What are you looking for ?
Infinidat
Articles_top

Intevac: Fiscal 1Q17 Financial Results

Stronger non-system order activity in core HDD business

(in $ million) 1Q16 1Q17 Growth
Revenue
13.7 30.4 122%
Including thin-film equipment 5.6 21.5 284%
Net income (loss) (6.3) 1.8  

Intevac, Inc. reported financial results for the first quarter ended April 1, 2017.

Recent traction in orders and revenue in new markets reflect important milestones in the future growth trajectory of our company,” commented Wendell Blonigan, president and CEO. “In the first quarter, we recognized revenue on VERTEX volume production systems and received follow-on orders for 12 ENERGi implant tools, both of which represent the crossover from pilot tools to capacity production systems in each of our new thin-film equipment growth markets. We have been working for several years to diversify and grow our thin-film equipment business beyond the HDD market, and significant orders and revenues recognized in the first quarter is a material demonstration of our success in expanding our Thin-film Equipment revenue opportunity.

“In the first quarter, our Photonics business continued to deliver results favorable to our long-term model for this business, with 16% operating profitability. We are also pleased to report an important development, which is the approval of the DELTA-I program under the Department of Defense’s Coalition Warfare Program. This program is funded by the DoD, SOCOM and several foreign nation coalition partners. The DELTA-I program includes a $12 million funding commitment to complete the design of our ISIE 19 sensor as well as the development of a digitally-fused infrared/night vision goggle. This program is a key component of our ability to realize the future revenue opportunity pipeline for Photonics of well over $1 billion.”

First Quarter 2017 Summary
Net income was $1.8 million, or $0.08 per diluted share, compared to a net loss of $6.3 million, or $0.31 per diluted share in the first quarter of 2016. The non-GAAP net income was $1.9 million or $0.08 per diluted share. This compares to the first quarter 2016 non-GAAP net loss of $6.3 million or $0.31 per diluted share.

Revenues were $30.4 million, including $21.5 million of thin-film Equipment revenues and Photonics revenues of $8.9 million. Thin-film equipment revenues consisted of four VERTEX coating systems for display cover panels, one 200 Lean HDD system, upgrades, spares and service. Photonics revenues consisted of $6.9 million of product sales and $2.0 million of R&D contracts. In the first quarter of 2016, revenues were $13.7 million, including $5.6 million of thin-film equipment revenues and Photonics revenues of $8.1 million, which included $7.7 million of product sales and $0.4 million of R&D contracts.

Thin-film equipment gross margin was 43.1%, compared to 9.0% in the first quarter of 2016, and compared to 38.9% in the fourth quarter of 2016. The improvement from the first quarter of 2016 and from the fourth quarter of 2016 was primarily due to higher revenue levels, improved factory absorption and lower inventory provisions.

Photonics gross margin was 42.6%, compared to 41.5% in the first quarter of 2016 and 45.5% in the fourth quarter of 2016. The improvement from the first quarter of 2016 was due to higher margins on technology development contracts and lower inventory provisions. The decline from the fourth quarter of 2016 was due to lower margins on technology development contracts. Consolidated gross margin was 42.9%, compared to 28.2% in the first quarter of 2016 and 41.1% in the fourth quarter of 2016.

R&D and SG&A expenses were $10.9 million and were up compared to $10.2 million in the first quarter of 2016 and $9.0 million in the fourth quarter of 2016 primarily due to increased accruals for variable compensation programs as a result of the company’s improved outlook for profitability for the year, and increased legal expenses for patent activity and contracts.

Order backlog totaled $73.0 million on April 1, 2017, compared to $68.5 million on December 31, 2016 and $44.7 million on April 2, 2016. Backlog at April 1, 2017 included three 200 Lean HDD systems, one Intevac MATRIX solar system and fourteen ENERGi solar ion implant systems. Backlog at December 31, 2016 included four 200 Lean HDD systems, four Intevac VERTEX display cover panel coating systems, one Intevac MATRIX solar system, and two ENERGi solar ion implant systems. Backlog as of April 2, 2016 included three solar systems.

The company ended the quarter with $46.3 million of total cash, restricted cash and investments and $74.5 million in tangible book value.

Comments

Abstracts of the earnings call transcript:

Wendell T. Blonigan,CEO and president:
"I'm also pleased to report that we continued to achieve meaningful milestones in our thin-film equipment growth strategy during the first quarter of the year. New orders in Q1 totaled $35 million, up 40% from Q4, with the most significant driver being the largest order Intevac has ever received in our thin-film equipment growth initiatives.
"Stronger nonsystem sales in our core HDD business provided the upside to our revenue guidance for the first quarter.
"In the HDD market, the program to upgrade the technical capabilities of our customers' installed base continues. We shipped 1,200 Lean in Q1 with 3 still in backlog for 2017. We have said that this is an ongoing technology program, and we see this continuing into the foreseeable future, providing us with a strengthened base of business in our core HDD market.
"As a reminder, the systems we are shipping currently are not increasing the installed base of media capacity in the HDD industry.
"Fundamentals in the overall HDD industry were relatively stable. The gross segment in the HDD market continues to be high-capacity nearline drives, which is a positive for media units, given that the number of disks in each nearline drive is significant and is forecast to grow from 4 to over 7 disks per drive by 2020. This growth is driving up the overall industry tie ratio, which has increased to more than 2 disks per drive on average. Preliminary media unit shipment estimates indicate a tie ratio exceeding 2.1 disks per drive in the first quarter.
"We continue to believe that the installed industry media capacity would be utilized once the overall HDD tie ratio gets into the range of 2.5 to 3 disks per drive, as any impact on media demand derived from forecast of a slowly declining HDD unit environment are being offset by the permanent retirement of a portion of the industry's media capacity.
"As we look into the near future, our HDD business is profitable, stable and is forecast to drive $200 million to $300 million in total revenue over the next 5 years, with the high end dependent on the timing of a return to capacity system orders.
"Given the nonsystems business upside we saw in the first quarter as well as the recently strong level of HDD bookings, we now expect our HDD business in 2017 will be at least as strong and most likely up from 2016 levels, which had grown year-on-year from 2015."

Articles_bottom
AIC
ATTO
OPEN-E