Cover Page
Cover Page - shares | 9 Months Ended | |
Oct. 01, 2023 | Nov. 06, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 01, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40345 | |
Entity Registrant Name | SkyWater Technology, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-1839853 | |
Entity Address, Address Line One | 2401 East 86th Street | |
Entity Address, City or Town | Bloomington | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55425 | |
City Area Code | 952 | |
Local Phone Number | 851-5200 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | SKYT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 47,024,616 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001819974 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Current assets | ||
Cash and cash equivalents | $ 17,346 | $ 30,025 |
Accounts receivable (net of allowance for credit losses of $4,699 and $1,638, respectively) | 43,492 | 28,045 |
Contract assets (net of allowance for credit losses of $227 and $0, respectively) | 37,733 | 34,625 |
Inventory | 16,648 | 13,397 |
Prepaid expenses and other current assets | 8,654 | 10,290 |
Income tax receivable | 122 | 169 |
Total current assets | 123,995 | 116,551 |
Property and equipment, net | 165,818 | 179,915 |
Intangible assets, net | 4,843 | 5,608 |
Other assets | 5,053 | 3,690 |
Total assets | 299,709 | 305,764 |
Current liabilities | ||
Current portion of long-term debt | 4,241 | 1,855 |
Accounts payable | 14,378 | 21,102 |
Accrued expenses | 39,381 | 25,212 |
Short-term financing | 45,253 | 55,817 |
Contract liabilities | 24,674 | 28,186 |
Total current liabilities | 127,927 | 132,172 |
Long-term liabilities | ||
Long-term debt, less current portion and net of unamortized debt issuance costs | 37,729 | 35,181 |
Long-term incentive plan | 0 | 1,643 |
Long-term contract liabilities | 55,636 | 67,967 |
Deferred income tax liability, net | 1,121 | 1,239 |
Other long-term liabilities | 9,466 | 13,585 |
Total long-term liabilities | 103,952 | 119,615 |
Total liabilities | 231,879 | 251,787 |
Commitments and contingencies (Note 11) | ||
Shareholders' equity | ||
Preferred stock, $0.01 par value per share (80,000,000 shares authorized; zero shares issued and outstanding) | 0 | 0 |
Common stock, $0.01 par value per share (200,000,000 shares authorized; 47,006,694 and 43,704,876 shares issued and outstanding) | 470 | 437 |
Additional paid-in capital | 177,286 | 147,304 |
Accumulated deficit | (114,878) | (94,072) |
Total shareholders' equity, SkyWater Technology, Inc. | 62,878 | 53,669 |
Noncontrolling interests | 4,952 | 308 |
Total shareholders' equity | 67,830 | 53,977 |
Total liabilities and shareholders' equity | $ 299,709 | $ 305,764 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss | $ 4,699 | $ 1,638 |
Contract asset, allowance for credit loss | $ 227 | $ 0 |
Preferred stock, par value per share (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value per share (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 47,006,694 | 43,704,876 |
Common stock, shares outstanding (in shares) | 47,006,694 | 43,704,876 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Income Statement [Abstract] | ||||
Revenue | $ 71,624 | $ 52,326 | $ 207,529 | $ 147,854 |
Cost of revenue | 57,477 | 44,049 | 160,247 | 138,437 |
Gross profit | 14,147 | 8,277 | 47,282 | 9,417 |
Research and development expense | 2,233 | 2,580 | 7,296 | 7,223 |
Selling, general, and administrative expense | 16,105 | 10,778 | 48,821 | 33,263 |
Operating loss | (4,191) | (5,081) | (8,835) | (31,069) |
Interest expense | (2,507) | (1,331) | (7,928) | (3,400) |
Loss before income taxes | (6,698) | (6,412) | (16,763) | (34,469) |
Income tax (benefit) expense | (96) | 87 | (71) | (44) |
Net loss | (6,602) | (6,499) | (16,692) | (34,425) |
Less: net income attributable to noncontrolling interests | 966 | 440 | 3,739 | 2,125 |
Net loss attributable to SkyWater Technology, Inc. | $ (7,568) | $ (6,939) | $ (20,431) | $ (36,550) |
Net loss per share attributable to common shareholders, basic (in USD per share) | $ (0.16) | $ (0.17) | $ (0.45) | $ (0.91) |
Net loss per share attributable to common shareholders, diluted (in USD per share) | $ (0.16) | $ (0.17) | $ (0.45) | $ (0.91) |
Weighted average shares used in computing net loss per common share, basic (in shares) | 46,445,309 | 40,669,322 | 45,001,998 | 40,245,736 |
Weighted average shares used in computing net loss per common share, diluted (in shares) | 46,445,309 | 40,669,322 | 45,001,998 | 40,245,736 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | At The Market Offering | Total Shareholders' Equity, SkyWater Technology, Inc. | Total Shareholders' Equity, SkyWater Technology, Inc. Cumulative Effect, Period of Adoption, Adjustment | Total Shareholders' Equity, SkyWater Technology, Inc. At The Market Offering | Preferred Stock | Common Stock | Common Stock At The Market Offering | Additional Paid-in Capital | Additional Paid-in Capital At The Market Offering | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment | Noncontrolling Interests |
Beginning balance of preferred stock (in shares) at Jan. 02, 2022 | 0 | |||||||||||||
Beginning balance of common stock (in shares) at Jan. 02, 2022 | 39,836,000 | |||||||||||||
Beginning balance at Jan. 02, 2022 | $ 59,927 | $ 61,127 | $ 0 | $ 398 | $ 115,208 | $ (54,479) | $ (1,200) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issuance of common stock (in shares) | 274,000 | |||||||||||||
Issuance of common stock | 2,169 | 2,169 | $ 6 | 2,163 | ||||||||||
Issuance of common stock pursuant to equity compensation plans (in shares) | 1,344,000 | |||||||||||||
Issuance of common stock pursuant to equity compensation plans | 3,065 | 3,065 | $ 11 | 3,054 | ||||||||||
Equity-based compensation | 6,642 | 6,642 | 6,642 | |||||||||||
Net distribution to VIE member | (1,297) | (1,297) | ||||||||||||
Net (loss) income | (34,425) | (36,550) | (36,550) | 2,125 | ||||||||||
Ending balance of preferred stock (in shares) at Oct. 02, 2022 | 0 | |||||||||||||
