Intevac: Fiscal 2Q22 Financial Results

Intevac, Inc. reported financial results for the quarter and six months ended July 2, 2022.

2FQ22 Highlights:
– Total backlog at quarter-end increased to over $100 million
– Revenues exceeded forecast at $9.3 million
– Gross margin of 48% was above forecast primarily due to favorable mix; and with continued control of expenses, our net loss from continuing operations was reduced to $0.10 per share, an improvement compared to the prior quarter and year-ago period
– Maintained strength of balance sheet, with $110 million in total cash, cash equivalents, restricted cash, and investments at quarter-end; with subsequent receipt of customer deposits adding to cash balance in 3Q to date

“We are pleased to report improved financial results for 2FQ22, with upside to our forecast for revenues, gross margin, and net earnings,” commented Nigel Hunton, president and CEO. “With continued strong order momentum in our HDD business, we grew backlog to $100 million at quarter-end, reflecting the technology investments and media capacity expansion plans being deployed by HDD industry leaders over the next few years. Importantly, all expansions are taking place on our industry-leading 200 Lean platform, either through the previously-announced new system purchases or our multi-year tool upgrade and refurbishment program. These backlog levels, along with our continued close partnership with our customers to enable their future media technology roadmaps, continue to support our forecast for at least $200 million of HDD revenues in the 2022 to 2025 timeframe.

“Given the recent softening in some areas of technology spending, we now expect our customers will spread their media capacity additions more evenly across the next 3 years, which we believe will result in continued Y/Y revenue growth for our HDD business as we look beyond 2022. Additional drivers for revenue growth beyond the HDD market are focused squarely on Intevac’s proprietary TRIO technology and manufacturing platform, which we believe offers a compelling solution that addresses the display cover glass market’s most pressing challenges. Our expertise and world-leading knowledge in materials science and creating highly precise and durable coatings from 30 years of HDD developments underpins this new innovation.”

He concluded: “We continue our targeted approach to increasing our revenue growth potential in order to move towards profitability and increased stockholder value. At the same time, we are steadfastly focused on streamlining the company, maintaining the strength of the balance sheet, and we continue to expect to end FY22 with a similarly strong cash position as year-end 2021.”

2FQ22 Summary
Revenues were $9.3 million, compared to $5.4 million in 2FQ21, and consisted of HDD upgrades, spares and service. Gross margin was 48.2%, compared to 18.7% in 2FQ21. Operating expenses were $6.9 million, compared to $7.3 million in 2FQ21. The operating loss was $2.4 million compared to $6.3 million in 2FQ21.

The net loss for the quarter was $2.8 million, or $0.11 per diluted share, compared to a net loss of $6.1 million, or $0.25 per diluted share, in 2FQ21. The non-GAAP net loss for 2FQ22 was $2.6 million, or $0.10 per diluted share, compared to a non-GAAP net loss of $6.1 million, or $0.25 per diluted share, in 2FQ21.

Order backlog was $100.2 million on July 2, 2022, compared to $87.2 million on April 2, 2022 and $18.9 million on July 3, 2021. Backlog at July 2, 2022 included 11 200 Lean HDD systems. Backlog at April 2, 2022 included 9 200 Lean HDD systems. Backlog at July 3, 2021 included solely HDD upgrades, spares and service.

The company ended the quarter with $110.2 million of total cash, cash equivalents, restricted cash and investments and $125.2 million in tangible book value.

2FH22 Summary
Revenues were $13.8 million, compared 1FH21 revenues of $14.6 million, and consisted of HDD upgrades, spares and service. Gross margin was 37.9%, compared to 21.5% in 2FH21. Operating expenses were $15.3 million, compared to $15.0 million in 2FH21. The operating loss of $10.1 million included $2.7 million of restructuring-related costs, including severance and loss on fixed asset disposals. The net loss was $10.7 million, or $0.43 per diluted share, compared to a net loss of $12.6 million, or $0.52 per diluted share, 2FH21.

Founded in 1991, the firm is the world’s leading provider of HDD media processing systems. Over the last 20 years, it has delivered over 180 200 Lean systems, which currently represent at least 65% of the world’s capacity for HDD disk media production.

It believes that all of the new media capacity additions for the HDD industry are being deployed on its 200 Lean platform.