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Intevac Inc. Reports Operating Results (10-Q)

August 03, 2010 | About:
10qk

10qk

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Intevac Inc. (IVAC) filed Quarterly Report for the period ended 2010-07-03.

Intevac Inc. has a market cap of $253.3 million; its shares were traded at around $11.37 with and P/S ratio of 3.2. IVAC is in the portfolios of Jean-Marie Eveillard of First Eagle Investment Management, LLC, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Intevac Photonics revenue for the three and six months ended July 3, 2010 increased over the same periods in the prior year which was the result of increased contract research and development work and increased product sales. Intevac Photonics revenues for the three months ended July 3, 2010 consisted of $4.6 million of research and development contract revenue and $3.9 million of product sales as compared to $3.3 million of research and development contract revenue and $2.9 million of product sales for the three months ended June 27, 2009. Intevac Photonics revenues for the six months ended July 3, 2010 consisted of $8.9 million of research and development contract revenue and $7.3 million of product sales as compared to $7.0 million of research and development contract revenue and $5.5 million of product sales for the six months ended June 27, 2009. The increase in product revenue resulted from higher sales of digital night-vision camera modules, systems and commercial products. The increase in contract research and development revenue was the result of a higher volume of contracts. Intevac expects that in 2010, Intevac Photonics revenues will grow driven by government spending as well as growth in commercial products. Substantial growth in future Intevac Photonics revenues is dependent on proliferation of Intevacs technology into major military programs, continued defense spending, the ability to obtain export licenses for foreign customers, obtaining production subcontracts for these programs, and development and sale of commercial products.

Intevacs backlog of orders at July 3, 2010 was $113.8 million, compared to $73.8 million at December 31, 2009 and $44.0 million at June 27, 2009. The $113.8 million of backlog at July 3, 2010 consisted of $90.9 million of Equipment backlog and $22.9 million of Intevac Photonics backlog. The $73.8 million of backlog at December 31, 2009 consisted of $57.5 million of Equipment backlog and $16.3 million of Intevac Photonics backlog. Backlog at July 3, 2010 included fourteen 200 Lean systems as compared to ten at December 31, 2009 and five at June 27, 2009.

International sales increased by 931.9% to $60.8 million for the three months ended July 3, 2010 from $5.9 million for the three months ended June 27, 2009 and by 559.4% to $77.9 million for the six months ended July 3, 2010 from $11.8 million for the six months ended June 27, 2009. International sales include products shipped to overseas operations of U.S. companies. The increase in international sales was primarily due to an increase in net revenues from disk sputtering systems, upgrades and spare parts. Substantially all of Intevacs international sales are to customers in Asia. International sales constituted 88.6% of net revenues for the three months ended July 3, 2010 and 47.8% of net revenues for the three months ended June 27, 2009. International sales constituted 76.6% of net revenues for the six months ended July 3, 2010 and 48.0% of net revenues for the six months ended June 27, 2009. The mix of domestic versus international sales will change from period to period depending on the location of Intevacs largest customers in each period.

Research and development spending decreased in both Equipment and Intevac Photonics during the three and six months ended July 3, 2010 as compared to the three and six months ended June 27, 2009. The decrease in Equipment spending was due primarily to a reduction in spending on semiconductor products, offset by increased investment in photovoltaic development. The decrease in Intevac Photonics research and development reflected decreased spending for sensor yield improvements, sensor development and digital night vision goggle development. Research and development expenses do not include costs of $3.1 million and $5.9 million for the three and six months ended July 3, 2010 respectively, or $2.0 million and $4.0 million for the three and six months ended June 27, 2009, respectively, which are related to Intevac Photonics contract research and development and included in cost of net revenues.

At July 3, 2010, Intevac had $88.4 million in cash, cash equivalents, and investments compared to $89.8 million at December 31, 2009. During the first six months of 2010, cash and cash equivalents and investments decreased by $1.4 million due primarily to investments in working capital and purchases of fixed assets, partially offset by net income and cash received from the sale of Intevac common stock to Intevacs employees through Intevacs employee benefit plans.

Accounts receivable totaled $63.6 million at July 3, 2010, compared to $44.8 million at December 31, 2009. The increase of $18.8 million in the receivable balance was due to invoicing on increased customer shipments. Total net inventories increased to $42.6 million at July 3, 2010, compared to $19.1 million at December 31, 2009 primarily as a result of increased business levels. Accounts payable increased to $16.2 million at July 3, 2010 compared to $4.7 million at December 31, 2009 in line with increased manufacturing activities. Accrued payroll and related liabilities increased by $5.0 million during the six months ended July 3, 2010 primarily related to bonus and profit sharing accruals. Customer advances increased by $1.3 million during the first six months of 2010, as new advances received from Intevacs customers were higher than liquidations related to revenue recognition.

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