Does Amtech Systems (NASDAQ:ASYS) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Amtech Systems, Inc. (NASDAQ:ASYS) does carry debt. But is this debt a concern to shareholders?

What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

Check out our latest analysis for Amtech Systems

How Much Debt Does Amtech Systems Carry?

The image below, which you can click on for greater detail, shows that Amtech Systems had debt of US$5.09m at the end of December 2020, a reduction from US$5.45m over a year. But on the other hand it also has US$45.6m in cash, leading to a US$40.5m net cash position.

How Strong Is Amtech Systems' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Amtech Systems had liabilities of US$8.43m due within 12 months and liabilities of US$13.1m due beyond that. Offsetting this, it had US$45.6m in cash and US$15.3m in receivables that were due within 12 months. So it can boast US$39.4m more liquid assets than total liabilities.

This excess liquidity suggests that Amtech Systems is taking a careful approach to debt. Because it has plenty of assets, it is unlikely to have trouble with its lenders. Succinctly put, Amtech Systems boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Amtech Systems's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

In the last year Amtech Systems had a loss before interest and tax, and actually shrunk its revenue by 24%, to US$63m. That makes us nervous, to say the least.

So How Risky Is Amtech Systems?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Amtech Systems had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$4.1m of cash and made a loss of US$1.9m. With only US$40.5m on the balance sheet, it would appear that its going to need to raise capital again soon. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Be aware that Amtech Systems is showing 2 warning signs in our investment analysis , you should know about...

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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