GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Intevac Inc. Reports Operating Results (10-Q)

August 01, 2009 | About:

Intevac Inc. (IVAC) filed Quarterly Report for the period ended 2009-06-27.

Intevac Inc. is a leading supplier of static sputtering systems and related manufacturing equipment used to manufacture thin-film disks for computer hard disk drives. Sputtering is a complex vacuum deposition process used to deposit multiple thin-film layers on a disk. Thecompany\'s primary objective is to be the industry leader in supplying disksputtering equipment by providing disk sputtering systems which have both the highest overall performance and the lowest cost of ownership in the industry. Intevac Inc. has a market cap of $252.3 million; its shares were traded at around $11.51 with and P/S ratio of 2.3.

Highlight of Business Operations:

Intevac Photonics revenue for the three and six months ended June 27, 2009 decreased over the same periods in the prior year which was the result of decreased contract research and development work, offset in part by increased product sales. Intevac Photonics revenues for the three months ended June 27, 2009 consisted of $3.3 million of research and development contract revenue and $2.9 million of product sales as compared to $4.0 million of research and development contract revenue and $2.4 million of product sales for the three months ended June 28, 2008. Intevac Photonics revenues for the six months ended June 27, 2009 consisted of $7.0 million of research and development contract revenue and $5.5 million of product sales as compared to $8.2 million of research and development contract revenue and $4.4 million of product sales for the six months ended June 28, 2008. The increase in product revenue resulted from higher sales of digital night vision camera modules, systems and commercial products. The decrease in contract research and development revenue was the result of a lower volume of contracts and no revenue from contract close-outs. Intevac expects that in the remainder of 2009, 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 June 27, 2009 was $44.0 million, as compared to $20.2 million at December 31, 2008 and $27.7 million at June 28, 2008. The $44.0 million of backlog at June 27, 2009 consisted of $34.0 million of Equipment backlog and $10.0 million of Intevac Photonics backlog. The $20.2 million of backlog at December 31, 2008 consisted of $11.4 million of Equipment backlog and $8.8 million of Intevac Photonics backlog. Backlog at June 27, 2009 included five 200 Lean systems as compared to one at December 31, 2008 and four at June 28, 2008.

International sales decreased by 76.2% to $5.9 million for the three months ended June 27, 2009 from $24.7 million for the three months ended June 28, 2008 and by 77.0% to $11.8 million for the six months ended June 27, 2009 from $51.1 million for the six months ended June 28, 2008. International sales include products shipped to overseas operations of U.S. companies. The decrease in international sales was primarily due to a decrease 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 47.8% of net revenues for the three months ended June 27, 2009 and 76.9% of net revenues for the three months ended June 28, 2008. International sales constituted 48.0% of net revenues for the six months ended June 27, 2009 and 78.3% of net revenues for the six months ended June 28, 2008. The mix of domestic versus international sales will change from period to period depending on the location of Intevacs largest customers in each period.

Cost of net revenues consists primarily of purchased materials and costs attributable to contract research and development, and also includes fabrication, assembly, test and installation labor and overhead, customer-specific engineering costs, warranty costs, royalties, provisions for inventory reserves and scrap. Cost of net revenues for the three and six months ended June 27, 2009 included $104,000 and $211,000 of equity-based compensation expense, respectively. Cost of net revenues for the three and six months ended June 28, 2008 included $204,000 and $453,000 of equity-based compensation expense, respectively.

product design phase is substantially complete and on-going efforts are primarily related to continuous improvement) and savings from the global cost reduction plan implemented in the fourth quarter of 2008, offset by initial investment in photovoltaic development. The increase in Intevac Photonics research and development reflected increased spending for sensor yield improvements, sensor development and digital night vision goggle development. Intevac expects that research and development spending will decrease in the third quarter of 2009 over the second quarter of 2009 primarily as a result of the lower level of spending on Intevacs Lean Etch product line and lower Photonics research and development costs. Intevac expects that research and development spending will decrease in the third quarter of 2009 over the same quarter in the previous year primarily as a result of the lower level of spending on Intevacs Lean Etch product line. Research and development expense for the three and six months ended June 27, 2009 included $394,000 and $838,000 of equity-based compensation expense, respectively. Research and development expense for the three and six months ended June 28, 2008 included $463,000 and $929,000 of equity-based compensation expense, respectively. Research and development expenses do not include costs of $2.0 million and $4.0 million for the three and six months ended June 27, 2009 respectively, or $2.4 million and $4.9 million for the three and six months ended June 28, 2008, respectively, which are related to Intevac Photonics contract research and development and included in cost of net revenues.

Selling, general and administrative expense consists primarily of selling, marketing, customer support, financial and management costs. The decrease in selling, general and administrative spending in the three and six months ended June 27, 2009 compared to the three and six months ended June 28, 2008 was primarily the result of savings from the global cost reduction plan implemented in the fourth quarter of 2008. Intevac expects that selling, general and administrative expenses will also decrease in the third quarter of 2009 over the amount spent in the same quarter in the previous year and remain flat as compared to the second quarter of 2009. Selling, general and administrative expense for the three and six months ended June 27, 2009 included $814,000 and $1.7 million of equity-based compensation expense, respectively. Selling, general and administrative expense for the three and six months ended June 28, 2008 included $976,000 and $1.9 million of equity-based compensation expense, respectively.

Read the The complete ReportIVAC is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

Rating: 5.0/5 (1 vote)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide