Intevac, Inc. (Nasdaq: IVAC) today 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 chief executive officer. “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 hard disk drive (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.”
($ Millions, except per share amounts)
Three Months Ended | Three Months Ended | ||||||||||||||||||
July 1, 2023 | July 2, 2022 | ||||||||||||||||||
GAAP Results | Non-GAAP Results | GAAP Results | Non-GAAP Results | ||||||||||||||||
Net Revenues | $ | 10.3 | $ | 10.3 | $ | 9.3 | $ | 9.3 | |||||||||||
Operating Loss | $ | (5.5 | ) | $ | (5.5 | ) | $ | (2.4 | ) | $ | (2.4 | ) | |||||||
Net Loss | $ | (4.9 | ) | $ | (4.9 | ) | $ | (2.8 | ) | $ | (2.6 | ) | |||||||
Net Loss per Share | $ | (0.19 | ) | $ | (0.19 | ) | $ | (0.11 | ) | $ | (0.10 | ) | |||||||
Six Months Ended | Six Months Ended | ||||||||||||||
July 1, 2023 | July 2, 2022 | ||||||||||||||
GAAP Results | Non-GAAP Results | GAAP Results | Non-GAAP Results | ||||||||||||
Net Revenues | $ | 21.8 | $ | 21.8 | $ | 13.8 | $ | 13.8 | |||||||
Operating Loss | $ | (9.9) | $ | (9.9) | $ | (10.1) | $ | (7.4) | |||||||
Net Loss | $ | (8.8) | $ | (9.1) | $ | (10.7) | $ | (7.6) | |||||||
Net Loss per Share | $ | (0.34) | $ | (0.35) | $ | (0.43) | $ | (0.30) | |||||||
Intevac’s non-GAAP adjusted results exclude the impact of the following, where applicable: (i) restructuring charges, (ii) fixed asset disposals associated with a restructuring program and (iii) discontinued operations. A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial table included in this release. See also “Use of Non-GAAP Financial Measures” section.
Second Quarter 2023 Summary
Revenues were $10.3 million, compared to $9.3 million in the second quarter of 2022, 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 the second quarter of 2022, 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 the second quarter of 2022. The operating loss was $5.5 million compared to $2.4 million in the second quarter of 2022.
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 the second quarter of 2022. 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 Six Months 2023 Summary
Revenues were $21.8 million, compared to first-half 2022 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 the first six months of 2022. Operating expenses were $17.2 million, compared to $15.3 million in the first six months of 2022. 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 the first six months of 2022.
Subsequent Event
During the third quarter of fiscal 2023, Intevac substantially completed implementation of a cost reduction plan (the “2023 Cost Reduction Plan”), which is intended to reduce expenses by reducing our workforce by approximately 25 percent including employees and contractors. Intevac 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 the third quarter of fiscal 2023. 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.
Use of Non-GAAP Financial Measures
Intevac’s non-GAAP results exclude the impact, where applicable, of restructuring charges, fixed asset disposals associated with a restructuring program and discontinued operations. A reconciliation of the GAAP and non-GAAP results is provided in the financial tables included in this release.
Management uses non-GAAP results to evaluate the Company’s operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Intevac believes these measures enhance investors’ ability to review the Company’s business from the same perspective as the Company’s management and facilitate comparisons of this period’s results with prior periods. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP.
Conference Call Information
The Company will discuss its financial results and outlook in a conference call today at 1:30 p.m. PDT (4:30 p.m. EDT). To participate in the teleconference, please call toll-free (877) 407-0989 prior to the start time, and reference meeting number 13739934. For international callers, the dial-in number is +1 (201) 389-0921. You may also listen live via the Internet at https://www.webcast-eqs.com/register/intevac080223/en or on the Company's investor relations website at https://ir.intevac.com/. For those unable to attend live, an archived webcast of the call will be available at the same link.
About Intevac
Founded in 1991, we are a leading provider of thin-film process technology and manufacturing platforms for high-volume manufacturing environments. As a long-time supplier to the hard disk drive (HDD) industry, over the last 20 years we have delivered over 180 of our industry-leading 200 Lean® systems, which currently represent the majority of the world’s capacity for HDD disk media production. Today, we believe that all of the technology upgrade initiatives for next-generation media for the HDD industry are being deployed on our 200 Lean platform. With over 30 years of leadership in designing, developing, and manufacturing high-productivity, thin-film processing systems, we also are leveraging our technology and know-how for additional applications, such as coatings for consumer devices.