Ending balance of common stock (in shares) at Oct. 02, 2022 | 41,454,000 | |||||||||||||
Ending balance at Oct. 02, 2022 | 36,081 | 36,453 | $ 0 | $ 415 | 127,067 | (91,029) | (372) | |||||||
Beginning balance of preferred stock (in shares) at Jul. 03, 2022 | 0 | |||||||||||||
Beginning balance of common stock (in shares) at Jul. 03, 2022 | 40,450,000 | |||||||||||||
Beginning balance at Jul. 03, 2022 | 37,629 | 38,011 | $ 0 | $ 404 | 121,697 | (84,090) | (382) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issuance of common stock (in shares) | 274,000 | |||||||||||||
Issuance of common stock | 2,169 | 2,169 | $ 6 | 2,163 | ||||||||||
Issuance of common stock pursuant to equity compensation plans (in shares) | 730,000 | |||||||||||||
Issuance of common stock pursuant to equity compensation plans | 1,620 | 1,620 | $ 5 | 1,615 | ||||||||||
Equity-based compensation | 1,592 | 1,592 | 1,592 | |||||||||||
Net distribution to VIE member | (430) | (430) | ||||||||||||
Net (loss) income | (6,499) | (6,939) | (6,939) | 440 | ||||||||||
Ending balance of preferred stock (in shares) at Oct. 02, 2022 | 0 | |||||||||||||
Ending balance of common stock (in shares) at Oct. 02, 2022 | 41,454,000 | |||||||||||||
Ending balance at Oct. 02, 2022 | $ 36,081 | 36,453 | $ 0 | $ 415 | 127,067 | (91,029) | (372) | |||||||
Beginning balance of preferred stock (in shares) at Jan. 01, 2023 | 0 | 0 | ||||||||||||
Beginning balance of common stock (in shares) at Jan. 01, 2023 | 43,704,876 | 43,705,000 | ||||||||||||
Beginning balance at Jan. 01, 2023 | $ 53,977 | $ (375) | 53,669 | $ (375) | $ 0 | $ 437 | 147,304 | (94,072) | $ (375) | 308 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issuance of common stock (in shares) | 2,040,000 | |||||||||||||
Issuance of common stock | $ 20,386 | $ 20,386 | $ 20 | $ 20,366 | ||||||||||
Issuance of common stock pursuant to equity compensation plans (in shares) | 1,262,000 | |||||||||||||
Issuance of common stock pursuant to equity compensation plans | 3,956 | 3,956 | $ 13 | 3,943 | ||||||||||
Equity-based compensation | 5,673 | 5,673 | 5,673 | |||||||||||
Net contribution from VIE member | 905 | 905 | ||||||||||||
Net (loss) income | $ (16,692) | (20,431) | (20,431) | 3,739 | ||||||||||
Ending balance of preferred stock (in shares) at Oct. 01, 2023 | 0 | 0 | ||||||||||||
Ending balance of common stock (in shares) at Oct. 01, 2023 | 47,006,694 | 47,007,000 | ||||||||||||
Ending balance at Oct. 01, 2023 | $ 67,830 | 62,878 | $ 0 | $ 470 | 177,286 | (114,878) | 4,952 | |||||||
Beginning balance of preferred stock (in shares) at Jul. 02, 2023 | 0 | |||||||||||||
Beginning balance of common stock (in shares) at Jul. 02, 2023 | 45,400,000 | |||||||||||||
Beginning balance at Jul. 02, 2023 | 62,882 | 59,323 | $ 0 | $ 454 | 166,179 | (107,310) | 3,559 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issuance of common stock (in shares) | 884,000 | |||||||||||||
Issuance of common stock | 8,234 | 8,234 | $ 9 | 8,225 | ||||||||||
Issuance of common stock pursuant to equity compensation plans (in shares) | 723,000 | |||||||||||||
Issuance of common stock pursuant to equity compensation plans | 1,036 | 1,036 | $ 7 | 1,029 | ||||||||||
Equity-based compensation | 1,853 | 1,853 | 1,853 | |||||||||||
Net contribution from VIE member | 427 | 427 | ||||||||||||
Net (loss) income | $ (6,602) | (7,568) | (7,568) | 966 | ||||||||||
Ending balance of preferred stock (in shares) at Oct. 01, 2023 | 0 | 0 | ||||||||||||
Ending balance of common stock (in shares) at Oct. 01, 2023 | 47,006,694 | 47,007,000 | ||||||||||||
Ending balance at Oct. 01, 2023 | $ 67,830 | $ 62,878 | $ 0 | $ 470 | $ 177,286 | $ (114,878) | $ 4,952 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2023 | Oct. 02, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (16,692) | $ (34,425) |
Adjustments to reconcile net loss to net cash flows used in operating activities | ||
Depreciation and amortization | 21,651 | 20,740 |
Amortization of debt issuance costs included in interest expense | 1,349 | 521 |
Long-term incentive and equity-based compensation | 5,673 | 7,033 |
Cash paid for contingent consideration in excess of initial valuation | 0 | (816) |
Deferred income taxes | (118) | (30) |
Cash paid for operating leases | (37) | 0 |
Cash paid for interest on finance leases | (649) | 0 |
Provision for credit losses | 4,133 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable and contract assets | (23,063) | 773 |
Inventory | (3,251) | (4,686) |
Prepaid expenses and other assets | 270 | (1,212) |
Accounts payable and accrued expenses | 4,868 | 16,705 |
Contract liabilities, current and long-term | (15,843) | (10,612) |
Income tax receivable and payable | 47 | 1 |
Net cash used in operating activities | (21,662) | (6,008) |
Cash flows from investing activities | ||
Purchase of software and licenses | (612) | (400) |
Purchases of property and equipment | (3,864) | (11,325) |
Net cash used in investing activities | (4,476) | (11,725) |
Cash flows from financing activities | ||
Draws on revolving line of credit | 182,763 | 0 |
Paydowns of revolving line of credit | (194,396) | 0 |
Net proceeds on Revolver | 0 | 14,522 |
Proceeds from tool financings | 6,492 | 0 |
Principal payments on long-term debt | (1,839) | (765) |
Cash paid for principal on finance leases | (818) | (1,158) |
Proceeds from the issuance of common stock pursuant to the employee stock purchase plan | 2,305 | 1,800 |
Proceeds from the issuance of common stock, net of commissions | 20,397 | 2,186 |
Cash paid on license technology obligations | (2,350) | (1,150) |
Net contributions (distributions) from (to) noncontrolling interest | 905 | (1,297) |
Net cash provided by financing activities | 13,459 | 14,138 |
Net uses of cash and cash equivalents | (12,679) | (3,595) |
Cash and cash equivalents - beginning of period | 30,025 | 12,917 |
Cash and cash equivalents - end of period | 17,346 | 9,322 |
Supplemental disclosure of cash flow information: | ||
Interest | 6,578 | 3,014 |
Income taxes | 0 | 3 |
Noncash investing and financing activity | ||
