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Intevac Announces Third Quarter 2021 Financial Results

Mon, November 1 2021

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the quarter and nine months ended October 2, 2021.

“We are pleased to report Q3 financial results that were above forecast, and up sequentially from the second quarter, chiefly as a result of the continued acceleration of upgrade programs by our hard disk drive (HDD) customers,” commented Wendell Blonigan, president and chief executive officer. “We achieved improved operating results in the quarter, with a significant sequential increase in gross margin and continued control of expenses. In the third quarter, we completed our restructuring efforts in Thin-film Equipment (TFE) to enable reduced expense levels during this period of limited new system sales, while maintaining our ability to support the expected growth in our HDD business, and continue the technology development efforts in our TFE growth initiatives. To date in 2021, we have closely managed cash and maintained the strength of our balance sheet, achieving a net increase in total cash, restricted cash and investments since year-end 2020.

“We continue to achieve momentum in each of our businesses and expect a return to revenue growth in 2022. Our confidence in the growth ahead reflects solidifying plans by our HDD customers to expand media manufacturing capacity over the next several years, as well as the U.S. Military’s continued investment in Intevac Photonics as a key technology provider for their digital night vision programs. We recently announced a new $16 million IDIQ award for Apache Helicopter night vision cameras and support, and we are the only technology provider actively working on all three of the U.S. Army’s development programs focused on enhancing the night vision performance of the IVAS dismounted soldier platform.” Mr. Blonigan concluded, “We believe the revenue growth ahead in both HDD and Photonics will be further bolstered by opportunities in new TFE growth markets for the Company.”

 

($ Millions, except per share amounts)

Q3 2021

Q3 2020

GAAP Results

Non-GAAP Results

GAAP Results

Non-GAAP Results

Net Revenues

$

14.8

 

$

14.8

 

$

21.6

 

$

21.6

 

Operating Loss

$

(4.0

)

$

(3.7

)

$

(0.1

)

$

(0.0

)

Net Loss

$

(4.2

)

$

(4.0

)

$

(0.4

)

$

(0.3

)

Net Loss per Share

$

(0.17

)

$

(0.16

)

$

(0.02

)

$

(0.01

)

 

Nine Months Ended

Nine Months Ended

October 2, 2021

September 26, 2020

GAAP Results

Non-GAAP Results

GAAP Results

Non-GAAP Results

Net Revenues

$

44.8

 

$

44.8

 

$

69.2

 

$

69.2

 

Operating Income (Loss)

$

(16.8

)

$

(16.5

)

$

0.9

 

$

1.0

 

Net Income (Loss)

$

(16.9

)

$

(16.5

)

$

(0.1

)

$

0.0

 

Net Income (Loss) per Share

$

(0.69

)

$

(0.68

)

$

(0.00

)

$

0.00

 

Intevac’s non-GAAP adjusted results exclude the impact, where applicable, of restructuring charges. 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.

Third Quarter 2021 Summary

The net loss for the quarter was $4.2 million, or $0.17 per diluted share, compared to a net loss of $357,000, or $0.02 per diluted share, in the third quarter of 2020. The non-GAAP net loss was $4.0 million, or $0.16 per diluted share, compared to a non-GAAP net loss of $254,000, or $0.01 per diluted share, for the third quarter of 2020.

Revenues were $14.8 million, including $8.0 million of TFE revenues and $6.8 million of Photonics revenues. TFE revenues consisted of upgrades, spares and service. Photonics revenues included $3.1 million of research and development contracts and $3.7 million of product sales. In the third quarter of 2020, revenues were $21.6 million, of which $9.4 million in TFE revenues consisted of upgrades, spares and service, and $12.2 million in Photonics revenues consisted of $6.5 million of research and development contracts and $5.7 million of product sales.

TFE gross margin was 41.9% compared to 43.5% in the third quarter of 2020 and 18.7% in the second quarter of 2021. The improvement compared to the second quarter of 2021 reflected higher revenues and more favorable product mix. Photonics gross margin was 32.0% compared to 42.8% in the third quarter of 2020 and 24.9% in the second quarter of 2021. The improvement compared to the second quarter of 2021 reflected higher margins on product sales. Consolidated gross margin was 37.4%, compared to 43.1% in the third quarter of 2020 and 22.5% in the second quarter of 2021.

R&D and SG&A expenses were $9.5 million, compared to $9.4 million in the third quarter of 2020 and $9.4 million in the second quarter of 2021.

Order backlog totaled $44.9 million on October 2, 2021, compared to $51.7 million on July 3, 2021 and $63.3 million on September 26, 2020. Backlog at October 2, 2021, July 3, 2021 and September 26, 2020 did not include any 200 Lean HDD systems.

The Company ended the quarter with $51.4 million of total cash, restricted cash and investments and $89.6 million in tangible book value.

First Nine Months 2021 Summary

The net loss was $16.9 million, or $0.69 per diluted share, compared to a net loss of $57,000, or $0.00 per diluted share, for the first nine months of 2020. The non-GAAP net loss was $16.5 million or $0.68 per diluted share, compared to non-GAAP net income of $46,000 or $0.00 per diluted share, for the first nine months of 2020.

Revenues were $44.8 million, including $22.6 million of TFE revenues and $22.2 million of Photonics revenues, compared to revenues of $69.2 million, which included $33.9 million of TFE revenues and $35.3 million of Photonics revenues, for the first nine months of 2020.

TFE gross margin was 28.7%, compared to 40.2% in the first nine months of 2020, primarily due to lower revenues which affected factory utilization. Photonics gross margin was 23.4% compared to 43.2% in the first nine months of 2020 due to lower revenue levels, as well as higher costs related to completing the integration of our camera into the IVAS platform. Consolidated gross margin was 26.1%, compared to 41.7% in the first nine months of 2020.

R&D and SG&A expenses were $28.5 million compared to $28.0 million in the first nine months of 2020.

Use of Non-GAAP Financial Measures

Intevac's non-GAAP results exclude the impact, where applicable, of restructuring charges. 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 13723665. For international callers, the dial-in number is +1 (201) 389-0921. A live and archived webcast of the call will also be available on the Company’s investor relations website at https://ir.intevac.com: https://www.webcast-eqs.com/intevac11012021/en.

About Intevac

Intevac was founded in 1991 and has two businesses: Thin-film Equipment and Photonics.

In our Thin-film Equipment business, we are a leader in the design and development of high-productivity, thin-film processing systems. Our production-proven platforms are designed for high-volume manufacturing of substrates with precise thin film properties, such as the hard drive media, display cover panel, solar photovoltaic, and advanced semiconductor packaging markets we serve currently.

In our Photonics business, we are a recognized leading developer of advanced high-sensitivity digital sensors, cameras and systems that primarily serve the defense industry. We are the provider of integrated digital imaging systems for most U.S. military night vision programs.

For more information call 408-986-9888, or visit the Company's website at www.intevac.com.

200 Lean®, INTEVAC MATRIX®, INTEVAC VERTEX®, ENERGi®, VERTEX Marathon®, and VERTEX Spectra® are registered trademarks 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: impacts related to the COVID-19 global pandemic, customer adoption of our products, future revenue growth potential, and the future financial performance of Intevac. 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 delays in customer evaluations, supply chain constraints and disruptions related to COVID-19, technology risk, challenges achieving customer adoption and revenue growth in Thin-film Equipment markets, and delays in Photonics programs, 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.

INTEVAC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

 

 

Three months ended

Nine months ended

 

October 2,
2021

September 26,
2020

October 2,
2021

September 26,
2020

Net revenues

 

 

 

 

TFE

$

7,998

 

$

9,367

 

$

22,605

 

$

33,925

 

Photonics

 

6,795

 

 

12,198

 

 

22,242

 

 

35,323

 

Total net revenues

 

14,793

 

 

21,565

 

 

44,847

 

 

69,248

 

 

 

 

 

 

Gross profit

 

5,527

 

 

9,300

 

 

11,689

 

 

28,876

 

Gross margin

 

 

 

 

TFE

 

41.9

%

 

43.5

%

 

28.7

%

 

40.2

%

Photonics

 

32.0

%

 

42.8

%

 

23.4

%

 

43.2

%

Consolidated

 

37.4

%

 

43.1

%

 

26.1

%

 

41.7

%

 

 

 

 

 

Operating expenses

 

 

 

 

Research and development

 

3,743

 

 

3,603

 

 

11,262

 

 

10,594

 

Selling, general and administrative

 

5,752

 

 

5,845

 

 

17,208

 

 

17,426

 

Total operating expenses

 

9,495

 

 

9,448

 

 

28,470

 

 

28,020

 

Total operating income (loss)

 

(3,968

)

 

(148

)

 

(16,781

)

 

856

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

TFE

 

(1,841

)

 

(1,661

)

 

(10,148

)

 

(4,366

)

Photonics

 

(341

)

 

3,032

 

 

(1,742

)

 

9,480

 

Corporate

 

(1,786

)

 

(1,519

)

 

(4,891

)

 

(4,258

)

Total operating income (loss)

 

(3,968

)

 

(148

)

 

(16,781

)

 

856

 

 

 

 

 

 

Interest income and other income (expense), net

 

25

 

 

8

 

 

75

 

 

212

 

Net income (loss) before provision for income taxes

 

(3,943

)

 

(140

)

 

(16,706

)

 

1,068

 

Provision for income taxes

 

290

 

 

217

 

 

157

 

 

