Intevac: Fiscal 2Q23 Financial Results

Intevac, Inc. reported financial results for the quarter and six months ended July 1, 2023.

“2023 has been a year of both immense change for Intevac, as well as tremendous opportunity,” commented Nigel Hunton, president and CEO. “We are excited about continued progress in our joint development program for our groundbreaking TRIO platform year to date. Our JDA partner, one of the world’s leading innovators in glass and glass-ceramic materials for mobile consumer electronics applications, with whom we entered a joint development agreement for the TRIO platform in fiscal 2022, is currently evaluating the TRIO tool built by Intevac. The next step will be to move into the formal qualification cycle planned for this month. This partnership presents significant potential for revenue growth for Intevac as we look toward the next few years. During this period, while visibility in the HDD industry continues to present operational challenges for a company of our size, there is no doubt that our differentiated position as a key technology enabler is reinforcing the importance of our partnerships with our customers in the critical advancements of the industry’s technology roadmap. Finally, we expect our current restructuring efforts, which are anticipated to be completed by the end of the third quarter, will enable the company to be cash-flow neutral from the P&L for fiscal 2024.”

2FQ23 Summary
Revenues were $10.3 million, compared to $9.3 million in 2FQ22, and consisted of one 200 Lean HDD system, one refurbished 200 Lean HDD system, HDD upgrades, spares and service. Gross margin was 24.9%, compared to 48.2%, in 2FQ22, and was lower than forecast due to approximately $0.9 million of incremental materials, labor and overhead charges during the quarter. Operating expenses were $8.0 million, compared to $6.9 million in 2FQ22. The operating loss was $5.5 million compared to $2.4 million in 2FQ22.

The net loss for the quarter was $4.9 million, or $0.19 per diluted share, compared to a net loss of $2.8 million, or $0.11 per diluted share, in 2FQ22. The non-GAAP net loss for the second quarter of 2023 was $4.9 million, or $0.19 per diluted share, compared to a non-GAAP net loss of $2.6 million, or $0.10 per diluted share, in the second quarter of 2022.

Order backlog was $58.2 million on July 1, 2023, compared to $120.7 million on April 1, 2023 and $100.2 million on July 2, 2022. Backlog at July 1, 2023 included two 200 Lean HDD systems. Backlog at April 1, 2023 and at July 2, 2022 included eleven 200 Lean HDD systems.

The company ended the quarter with $73.9 million of total cash, cash equivalents, restricted cash and investments and $116.0 million in tangible book value.

First 1FH23 Summary
Revenues were $21.8 million, compared to 1FH22 revenues of $13.8 million, and consisted of one 200 Lean HDD system, one refurbished 200 Lean HDD system, HDD upgrades, spares and service. Gross margin was 33.4%, compared to 37.9% in 1FH22. Operating expenses were $17.2 million, compared to $15.3 million in 1FH22. The net loss was $8.8 million, or $0.34 per diluted share, compared to a net loss of $10.7 million, or $0.43 per diluted share, for 1FH22.

Subsequent Event
During 3FQ23, the firm substantially completed implementation of a cost reduction plan, which is intended to reduce expenses by reducing our workforce by approximately 25% including employees and contractors. It expects to incur restructuring costs of $1.8 million in estimated severance and other employee-related expenses associated with the 2023 cost reduction plan. Substantially all cash outlays in connection with the 2023 cost reduction plan are expected to occur in 3FQ23. Implementation of the 2023 cost reduction plan is expected to reduce salary, wages, and other employee-related expenses and contractor payments by approximately $4.0 million on an annual basis.