Capital expenditures incurred, not yet paid | 3,269 | 7,082 |
Equipment acquired through capital lease obligations | 662 | 9,008 |
Intangible assets acquired, not yet paid | $ 0 | $ 2,562 |
Nature of Business
Nature of Business | 9 Months Ended |
Oct. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business SkyWater Technology, Inc., together with its consolidated subsidiaries (collectively, "SkyWater", the "Company", "it", or "its"), is a U.S.-based, independent, pure-play technology foundry that offers advanced semiconductor development and manufacturing services from its fabrication facility, or fab, in Minnesota and advanced packaging services from its Florida facility. SkyWater's technology-as-a-service model leverages a strong foundation of proprietary technology to co-develop process technology intellectual property with its customers that enables disruptive concepts through its Advanced Technology Services ("ATS") for diverse microelectronics (integrated circuits, or ICs) and related micro- and nanotechnology applications. In addition to these differentiated technology development services, SkyWater supports customers with volume production of ICs for high-growth markets through its Wafer Services. SkyWater is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012. |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 9 Months Ended |
Oct. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements as of October 1, 2023, and for the three- and nine-month periods ended October 1, 2023 and October 2, 2022, are presented in thousands of U.S. dollars (except share and per share information), are unaudited, and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. Accordingly, they do not include all financial information and disclosures required by U.S. GAAP for annual consolidated financial statements. These interim condensed consolidated financial statements should be read in conjunction with SkyWater's annual consolidated financial statements and the related notes thereto as of January 1, 2023 and for the fiscal year then ended. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, including normal and recurring adjustments, necessary for the fair presentation of the Company's consolidated financial position as of October 1, 2023 and its consolidated results of operations, shareholders' equity, and cash flows for the three- and nine-month periods ended October 1, 2023 and October 2, 2022. The consolidated results of operations for the three- and nine-month periods ended October 1, 2023 are not necessarily indicative of the results of operations to be expected for the fiscal year ending December 31, 2023, or for any other interim period, or for any other future fiscal year. Principles of Consolidation The interim condensed consolidated financial statements include the Company's assets, liabilities, revenues, and expenses, as well as the assets, liabilities, revenues, and expenses of the Company's subsidiaries in which it has a controlling financial interest, SkyWater Technology Foundry, Inc. ("SkyWater Technology Foundry"), SkyWater Federal, LLC ("SkyWater Federal"), SkyWater Florida, Inc. ("SkyWater Florida"), and Oxbow Realty Partners, LLC ("Oxbow Realty"), a variable interest entity ("VIE") for which SkyWater is the primary beneficiary and an affiliate of the Company's principal shareholder, CMI Oxbow Partners, LLC ("Oxbow"). All intercompany accounts and transactions have been eliminated in consolidation. Liquidity and Cash Requirements The accompanying interim condensed consolidated financial statements have been prepared on the basis of the realization of assets and the satisfaction of liabilities and commitments in the normal course of business and do not include any adjustments to the recoverability and classifications of recorded assets and liabilities as a result of uncertainties. For the three- and nine-month periods ended October 1, 2023, SkyWater incurred losses of $7,568 and $20,431, respectively. As of October 1, 2023, the Company had cash and cash equivalents of $17,346. SkyWater's ability to execute its operating strategy is dependent on its ability to maintain liquidity and continue to access capital through the Revolver (as defined in Note 6 – Debt ) and other sources of financing. The current business plans indicate that the Company may require additional liquidity to continue to operate for the next twelve months from the date these interim condensed consolidated financial statements are issued. The Company has identified specific actions that can be taken to reduce operating costs and improve cash flow, including reductions in spending and delays in hiring personnel. If such actions are taken, it may require the Company to decrease its level of investment in new products and technologies, or discontinue further expansion of its business. The Company also obtained a support letter from Oxbow Industries, LLC ("Oxbow Industries"), an affiliate of Oxbow, to provide funding in an amount up to $12,500, if necessary, to enable the Company to meet its obligations as they become due for the twelve months following the date these interim condensed consolidated financial statements are issued. Based upon SkyWater's operating forecasts, its cash and cash equivalents on hand, available borrowings on the Revolver, potential cost reduction measures it could undertake, and the support letter from Oxbow Industries, as needed, management believes SkyWater will have sufficient liquidity to fund its operations for the next twelve months from the date these interim condensed consolidated financial statements are issued. Additionally, the Company could seek additional equity or debt financing, including a refinancing and/or expansion of the Revolver, however it cannot provide any assurance that additional funds will be available when needed or, if available, will be available on terms that are acceptable to the Company. SkyWater has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. To the extent that the Company's current resources and plans to potentially reduce expenses are insufficient to satisfy the Company's cash requirements, it may need to seek additional equity or debt financing. The Company's ability to do so depends on prevailing economic conditions and other factors, many of which are beyond SkyWater's control. Use of Estimates The preparation of the interim condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods then ended. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations, and various other assumptions that management believes are reasonable under the circumstances. Actual results could differ from those estimates. Net Loss Per Share Basic net loss per common share is calculated by dividing the net loss attributable to SkyWater by the weighted-average number of shares outstanding during the reporting periods, without consideration for potentially dilutive securities. Diluted net loss per common share is computed by dividing the net loss attributable to SkyWater by the weighted-average number of shares and potentially dilutive securities outstanding during the reporting periods determined using the treasury-stock method. Because the Company reported a net loss attributable to SkyWater for the three- and nine-month periods ended October 1, 2023 and October 2, 2022, the number of shares used to calculate diluted net loss per common share is the same as the number of shares used to calculate basic net loss per common share because the potentially dilutive shares would have been anti-dilutive if included in the calculation. At October 1, 2023 and October 2, 2022, there were restricted stock units and stock options totaling 2,258,000 and 2,222,000, respectively, excluded from the computation of diluted weighted-average shares outstanding because their inclusion would have been anti-dilutive. The following table sets forth the computation of basic and diluted net loss per common share for the three- and nine-month periods ended October 1, 2023 and October 2, 2022: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 (in thousands, except per share data) Numerator: net loss attributable to SkyWater Technology, Inc. $ (7,568) $ (6,939) $ (20,431) $ (36,550) Denominator: weighted-average common shares outstanding, basic and diluted 46,445 40,669 45,002 40,246 Net loss per common share, basic and diluted $ (0.16) $ (0.17) $ (0.45) $ (0.91) Reportable Segment Information Operating segments are identified as components of an enterprise about which separate financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. SkyWater operates and manages its business as a single operating segment, and as a result, only has one reportable segment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-13, "Measurement of Credit Losses on Financial Instruments", later codified in FASB Accounting Standards Codification ("ASC") Topic 326, "Financial Instruments – Credit Losses" ("Topic 326"). Topic 326 replaces the preexisting U.S. GAAP guidance that only required the recognition of credit losses when losses were probable and estimable. Topic 326 now requires recognition of credit losses based on SkyWater's expectation of losses to be incurred while the financial instrument is held. Topic 326 was effective for most public business entities for fiscal years beginning after December 15, 2019. As an emerging growth company, SkyWater adopted Topic 326 on January 2, 2023 using the modified retrospective approach. Upon adoption, the Company increased its accumulated deficit by $375 for the effects of increasing its allowance for credit losses as of January 2, 2023. All other impacts to SkyWater's consolidated financial position, results of operations and cash flows were immaterial. Significant Accounting Policies The annual consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023 include discussion of the significant accounting policies and estimates used in the preparation of the condensed consolidated financial statements. The Company made no changes to its significant accounting policies and estimates during the three- and nine-month periods ended October 1, 2023, except as noted below. Revenue Recognition Revenue is recognized when control of promised goods or services are transferred to the Company's customers, in amounts that reflect the consideration the Company expects to be entitled to in exchange for those goods or services. To recognize revenues, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the customer contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the customer contract; and (5) recognize revenues when or as we satisfy a performance obligation. The Company accounts for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of transaction price is reasonably assured. At contract inception, the Company applies judgment in determining a customer's ability and intentions to pay amounts entitled to the Company when due based on a variety of factors including the customer's historical payment experience. The Company primarily derives revenue from the performance of ATS wafer manufacturing process development services and the manufacture and delivery of wafers via Wafer Services. ATS - ATS contracts are focused on the performance of wafer manufacturing process development services, the output of which is a manufacturing plan that defines the steps and activities needed to produce customer wafers at high volumes and with high yields. Wafer manufacturing development services do not include services to manufacture customer wafers at scale. ATS contracts are complex and wafer manufacturing development services are often either the lone performance obligation in an ATS contract, or the performance obligation to which the majority of the contract value is allocated. The Company has both fixed price and time-and-materials contracts with its ATS customers. The Company's ATS customers receive the benefits of these services, and revenue from performance of these services are recognized, over time as they are performed. Revenue on fixed price contracts is recognized using either an