1,125

 

Net loss

$

(4,233

)

$

(357

)

$

(16,863

)

$

(57

)

 

 

 

 

 

Net loss per share

 

 

 

 

Basic and Diluted

$

(0.17

)

$

(0.02

)

$

(0.69

)

$

(0.00

)

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

Basic and Diluted

 

24,522

 

 

23,771

 

 

24,265

 

 

23,605

 

INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)
 

 

October 2,
2021

January 2,
2021

 

(Unaudited)

(see Note)

ASSETS

 

 

 

 

 

Current assets

 

 

Cash, cash equivalents and short-term investments

$

44,833

 

$

44,180

 

Accounts receivable, net

 

13,470

 

 

28,646

 

Inventories

 

22,453

 

 

21,689

 

Prepaid expenses and other current assets

 

1,981

 

 

1,893

 

Total current assets

 

82,737

 

 

96,408

 

 

 

 

Long-term investments

 

5,825

 

 

5,388

 

Restricted cash

 

786

 

 

787

 

Property, plant and equipment, net

 

9,209

 

 

11,004

 

Operating lease right-of-use assets

 

6,382

 

 

8,165

 

Deferred income tax and other long-term assets

 

5,554

 

 

5,486

 

Total assets

$

110,493

 

$

127,238

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

 

Current operating lease liabilities

$

3,047

 

$

2,853

 

Accounts payable

 

4,659

 

 

4,259

 

Accrued payroll and related liabilities

 

5,657

 

 

7,679

 

Other accrued liabilities

 

2,649

 

 

3,631

 

Total current liabilities

 

16,012

 

 

18,422

 

 

 

 

Non-current liabilities

 

 

Non-current operating lease liabilities

 

4,476

 

 

6,803

 

Other long-term liabilities

 

450

 

 

457

 

Total non-current liabilities

 

4,926

 

 

7,260

 

 

 

 

Stockholders’ equity

 

 

Common stock ($0.001 par value)

 

25

 

 

24

 

Additional paid-in capital

 

198,117

 

 

193,173

 

Treasury stock, at cost

 

(29,551

)

 

(29,551

)

Accumulated other comprehensive income

 

557

 

 

640

 

Accumulated deficit

 

(79,593

)

 

(62,730

)

Total stockholders’ equity

 

89,555

 

 

101,556

 

Total liabilities and stockholders’ equity

$

110,493

 

$

127,238

 

Note: Amounts as of January 2, 2021 are derived from the January 2, 2021 audited consolidated financial statements.

INTEVAC, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited, in thousands, except per share amounts)

 

 

 

 

Three months ended

Nine months ended

 

October 2,
2021

September 26,
2020

October 2,
2021

September 26,
2020

Non-GAAP Income (Loss) from Operations

 

 

 

 

Reported operating income (loss) (GAAP basis)

$

(3,968

)

$

(148

)

$

(16,781

)

$

856

 

Restructuring charges1

 

276

 

 

103

 

 

319

 

 

103

 

Non-GAAP Operating Income (Loss)

$

(3,692

)

$

(45

)

$

(16,462

)

$

959

 

 

 

 

 

 

Non-GAAP Net Income (Loss)

 

 

 

 

Reported net loss (GAAP basis)

$

(4,233

)

$

(357

)

$

(16,863

)

$

(57

)

Restructuring charges1

 

276

 

 

103

 

 

319

 

 

103

 

Income tax effect of non-GAAP adjustments2

 

—

 

 

—

 

 

—

 

 

—

 

Non-GAAP Net Income (Loss)

$

(3,957

)

$

(254

)

$

(16,544

)

$

46

 

 

 

 

 

 

Non-GAAP Net Income (Loss) Per Diluted Share

 

 

 

 

Reported net loss per diluted share (GAAP basis)

$

(0.17

)

$

(0.02

)

$

(0.69

)

$

(0.00

)

Restructuring charges1

$

0.01

 

$

0.00

 

$

0.01

 

$

0.00

 

Non-GAAP Net Income (Loss) Per Diluted Share

$

(0.16

)

$

(0.01

)

$

(0.68

)

$

0.00

 

Weighted average number of basic shares

 

24,522

 

 

23,771

 

 

24,265

 

 

23,605

 

Weighted average number of diluted shares

 

24,522

 

 

23,771

 

 

24,265

 

 

24,049

 

1Results for all periods presented include severance and other employee-related costs related to a restructuring program.

2The amount represents the estimated income tax effect of the non-GAAP adjustments. The Company calculated the tax effect of non-GAAP adjustments by applying an applicable estimated jurisdictional tax rate to each specific non-GAAP item.

James Moniz
Chief Financial Officer
(408) 986-9888

Claire McAdams
Investor Relations
(530) 265-9899

Source: Intevac, Inc.