For more information call 408-986-9888, or visit the Company's website at www.intevac.com.
200 Lean® is a registered trademark of Intevac, Inc. and TRIO™ is a trademark of Intevac, Inc.
Safe Harbor Statement
This press release includes statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Intevac claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “expects,” or “anticipates,” and do not reflect historical facts. Specific forward-looking statements contained in this press release include, but are not limited to: the Company’s revenue growth potential and future financial performance. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from the Company’s expectations. These risks include, but are not limited to, global economic impacts of COVID-19 including shipment delays, availability of components, supply chain constraints and other disruptions related to COVID-19, and changes in market dynamics that could change the delivery schedule of our systems and upgrades, each of which could have a material impact on our business, our financial results, and the Company's stock price. These risks and other factors are detailed in the Company’s periodic filings with the U.S. Securities and Exchange Commission.
All forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Intevac does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law. Any future product, service, feature, or related specification that may be referenced in this release is for informational purposes only and is not a commitment to deliver any offering, technology or enhancement.
INTEVAC, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share amounts) | ||||||||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||||||
Net revenues | $ | 10,301 | $ | 9,307 | $ | 21,843 | $ | 13,752 | ||||||||||||
Gross profit | 2,570 | 4,487 | 7,289 | 5,209 | ||||||||||||||||
Gross margin | 24.9 | % | 48.2 | % | 33.4 | % | 37.9 | % | ||||||||||||
Operating expenses | ||||||||||||||||||||
Research and development | 3,647 | 2,868 | 7,620 | 7,028 | ||||||||||||||||
Selling, general and administrative | 4,375 | 4,016 | 9,575 | 8,265 | ||||||||||||||||
Total operating expenses | 8,022 | 6,884 | 17,195 | 15,293 | ||||||||||||||||
Total operating loss | (5,452 | ) | (2,397 | ) | (9,906 | ) | (10,084 | ) | ||||||||||||
Interest and other income (expense), net | 650 | 317 | 1,322 | 310 | ||||||||||||||||
Loss from continuing operations before provision for income taxes | (4,802 | ) | (2,080 | ) | (8,584 | ) | (9,774 | ) | ||||||||||||
Provision for income taxes | 116 | 500 | 502 | 526 | ||||||||||||||||
Net loss from continuing operations | (4,918 | ) | (2,580 | ) | (9,086 | ) | (10,300 | ) | ||||||||||||
Net income (loss) from discontinued operations, net of taxes | 40 | (238 | ) | 317 | (373 | ) | ||||||||||||||
Net loss | $ | (4,878 | ) | $ | (2,818 | ) | $ | (8,769 | ) | $ | (10,673 | ) | ||||||||
Net income (loss) per share | ||||||||||||||||||||
Basic and diluted - continuing operations | $ | (0.19 | ) | $ | (0.10 | ) | $ | (0.35 | ) | $ | (0.41 | ) | ||||||||
Basic and diluted - discontinued operations | $ | 0.00 | $ | (0.01 | ) | $ | 0.01 | $ | (0.01 | ) | ||||||||||
Basic and diluted - net loss | $ | (0.19 | ) | $ | (0.11 | ) | $ | (0.34 | ) | $ | (0.43 | ) | ||||||||
Weighted average common shares outstanding | ||||||||||||||||||||
Basic and diluted | 26,032 | 25,141 | 25,907 | 24,970 | ||||||||||||||||
INTEVAC, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) | |||||||||
July 1, 2023 | December 31, 2022 | ||||||||
(Unaudited) | (see Note) | ||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash, cash equivalents and short-term investments | $ | 67,602 | $ | 94,445 | |||||
Accounts receivable, net | 20,211 | 15,823 | |||||||
Inventories | 46,293 | 30,003 | |||||||
Prepaid expenses and other current assets | 1,914 | 1,898 | |||||||
Total current assets | 136,020 | 142,169 | |||||||
Long-term investments | 5,550 | 17,585 | |||||||