output or input method based upon the method that best measures the value of the services performed for the Company's customers. Whether an input or output method is selected is judgmental and subject to thorough analysis of the terms of each fixed price contract. The Company consistently uses either its output method or input method for similar performance obligations and in similar circumstances. The Company's output method of revenue recognition evaluates the steps and activities needed to complete manufacturing development services and relies on surveys of steps and activities completed and partially completed as of the reporting date in relation to the current manufacturing development plans to measure the level of progress on the service. There are many steps and activities included in the Company's manufacturing development plans. The time and effort to complete the steps and activities are very similar which demonstrates a level of uniformity. This uniformity accurately conveys the steps and activities successfully validated during development in relation to the development plan and therefore provides a faithful representation of the progress achieved on wafer manufacturing development services. Based on the level of progress, the Company records the proportion of the transaction price allocated to wafer manufacturing development services as revenue in the period. Manufacturing development plans are subject to change as data is analyzed and the plans are revised. Development of production plans are technical endeavors and adjustment to manufacturing development plans may impact the percentage of progress achieved and result in cumulative adjustments of revenue. The Company uses the input method of revenue recognition for larger customer programs that are focused on development of new applications or whose manufacturing processes will rely on new or emerging technologies. Wafer manufacturing development services for these customers is inherently more complex, requiring more changes to manufacturing development plans over the period of service performance. Given the level of technical complexity and the expectation that there will be more changes to manufacturing plans as compared to other customer programs, the Company measures progress for larger customer programs by comparing costs incurred to date to estimated total cost required to complete wafer manufacturing development services. The Company records that proportion of the transaction price allocated to wafer manufacturing development services as revenue in the period. Costs include labor costs, manufacturing costs, material costs, and other direct costs incurred while performing the services. The estimation of total costs requires significant judgment and any adjustment to estimates of total cost may impact the proportion of progress achieved and could result in cumulative adjustments of revenue. When contracts are fixed price, the Company completes an evaluation of onerous ATS contracts as of the reporting date for each separate contract, not for separate performance obligations in each contract. The Company recognizes losses on onerous ATS contracts depending on whom the customer is based on the following: • U.S. Federal Government – The Company designates all ATS contracts with the U.S. Federal Government as production-type service contracts; accordingly, it accrues liabilities for onerous contracts in the period it becomes evident the contract will result in a loss. • Customers other than the U.S. Federal Government – As the Company generally develops wafer manufacturing plans for its customers under ATS contracts, ATS contracts with non-U.S. Federal Government ATS customers do not represent production-type service contracts; accordingly, the Company recognizes losses as the losses are incurred; it does not accrue liabilities for anticipated losses. Wafer Services - Wafers are goods that are generally customer specific, highly customized and have no alternative use to the Company. Wafer Services customers contract with the Company to manufacture wafers based on their manufacturing design specifications. The terms of Wafer Services contracts dictate when control over wafers is transferred to the Company's customers. For contracts where orders are non-cancelable and the Company thereby maintain enforceable rights to customer performance, including rights to payment for partially completed wafers at reasonable margins, control over wafers transfers to its customers as wafers are manufactured. For these contracts, the Company recognizes revenue using an input method. This method measures the percentage of completion of wafers still in the manufacturing process by comparing total costs incurred to date to the total estimated costs to manufacture the wafers. The Company records that proportion of the transaction price as revenue in the period. The input method provides the best method of progress as it considers the steps and activities needed to manufacture a wafer and the costs associated with those steps. Costs include labor costs, manufacturing costs, material costs, and other direct costs required to manufacture customers' wafers. The estimation of total costs requires significant judgment and any adjustment to estimates of cost to complete manufacturing may impact the proportion of completion achieved and could result in cumulative adjustments of revenue. When the Company's contracts allow for orders to be canceled and it does not maintain enforceable rights to customer performance on canceled orders, including a right to payment for partially completed wafers at reasonable margins, control of wafers transfers to its customers at the point in time when wafer manufacturing is complete, and wafers have been shipped to the customer. In these instances, the Company recognizes revenue based on the agreed shipping terms with its customers. The Company has a long-standing relationship with a significant Wafer Services customer. The terms and conditions of this relationship have evolved over time and