Intevac: Fiscal 2Q20 Financial Results

Intevac, Inc. reported financial results for the fiscal fourth quarter and year ended January 2, 2021.

“Given the immense challenges faced in 2020, we are pleased to report profitable results and strong cash flow gen for the year,” commented Wendell Blonigan, president and CEO. “Our profitable results were driven primarily by our Photonics business, which reported strong growth and a record year as a result of significant development revenues for the IVAS program, the first all-digital solution for the ground soldier. In our Thin-film Equipment (TFE) business, we achieved strong gross margin performance, primarily as a result of record sales of HDD upgrades for both the fourth quarter and full year. While total sales declined Y/Y as a result of Covid-related impacts to our TFE growth initiatives, our combined Photonics and HDD businesses actually grew 5% for the year, exceeding our expectations entering 2020.

“As we look forward, the IVAS program continues to be the primary revenue growth opportunity for Photonics. We expect to transition from the development stage into production over the course of this year, setting the stage for significant growth potential in our Photonics business for 2022 and beyond. In TFE, we expect the investment cycle for HDD media capacity expansions to begin by mid-2021, and accelerate into next year, in support of strong demand for mass-capacity data center storage and growth in high-performance computing. Finally, we believe the multiple evaluation and demo programs in our TFE growth initiatives will contribute to our overall growth story, and continue to support the long-term revenue growth and profitability objectives for Intevac,” he concluded.

4FQ20 Summary
Net income for the quarter was $1.1 million, or $0.05 per diluted share, compared to net income of $5.2 million, or $0.22 per diluted share, in 4FQ19. Non-GAAP net income for FQ20 was $1.1 million, or $0.05 per diluted share, compared to non-GAAP net income of $5.2 million, or $0.22 per diluted share, in 4FQ19.

Revenues were $28.6 million, including $18.2 million of TFE revenues and $10.4 million of Photonics revenues. TFE revenues consisted of upgrades, spares and service. Photonics revenues included $5.3 million of R&D contracts and $5.1 million of product sales. In 4FQ19 revenues were $35.4 million, including $24.4 million of TFE revenues which consisted of two 200 Lean HDD systems, upgrades, spares and service, and Photonics revenues of $11.1 million, which included $6.2 million of R&D contracts and $4.9 million of product sales.

TFE gross margin was 48.3%, compared to 46.9% in 4FQ19 and 43.5% in 3FQ20. The improvement from 4FQ19 and 3FQ20 was primarily due to favorable product mix. Photonics gross margin was 27.7%, compared to 45.7% in 4FQ19 and 42.8% in 3FQ20. The decline from 4FQ19 and the third quarter of 2020 was primarily due to lower margins on R&D contracts.

Consolidated gross margin was 40.8%, compared to 46.5% in 4FQ19 and 43.1% in 3FQ20.R&D and SG&A expenses were $10.0 million, compared to $9.2 million in 4FQ19 and $9.4 million in 3FQ20.

Order backlog totaled $46.9 million on January 2, 2021, compared to $63.3 million on September 26, 2020 and $92.4 million on December 28, 2019.

Backlog at January 2, 2021 and September 26, 2020 did not include any 200 Lean HDD systems. Backlog at December 28, 2019 included two 200 Lean HDD systems.

The company ended the year with $50.4 million of total cash, cash equivalents, restricted cash and investments and $101.6 million in tangible book value.

FY20 Summary
Net income was $1.1 million, or $0.04 per diluted share, compared to $1.1 million, or $0.05 per diluted share, for FY19. Non-GAAP net income was $1.2 million or $0.05 per diluted share, compared to non-GAAP net income of $1.2 million or $0.05 per diluted share for FY19.

Revenues were $97.8 million, including $52.1 million of TFE revenues and $45.7 million of Photonics revenues, of which $22.9 million was contract R&D revenues, compared to 2019 revenues of $108.9 million, which included $73.7 million of TFE revenues and $35.2 million of Photonics revenues, of which $19.7 million was contract R&D revenues.

TFE gross margin was 43.0%, compared to 37.2% in 2019, while Photonics gross margin was 39.7%, compared to 38.3% in 2019. Consolidated gross margin was 41.4%, compared to 37.5% in 2019.

Total R&D and SG&A expenses were $38.0 million, compared to $36.9 million in 2019.