Intevac: Fiscal 3Q21 Financial Results

Intevac, Inc. 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 HDD customers,” commented Wendell Blonigan, president and CEO. “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 US 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 US Army’s development programs focused on enhancing the night vision performance of the IVAS dismounted soldier platform. 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.”

3Q21 Summary
The net loss 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 3Q20. 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 3Q20.

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 R&D contracts and $3.7 million of product sales. In 3Q20, 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 R&D contracts and $5.7 million of product sales.

TFE gross margin was 41.9% compared to 43.5% in 3Q20 and 18.7% in 2FQ21. The improvement compared reflected higher revenues and more favorable product mix.

Photonics gross margin was 32.0% compared to 42.8% in 3Q20 and 24.9% in 2FQ21. The improvement comparedreflected higher margins on product sales. Consolidated gross margin was 37.4%, compared to 43.1% in 3Q20 and 22.5% 2FQ21.

R&D and SG&A expenses were $9.5 million, compared to $9.4 million in 3Q20 and $9.4 million in 2FQ21.

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 9 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 9 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 9 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 9 months of 2020.

TFE gross margin was 28.7%, compared to 40.2% in the first 9 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 9 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 9 months of 2020.

R&D and SG&A expenses were $28.5 million compared to $28.0 million in the first 9 months of 2020.