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Intevac: Fiscal 1Q09 Financial Results

A disaster

(in US$ millions) 1Q08 1Q09
 Revenues  33.2  12.3
 Growth   -63%
 Net income (loss)  1.5 (5.8)


Intevac, Inc. reported financial results for the quarter ended March 28, 2009.

The net loss for the quarter was $5.8 million, or $0.26 per diluted share, on 21.9 million weighted-average shares outstanding. The net loss included $1.4 million of pre-tax equity-based compensation expense, equivalent to $0.05 per diluted share. For the first quarter of 2008, net income was $1.6 million, or $0.07 per diluted share, on 22.1 million weighted-average shares outstanding, which included $1.6 million of pre-tax equity-based compensation expense, equivalent to $0.05 per diluted share.

Revenues for the quarter were $12.3 million, including $6.1 million of Equipment revenues and Intevac Photonics revenues of $6.2 million. Equipment revenues consisted of disk lubrication systems, equipment upgrades, spares and service and did not include any 200 Lean systems. Intevac Photonics revenues consisted of $3.6 million of research and development contracts and a record $2.6 million of product sales. In the first quarter of 2008, revenues were $33.2 million, including $27.0 million of Equipment revenues and $6.2 million of Intevac Photonics revenues, which included $2.0 million of product sales.

Equipment gross margins were 29.9%, compared to 41.4% in the fourth quarter of 2008 and 47.1% in the first quarter of 2008. The decrease in Equipment gross margin reflected lower revenues, changes in product mix and lower factory utilization. Intevac Photonics gross margins were 39.4%, compared to 19.5% in the fourth quarter of 2008 and 42.0% in the first quarter of 2008. The sequential improvement in Photonics gross margin reflected lower warranty expense and improved factory utilization, while the year-over-year decrease in Photonics gross margin was due to changes in product mix. Consolidated gross margins were 34.7%, compared to 46.2% in the first quarter of 2008.

Operating expenses for the quarter totaled $13.7 million, or 112% of revenues, versus $16.5 million, or 50% of revenues, in the first quarter of 2008. Total operating expenses decreased versus the first quarter of 2008 as a result of cost savings from the global cost reduction plan initiated in the fourth quarter of 2008.

Order backlog totaled $17.0 million on March 28, 2009, compared to $20.2 million on December 31, 2008 and $43.5 million on March 29, 2008. Backlog at quarter end includes one 200 Lean® system, compared to one on December 31, 2008 and seven on March 29, 2008.

As expected, our Equipment business had a challenging quarter due to the global economic environment. However, on the positive side, our Photonics business had a strong quarter with record product sales, driven by the proliferation of our unique digital low light sensors and cameras into multiple programs,” commented Kevin Fairbairn, president and chief executive officer of Intevac. “While our Photonics business is strong and growing, we have implemented further cost reductions in 2009 in response to the continued downturn in our Equipment business. The global cost reduction plan that began in the fourth quarter of 2008 is expected to realize over $15 million in annualized cost savings. For the remainder of 2009, we expect technology system orders to drive our Equipment business with continued strong growth in our Photonics business.”

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