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Intevac Announces Third Quarter 2019 Financial Results

Mon, October 28 2019

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the quarter and nine months ended September 28, 2019.

“In the third quarter, we continued to gain momentum as we drove our strategies for revenue growth and profitability,” commented Wendell Blonigan, president and chief executive officer of Intevac. “In Photonics, we booked a record order in July, which drove Photonics backlog to a new record of $76 million at quarter-end. We continue to see quarter-on-quarter revenue growth – and increasing operating profitability – for our Photonics business in 2019. In our Thin-film Equipment (“TFE”) growth initiatives, we continued to gain momentum through the successful installation of one VERTEX Spectra™ evaluation system, progress in the agreement finalization for a second VERTEX display cover glass evaluation system, the delivery of the remaining five ENERGi® systems in backlog, and steady progress in the build and test of our first MATRIX® PVD evaluation system for advanced semiconductor packaging, which we expect will be delivered in the fourth quarter. Meanwhile, Q3 revenues and profitability exceeded our forecast, primarily due to a stronger level of upgrades in our hard disk drive (“HDD”) equipment business, coupled with favorable gross margins in Photonics. Our progress to date increases our confidence for year-over-year revenue growth, both for Photonics and for TFE, as well as a return to profitable results for fiscal 2019.”

($ Millions, except per share amounts)

Q3 2019

Q3 2018

GAAP Results

Non-GAAP Results

GAAP Results

Non-GAAP Results

Net Revenues

$

26.3

$

26.3

$

19.5

$

19.5

Operating Loss

$

(0.4)

$

(0.4)

$

(1.1)

$

(1.1)

Net Loss

$

(0.5)

$

(0.5)

$

(1.1)

$

(1.1)

Net Loss per Share

$

(0.02)

$

(0.02)

$

(0.05)

$

(0.05)

 

Nine Months Ended

Nine Months Ended

September 28, 2019

September 29, 2018

GAAP Results

Non-GAAP Results

GAAP Results

Non-GAAP Results

Net Revenues

$

73.4

$

73.4

$

63.5

$

63.5

Operating Loss

$

(3.4)

$

(3.4)

$

(6.1)

$

(6.0)

Net Loss

$

(4.1)

$

(4.0)

$

(6.4)

$

(6.3)

Net Loss per Share

$

(0.18)

$

(0.18)

$

(0.29)

$

(0.28)

Intevac’s non-GAAP adjusted results exclude the impact of the following, where applicable: (1) changes in fair value of contingent consideration liabilities associated with business combinations; and (2) 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 2019 Summary

The net loss for the quarter was $480,000, or $0.02 per diluted share, compared to a net loss of $1.1 million, or $0.05 per diluted share, in the third quarter of 2018.

Revenues were $26.3 million, including $17.1 million of TFE revenues and $9.2 million of Photonics revenues. TFE revenues consisted of five solar implant ENERGi systems, upgrades, spares and service. Photonics revenues included $5.2 million of research and development contracts and $4.0 million of product sales. In the third quarter of 2018, revenues were $19.5 million, including $12.1 million of TFE revenues, which consisted of upgrades, spares and service, and Photonics revenues of $7.4 million, which included $5.1 million of product sales and $2.3 million of research and development contracts.

TFE gross margin was 28.2% compared to 40.2% in the third quarter of 2018 and 38.9% in the second quarter of 2019. The decline from the third quarter of 2018 and the second quarter of 2019 reflected unfavorable product mix.

Photonics gross margin was 43.1% compared to 35.5% in the third quarter of 2018 and 35.4% in the second quarter of 2019. The improvement from the second quarter of 2019 was primarily due to improved margins on both product sales and research and development contracts. The improvement from the third quarter of 2018 was primarily due to improved margins on research and development contracts. Consolidated gross margin was 33.4%, compared to 38.5% in the third quarter of 2018 and 37.5% in the second quarter of 2019.

R&D and SG&A expenses were $9.2 million, compared to $8.6 million in the third quarter of 2018 and $9.3 million in the second quarter of 2019.

Order backlog totaled $115.4 million on September 28, 2019, compared to $93.7 million on June 29, 2019 and $72.2 million on September 29, 2018. Backlog at September 28, 2019 included four 200 Lean® HDD systems. Backlog at June 28, 2019 included four 200 Lean HDD systems and five ENERGi solar ion implant systems. Backlog at September 29, 2018 included three 200 Lean HDD systems and twelve ENERGi solar ion implant systems.

