Zacks_Analysts' Blog : Amtech Tops Consensus - Analyst Blog

Amtech Systems Inc. (ASYS) reported fiscal first quarter 2011 diluted earnings per share of 52 cents, moving ahead of Zacks Consensus Estimate of 37 cents. Though the reported earnings was down 10.3% sequentially, it was up considerably from 1 cent that it had earned in the year ago quarter.

Quarterly Performance

Revenue of $53.7 million not only beat Zacks Consensus Estimate of $47.0 million, it was up 18.0% sequentially and 246.5% from the year ago quarter. On a segment basis, revenue from solar was up 19.0% sequentially to $45.9 million. The surge in revenue was primarily driven by higher system shipments to customers in the solar industry and was partially offset by an increase in the amount of deferred revenue.

Bookings for the quarter were $137.0 million which accounted a rise of 176.0% sequentially. Quarter end backlog was $173.0 million, a jump of 83.0% sequentially.

Gross profit increased from $4.6 million in the year ago quarter to $19.6 million. Gross margin increased from 30.0% in the year ago quarter to 36.0%. The increase in gross margin was primarily attributed to the efficient capacity utilization from higher shipment volumes and was partially offset by higher deferred profit.

Operating income increased from $0.1 million in the prior year quarter to $ 8.4 million. Operating margin for the quarter was 15.6%.

Book-to-bill ratio in the first quarter was 2.3:1.

Income taxes for the quarter were $3.3 million, reflected an effective tax rate of approximately 40.0%.

Outlook

The management expects fiscal year 2011 revenue to surpass $230 million and for the forthcoming quarter the management expects revenue to range in between $55.0 million and $60.0 million.

Management also hinted on the factors that could affect the operating margins adversely in the second quarter which included higher revenue deferral due to expected continued ramp up of shipments, expected higher material costs and continued acquisition costs along with increased research and development costs resulting from the expected acquisition of Kingstone Technology Hong Kong Limited.

Conclusion

Analyst estimates had been moving in the run up to the earnings release with two analysts revising their estimates upward and none of the analysts lowering them. We note that Amtech Systems has consistently exceeded estimates over the past year or so. The average surprise in the preceding 4 quarters is a positive 100.52%, and another positive surprise was therefore expected.

The company faces stiff competition from Applied Materials Inc. (AMAT) and GT Solar International Inc. (SOLR).

We currently have Zacks #1 Rank for Amtech Systems, which translates into a Strong Buy rating on short-term basis. We have an Outperform recommendation on long-term basis.