have dictated the manner in which the Company recognized revenue for the manufacture of their wafers. Prior to 2021, transfer of control of wafers, and revenue recognition occurred, as completed wafers were shipped to the customer. In 2021, this customer requested that it be able to purchase wafers and for those wafers to be shipped to them at a later date of their choosing. With the introduction of these bill and hold terms, transfer of control of the wafers, and revenue recognition occurred, as wafers completed post-manufacturing electrical testing and became available for shipment to the customer. In March 2022, the Company signed a new contract with this customer pursuant to which orders became non-cancelable and thus there was a right to specific performance by the customer, including an enforceable right to payment for the cost of partially completed orders plus a reasonable profit margin. Given that the wafers produced for this customer are for customer-specific applications with no alternative use, the introduction of these contract terms demonstrated that control of the wafers transfers to the customer over time as the wafers are manufactured pursuant to ASC Topic 606, "Revenue from Contracts with Customers" ("Topic 606"). Accordingly, the Company's revenue recognition method for wafers produced for this customer transitioned from point in time to over-time using the Company's input method of revenue recognition. In March 2022, the Company recorded a one-time, cumulative adjustment to revenue of $8,290 for wafers still being manufactured at the time the new contract became enforceable. Between 2021 and March 2022, wafers manufactured while bill and hold provisions were in place, were separately identified as belonging to this customer, the wafers were denoted as ready for shipment to this customer in their then current form, and the Company did not have the ability to direct or sell the wafers to a different customer. Upon completion of post-manufacturing electrical testing, the Company had the right to invoice this customer. This customer also obtained legal title and the risks and rewards of ownership at this point. |
Revenue
Revenue | 9 Months Ended |
Oct. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregated Revenue The Company recognizes ATS and Wafer Services revenues pursuant to our revenue recognition policies as updated and revised in Note 3 – Summary of Significant Accounting Policies . The following tables disclose revenue for the three- and nine-month periods ended October 1, 2023 and October 2, 2022 by product type and the timing of recognition of revenue for transfer of goods and services to customers: Three-Month Period Ended October 1, 2023 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 30,905 $ — $ 30,905 Fixed price contracts — 25,062 — 25,062 Other — — 1,167 1,167 Total ATS (1) — 55,967 1,167 57,134 Wafer Services 124 14,366 — 14,490 Total $ 124 $ 70,333 $ 1,167 $ 71,624 __________________ (1) Total ATS revenue includes $3,243 of tool revenue. Three-Month Period Ended October 2, 2022 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 21,021 $ — $ 21,021 Fixed price contracts — 12,984 — 12,984 Other — — 1,167 1,167 Total ATS (1) — 34,005 1,167 35,172 Wafer Services 1,645 15,509 — 17,154 Total $ 1,645 $ 49,514 $ 1,167 $ 52,326 __________________ (1) Total ATS revenue includes $219 of tool revenue. Nine-Month Period Ended October 1, 2023 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 86,651 $ — $ 86,651 Fixed price contracts — 68,299 — 68,299 Other — — 3,500 3,500 Total ATS (1) — 154,950 3,500 158,450 Wafer Services 7,312 41,767 — 49,079 Total $ 7,312 $ 196,717 $ 3,500 $ 207,529 __________________ (1) Total ATS revenue includes $4,715 of tool revenue. Nine-Month Period Ended October 2, 2022 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 59,929 $ — $ 59,929 Fixed price contracts — 28,140 — 28,140 Other — — 3,501 3,501 Total ATS (1) — 88,069 3,501 91,570 Wafer Services (2) 18,369 37,915 — 56,284 Total $ 18,369 $ 125,984 $ 3,501 $ 147,854 __________________ (1) Total ATS revenue includes $1,516 of tool revenue. (2) As discussed in Note 3 – Summary of Significant Accounting Policies , in March 2022, the Company signed a new contract with a significant Wafer Services customer that resulted in a change from point in time revenue recognition method to an over-time, input revenue recognition method. As a result of the transition, the Company recognized a one-time, cumulative adjustment to Wafer Services revenue of $8,290 for wafers still being manufactured at the time the new contract became enforceable. For the nine-month period ended October 2, 2022, $11,049 of Wafer Services revenues were recognized using the point in time method related to the period before the new contract was enforceable and $35,080 of Wafer Services revenues, inclusive of the one-time, cumulative adjustment, were recognized using the over-time method after the contract was enforceable. The following table discloses revenue for the three- and nine-month periods ended October 1, 2023 and October 2, 2022 by country as determined based on customer address: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 United States $ 67,064 $ 44,902 $ 185,185 $ 125,811 Canada 1,889 1,020 6,395 4,245 Hong Kong 289 1,562 6,291 4,603 United Kingdom 265 1,868 4,139 5,402 All others 2,117 2,974 5,519 7,793 Total $ 71,624 $ 52,326 $ 207,529 $ 147,854 The following customers accounted for 10% or more of revenue for the three- and nine-month periods ended October 1, 2023 and October 2, 2022: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Customer A 27 % 18 % 23 % 19 % Customer B 19 % 29 % 19 % 31 % Customer E 19 % 17 % 16 % * Total 65 % 64 % 58 % 50 % __________________ * Represents less than 10% of revenue. The loss of a major customer could adversely affect the Company's operating results and financial condition. Deferred Contract Costs The Company recognized accretion of deferred contract costs in its interim condensed consolidated statements of operations