The Company ended the quarter with $37.1 million of total cash, restricted cash and investments and $88.8 million in tangible book value.

First Nine Months 2019 Summary

The net loss was $4.1 million, or $0.18 per diluted share, compared to a net loss of $6.4 million, or $0.29 per diluted share, for the first nine months of 2018. The non-GAAP net loss was $4.0 million or $0.18 per diluted share. This compares to the first nine months of 2018 non-GAAP net loss of $6.3 million or $0.28 per diluted share.

Revenues were $73.4 million, including $49.3 million of TFE revenues and $24.1 million of Photonics revenues, compared to revenues of $63.5 million, which included $45.7 million of TFE revenues and $17.8 million of Photonics revenues, for the first nine months of 2018.

TFE gross margin was 32.4%, a decline compared to 39.6% in the first nine months of 2018, as a result of less favorable product mix. Photonics gross margin was 34.9% compared to 22.5% in the first nine months of 2018. The improvement from the first nine months of 2018 was primarily due to higher revenue levels and improved margins on both product sales and research and development contracts. Consolidated gross margin was 33.2%, compared to 34.8%, in the first nine months of 2018.

R&D and SG&A expenses were $27.7 million compared to $28.3 million in the first nine months of 2018. The lower level of expenses reflects lower spending on development costs.

Use of Non-GAAP Financial Measures

Intevac's non-GAAP results exclude the impact of the following, where applicable: changes in fair value of contingent consideration liabilities associated with business combinations and restructuring. 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) 334-0811 prior to the start time. For international callers, the dial-in number is (408) 427-3734. You may also listen live via the Internet at the Company's website, www.intevac.com, under the Investors link, or at www.earnings.com. For those unable to attend, these web sites will host an archive of the call. Additionally, a telephone replay of the call will be available for 48 hours beginning today at 7:30 p.m. EDT. You may access the replay by calling (855) 859-2056 or, for international callers, (404) 537-3406, and providing Conference ID 6083599.

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, and solar photovoltaic 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®, oDLC® and ENERGi® are registered trademarks and VERTEX Spectra™ 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: customer adoption of our products, timing of shipments in TFE, future revenue growth potential for Photonics, and the future financial performance of Intevac, such as achieving growth and profitability. 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: technology risk and challenges achieving customer adoption and revenue recognition 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

 

Three months ended

 

Nine months ended

 

September 28,

September 29,

 

September 28,

September 29,

2019

2018

2019

2018

Net revenues

 

 

 

 

 

TFE

$

17,116

$

12,108

 

$

49,325

$

45,745

Photonics

 

9,183

 

7,358

 

 

24,116

 

17,793

Total net revenues

 

26,299

 

19,466

 

 

73,441

 

63,538

 

 

 

 

 

 

Gross profit

 

8,778

 

7,486

 

 

24,375

 

22,122

Gross margin

 

 

 

 

 

TFE

 

28.2%

 

40.2%

 

 

32.4%

 

39.6%

Photonics

 

43.1%

 

35.5%

 

 

34.9%

 

22.5%

Consolidated

 

33.4%

 

38.5%

 

 

33.2%

 

34.8%

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Research and development

 

3,596

 

3,737

 

 

11,013

 

12,889

Selling, general and administrative

 

5,615

 

4,842

 

 

16,720

 

15,382

Total operating expenses

 

9,211

 

8,579

 

 

27,733

 

28,271

Total operating loss

 

(433)

 

(1,093)

 

 

(3,358)

 

(6,149)

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

TFE

 

(1,542)

 

(907)

 

 

(3,434)

 

(2,197)

Photonics

 

2,268

 

688

 

 

3,114

 

(966)

Corporate

 

(1,159)

 

(874)

 

 

(3,038)

 

(2,986)

Total operating loss

 

(433)

 

(1,093)

 

 

(3,358)

 

(6,149)

 

 

 

 

 

 

Interest income and other income (expense), net

 

126

 

186

 

 

448

 

464

Net loss before income taxes

 

(307)

 

(907)

 

 

(2,910)

 

(5,685)

Provision for income taxes

 

173

 

192

 

