Intevac: Fiscal 3Q22 Financial Results

Intevac, Inc. reported financial results for the quarter and nine months ended October 1, 2022.

3FQ22 Highlights:

• Total backlog at quarter-end increased to over $110 million
• Revenue exceeds forecast at $10.8 million
• Gross margin of 45.5% was above forecast primarily due to favorable mix, and our net loss from continuing operations was above guidance at $0.13 per share
• Further built upon our balance sheet strength, with $125 million in total cash, cash equivalents, restricted cash, and investments at quarter-end

“We are pleased to report financial results exceeding our forecast for 3FQ22, with upside in revenues, gross margin, and net earnings, as well as positive cash flow gen,” commented Nigel Hunton, president and CEO. “2022 is shaping up to be one of our strongest bookings years on record, with year-to-date orders topping $110 million. While the HDD industry has witnessed a sharp decline in demand since earlier this year, the importance of this market long-term and the future growth trajectory of storage remain strong. As such, our customers continue to execute on multi-year capital investment strategies for technology upgrades and media capacity additions. These multi-year plans have been recently adjusted to defer near-term capacity adds in favor of accelerating technology upgrades, which are being deployed aggressively during this current period of reduced capacity utilization levels. We are pleased to report that our forecast for continued growth in our HDD business over the next several years is largely unchanged with this recent shift in investment strategy.

“Our revenue growth strategy beyond the HDD market is focused squarely on Intevac’s novel TRIO platform, and we are pleased to report today that we have executed a non-binding term sheet with Corning Incorporated. The objective of our partnership is the development and deployment of the TRIO platform to apply coatings to Corning’s glass and glass ceramic materials, as Corning is a leading player in the use of these materials in consumer electronics applications. We are advancing to a definitive agreement with Corning and expect to have it signed by year-end. Our confidence in the collaboration is such that we are starting to invest in long-lead capital items to support the program, which in turn will have a modest impact on our cash forecast for year-end 2022.

“We continue our targeted approach to increasing our revenue growth potential in order to move towards profitability and increased stockholder value, while remaining steadfastly focused on protecting the company’s strong balance sheet. We look forward to continued growth and progress as we look to 2023.”

3FQ22 Summary
Revenue was $10.8 million, compared to $8.0 million in 3FQ21, and consisted of HDD upgrades, spares and service. Gross margin was 45.5%, compared to 41.9% in in 3FQ21. Operating expenses were $8.1 million, compared to $7.2 million in in 3FQ21. The operating loss was $3.2 million compared to $3.8 million in the third quarter of 2021.

The net loss for the quarter was $3.2 million, or $0.13 per diluted share, compared to a net loss of $4.2 million, or $0.17 per diluted share, in in 3FQ21. The non-GAAP net loss for 3FQ22 was $3.2 million, or $0.13 per diluted share, compared to a non-GAAP net loss of $3.8 million, or $0.16 per diluted share, in in 3FQ21.

Order backlog was $110.4 million on October 1, 2022, compared to $100.2 million on July 2, 2022 and $16.9 million on October 2, 2021. Backlog at October 1, 2022 and July 2, 2022 included eleven 200 Lean HDD systems. Backlog at October 2, 2021 included solely HDD upgrades, spares and service.

The company ended the quarter with $124.9 million of total cash, cash equivalents, restricted cash and investments and $123.5 million in tangible book value.

First 9 Months 2022 Summary
Revenue was $24.5 million, compared to first nine months of 2021 revenues of $22.6 million, and consisted of HDD upgrades, spares and service. Gross margin was 41.2%, compared to 28.7% in the first nine months of 2021. Operating expenses were $23.3 million, compared to $22.2 million in the first nine months of 2021. The operating loss of $13.2 million included $2.7 million of restructuring-related costs, including severance and loss on fixed asset disposals. The net loss was $13.9 million, or $0.55 per diluted share, compared to a net loss of $16.9 million, or $0.69 per diluted share, for the first nine months of 2021. On a non-GAAP basis, the net loss was $10.8 million, or $0.43 per diluted share, compared to a net loss of $15.5 million, or $0.64 per share, for the first nine months of 2021.