totaling $43 for the three-month period ended October 1, 2023. The Company recognized amortization of deferred contract costs of $486 for the three-month period ended October 2, 2022, and $757 and $1,080 for the nine-month periods ended October 1, 2023 and October 2, 2022, respectively. Contract Assets Contract assets represent SkyWater's rights to payments for services it has transferred to its customers, but has not yet billed to its customers. Contract assets were $37,973 and $34,625 at October 1, 2023 and January 1, 2023, respectively, and are presented net of allowances for expected credit losses of $227 and $0, respectively. Contract Liabilities The Company's contract liabilities principally consist of deferred revenue on customer contracts and deferred lease revenue representing customer prepayments on a leasing arrangement in which the Company serves as lessor. Deferred revenue on customer contracts represents payments from customers for which performance obligations have not yet been satisfied. In some instances, cash may be received, or payment may be contractually due by a customer before the related revenue is recognized. The significant components of contract liabilities at October 1, 2023 and January 1, 2023 are as follows: October 1, 2023 January 1, 2023 Contract Deferred Revenue (1) Lease Deferred Revenue Total Contract Liabilities Contract Deferred Revenue (1) Lease Deferred Revenue Total Contract Liabilities Current $ 20,007 $ 4,667 $ 24,674 $ 23,519 $ 4,667 $ 28,186 Long-term 52,525 3,111 55,636 61,356 6,611 67,967 Total $ 72,532 $ 7,778 $ 80,310 $ 84,875 $ 11,278 $ 96,153 __________________ (1) Contract deferred revenue includes $62,103 and $68,917 at October 1, 2023 and January 1, 2023, respectively, related to material rights provided to a significant customer in exchange for the customer's assistance funding the expansion of the Company's Minnesota fabrication facility. Of these amounts, $11,123 and $10,882 were classified as current as of October 1, 2023 and January 1, 2023, respectively. The decrease in contract liabilities from January 1, 2023 to October 1, 2023 was primarily the result of completion of specific performance obligations for the Company's customers. Of the Company's total contract liabilities at January 1, 2023, 20% have been recognized in revenue during the nine-month period ended October 1, 2023. Of the Company's total contract liabilities at January 2, 2022, 12% were recognized in revenue during the nine-month period ended October 2, 2022. Remaining Performance Obligations At October 1, 2023, the Company had $159,159 of remaining performance obligations that had not been fully satisfied on contracts with original expected durations of one year or more, which were primarily related to ATS contracts. The Company expects to recognize those revenues as it satisfies its performance obligations, which is not expected to exceed 6.5 years. The Company does not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less. Further, the Company does not adjust the promised amount of consideration for the effects of financing if it expects, at contract inception, that the period between when it transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. |
Balance Sheet Information
Balance Sheet Information | 9 Months Ended |
Oct. 01, 2023 | |
Balance Sheet Information [Abstract] | |
Balance Sheet Information | Balance Sheet Information Certain significant amounts included in the Company's interim condensed consolidated balance sheets are summarized in the following tables: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Allowance for credit losses - Accounts receivable Balance at beginning of period $ 4,209 $ — $ 1,638 $ — Add Adoption of Credit Loss Standard (Topic 326) — — 168 — Provision for credit losses 490 — 4,113 — Deduct Accounts written-off — — 1,220 — Less recoveries of accounts charged-off — — — — Net account charge-offs (recoveries) — — 1,220 — Balance at end of period $ 4,699 $ — $ 4,699 $ — Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Allowance for credit losses - Contract assets Balance at beginning of period $ 186 $ — $ — $ — Add Adoption of Credit Loss Standard (Topic 326) — — 207 — Provision for credit losses 41 — 20 — Deduct Accounts written-off — — — — Less recoveries of accounts charged-off — — — — Net account charge-offs (recoveries) — — — — Balance at end of period $ 227 $ — $ 227 $ — October 1, 2023 January 1, 2023 Inventory Raw materials $ 5,189 $ 3,991 Work-in-process 22 359 Supplies and spare parts 11,437 9,047 Total inventories, current 16,648 13,397 Inventory, noncurrent 3,166 2,605 Total inventory $ 19,814 $ 16,002 October 1, 2023 January 1, 2023 Prepaid expenses and other current assets Prepaid expenses $ 2,371 $ 2,395 Prepaid inventory 374 129 Equipment purchased for customers (1) 4,277 5,669 Deferred contract costs 1,407 2,097 Other 225 — Total prepaid assets and other current assets $ 8,654 $ 10,290 __________________ (1) The Company acquired equipment for a customer that is being installed and calibrated in its facility. Prior to the customer obtaining ownership and control of the equipment, the Company recorded costs, including the acquisition costs of the equipment, incurred to date within prepaid expenses and other current assets. October 1, 2023 January 1, 2023 Property and equipment, net Land $ 5,396 $ 5,396 Buildings and improvements 88,182 88,141 Machinery and equipment 193,495 187,276 Fixed assets not yet in service 9,664 9,746 Total property and equipment, at cost (1) 296,737 290,559 Less: accumulated depreciation (1) (130,919) (110,644) Total property and equipment, net (1) $ 165,818 $ 179,915 __________________ (1) Includes $13,332 and $12,521 of cost and $(3,748) and $(2,781) of accumulated depreciation associated with capital assets subject to financing leases at October 1, 2023 and January 1, 2023, respectively. Depreciation expense was $6,719 and $6,635 for the three-month periods ended October 1, 2023 and October 2, 2022, respectively, and $20,275 and $19,349 for the nine-month