 

1,144

 

717

Net loss

$

(480)

$

(1,099)

 

$

(4,054)

$

(6,402)

 

 

 

 

 

 

Net loss per share

 

 

 

 

 

Basic and Diluted

$

(0.02)

$

(0.05)

 

$

(0.18)

$

(0.29)

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

Basic and Diluted

 

23,130

 

22,719

 

 

22,992

 

22,429

INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

September 28,

 

December 29,

2019

 

2018

 

(Unaudited)

 

(see Note)

ASSETS

 

 

 

 

 

Current assets

 

 

Cash, cash equivalents and short-term investments

$

30,299

$

34,791

Accounts receivable, net

 

24,884

 

27,717

Inventories

 

29,851

 

30,597

Prepaid expenses and other current assets

 

1,872

 

2,528

Total current assets

 

86,906

 

95,633

 

 

 

Long-term investments

 

5,447

 

4,372

Restricted cash

 

1,355

 

1,169

Property, plant and equipment, net

 

11,980

 

11,198

Operating lease right-of-use assets

 

9,920

—

Intangible assets, net

 

428

 

889

Other long-term assets

 

8,248

 

8,809

Total assets

$

124,284

$

122,070

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

 

Current operating lease liabilities

$

2,394

$

—

Accounts payable

 

5,544

 

6,053

Accrued payroll and related liabilities

 

5,258

 

4,689

Other accrued liabilities

 

3,650

 

4,952

Customer advances

 

8,740

 

14,314

Total current liabilities

 

25,586

 

30,008

 

 

 

Non-current liabilities

 

 

Non-current operating lease liabilities

 

9,354

—

Other long-term liabilities

 

158

 

2,438

Total non-current liabilities

 

9,512

 

2,438

 

 

 

Stockholders’ equity

 

 

Common stock ($0.001 par value)

 

23

 

23

Additional paid-in capital

 

186,938

 

183,204

Treasury stock, at cost

 

(29,158)

 

(29,047)

Accumulated other comprehensive income

 

371

 

378

Accumulated deficit

 

(68,988)

 

(64,934)

Total stockholders’ equity

 

89,186

 

89,624

Total liabilities and stockholders’ equity

$

124,284

$

122,070

Note: Amounts as of December 29, 2018 are derived from the December 29, 2018 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

 

September 28,

 

September 29,

 

September 28,

 

September 29,

2019

 

2018

 

2019

 

2018

Non-GAAP Loss from Operations

 

 

 

 

 

Reported operating loss (GAAP basis)

$

(433)

$

(1,093)

 

$

(3,358)

$

(6,149)

Change in fair value of contingent consideration obligations1

—

—

 

 

7

 

8

Restructuring charges2

—

—

 

—

 

95

Non-GAAP Operating Loss

$

(433)

$

(1,093)

 

$

(3,351)

$

(6,046)

 

 

 

 

 

 

Non-GAAP Net Loss

 

 

 

 

 

Reported net loss (GAAP basis)

$

(480)

$

(1,099)

 

$

(4,054)

$

(6,402)

Change in fair value of contingent consideration obligations1

—

—

 

 

7

 

8

Restructuring charges2

—

—

 

—

 

95

Non-GAAP Net Loss

$

(480)

$

(1,099)

 

$

(4,047)

$

(6,299)

 

 

 

 

 

 

Non-GAAP Net Loss Per Diluted Share

 

 

 

 

 

Reported net loss per diluted share (GAAP basis)

$

(0.02)

$

(0.05)

 

$

(0.18)

$

(0.29)

Change in fair value of contingent consideration obligations1

—

—

 

—

—

Restructuring charges2

—

—

 

—

—

Non-GAAP Net Loss Per Diluted Share

$

(0.02)

$

(0.05)

 

$

(0.18)

$

(0.28)

Weighted average number of diluted shares

 

23,130

 

22,719

 

 

22,992

 

22,429

1Results for all periods presented include changes in fair value of contingent consideration obligations associated with the Solar Implant Technology (SIT) acquisition in 2010.

2Results for the nine months ended September 29, 2018 include severance and other employee-related costs related to a restructuring program.

James Moniz
Chief Financial Officer
(408) 986-9888

Claire McAdams
Investor Relations
(530) 265-9899

Source: Intevac, Inc.