of them in pilot production lines. But that's really a technology where I think we're having a very good position..

Does that mean, is there a potential to give it extra light with operate cycle the newness of the technology?.

It's relatively complex, so before more complex technologies go into really high volume, that you could say these gigawatts that I don't expect that already next year, that may take a little longer..

Great.

And just in terms of the big customer that you have problem for, is there more potential within that customer or is it for a while?.

Well that customer you're referring to our turnkey and that's a total project of 1 gigawatt and we certainly expect some more phases and time to come, yes there is still potential there..

Are you meaning, is there potential for them to multiple gigs like that?.

But we're not at - as I said - with the two phases, we're definitely not 1 gigawatt yet. And so before thinking more than 1 gigawatt at that customer we first need to make sure that everything that we have on order and possibly hope to get, is going perfect. And that's of course the highest change to get even beyond that plan that they have now..

Okay, is it finally anything you compete more about the top runner program in China?.

Well we've been talking about it a lot because we've always been saying over the years, we're technology company of course we have to make high quality and very cost effective than low cost equipment but without that urge for higher efficiencies it would be difficult to have a good operation in volume because cost along is not sufficient.

So yes that is something where we really fit in for going higher than the normal n-type can do at this moment. What I mentioned before the specific contact is really the next steps for top runner program to have that technology and that's why lot of leading Chinese manufacturers are working on that, is that's the next step.

And for the top runner program we'll force that issue that they have to more and more in this high efficiency and it's perfectly in line with what our strategy is..

Great. Thanks very much..

This concludes our question-and-answer session. I would like to turn the conference back over to Robert Hass, Chief Financial Officer for any closing remarks..

Thank you everyone for your time today and for your interest in Amtech Systems. This concludes our call for today..