periods ended October 1, 2023 and October 2, 2022, respectively, substantially all of which was classified as cost of revenue. October 1, 2023 January 1, 2023 Intangible assets, net Software and licensed technology $ 10,889 $ 10,277 Less: accumulated amortization (6,046) (4,669) Total intangible assets, net $ 4,843 $ 5,608 Intangible assets consist of purchased software and license costs from the acquisition of Cypress Semiconductor Corporation in 2017. Additionally, the Company has entered into license agreements for third-party software and licensed technology. During the nine-month period ended October 1, 2023, the Company acquired third-party software and licensed technology of $612, which will be amortized over a weighted average estimated life of 3 years. For the three-month periods ended October 1, 2023 and October 2, 2022, amortization of software and licensed technology was $373 and $448, respectively, and $1,376 and $1,391 for the nine-month periods ended October 1, 2023 and October 2, 2022, respectively. Remaining estimated aggregate annual amortization expense is as follows for the years ending: Amortization Remainder of 2023 $ 344 2024 1,018 2025 816 2026 590 2027 308 Thereafter 1,767 Total $ 4,843 October 1, 2023 January 1, 2023 Other assets Inventory, noncurrent $ 3,166 $ 2,605 Operating lease right-of-use assets 108 141 Other assets 1,779 944 Total other assets $ 5,053 $ 3,690 October 1, 2023 January 1, 2023 Accrued expenses Accrued compensation $ 10,245 $ 5,705 Licensed technology 1,000 1,500 Accrued commissions 380 30 Accrued fixed asset expenditures — 20 Accrued royalties 3,348 4,734 Current portion of operating lease liabilities 46 44 Current portion of finance lease liabilities 636 786 Accrued inventory 1,527 1,294 Accrued consulting fees 7,720 — Other accrued expenses 14,479 11,099 Total accrued expenses $ 39,381 $ 25,212 October 1, 2023 January 1, 2023 Other long-term liabilities Finance lease obligations $ 9,402 $ 9,257 Operating lease liability 64 100 Accrued customer payable — 3,728 Licensed technology — 500 Total other long-term liabilities $ 9,466 $ 13,585 |
Debt
Debt | 9 Months Ended |
Oct. 01, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt The components of debt outstanding at October 1, 2023 and January 1, 2023 are as follows: October 1, 2023 January 1, 2023 Short-term financing Revolver $ 48,461 $ 60,093 Unamortized debt issuance costs (3,208) (4,276) Total short-term financing, net of unamortized debt issuance costs 45,253 55,817 Long-term debt VIE Financing 36,035 36,826 Tool financing loans 8,509 3,037 Unamortized debt issuance costs (2,574) (2,827) Total long-term debt, including current maturities 41,970 37,036 Less: Current portion of long-term debt (4,241) (1,855) Total long-term debt, excluding current portion $ 37,729 $ 35,181 Revolver The outstanding balance of the revolving line of credit under the Company's Loan and Security Agreement with Siena Lending Group LLC (the "Revolver") was $48,461 as of October 1, 2023 at an interest rate of 10.7% due in December 2025. The remaining availability under the Revolver was $43,783 as of October 1, 2023. As of October 1, 2023, the Company was in compliance with applicable financial covenants of the Revolver. VIE Financing On September 30, 2020, Oxbow Realty, the Company's consolidated VIE (see Note 12 – Related Party Transactions and Note 13 – Variable Interest Entity ), entered into a loan agreement for $39,000 (the "VIE Financing") to finance the acquisition of the building and land of the SkyWater Minnesota facility. The VIE Financing is repayable in equal monthly installments of $194 over 10 years, with the remaining balance payable at the maturity date of October 6, 2030. The interest rate under the VIE Financing is fixed at 3.44%. The VIE Financing is guaranteed by Oxbow, who is also the sole equity holder of Oxbow Realty. The VIE financing is not subject to financial covenants. The terms of the VIE Financing include provisions that grant the lender several protective rights when certain triggering events defined in the loan agreement occur, including events tied to the Company's occupancy of the SkyWater Minnesota facility and SkyWater's financial performance. The triggering events are not financial covenants and the occurrence of these triggering events do not represent events of default, nor do they result in the VIE Financing becoming callable, rather the protective rights become enforceable by the lender. Based on the level of SkyWater's earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs relative to gross rents paid from SkyWater to Oxbow Realty, as defined in the loan agreement, a trigger event exists and the lender's protective rights are currently enforceable. Pursuant to its protective rights, the lender has retained in a restricted account amounts paid by SkyWater to Oxbow Realty pursuant to the Company's related party lease agreement that are in excess of the scheduled debt payments paid by Oxbow Realty to the lender. The funds held in the restricted accounts become remittable back to Oxbow Realty once the trigger event is cured. As of October 1, 2023, Oxbow Realty maintained a $6,230 receivable for the cumulative amount of excess payments held by the lender in the restricted account. Tool Financing Loans The Company, from time to time, enters into financing arrangements with lenders to finance the purchase of manufacturing tools and other equipment. Between fourth quarter 2022 and third quarter 2023, SkyWater entered into arrangements to sell manufacturing tools and other equipment to financing lenders for $9,592. These agreements include bargain purchase options at the end of the lease terms which the Company intends to exercise. These transactions represent failed sale leasebacks with the associated equipment recorded in property and equipment, net and the proceeds received, net of scheduled repayments of the financings recorded as debt on the Company's interim condensed consolidated balance sheet. Maturities Future principal payments of the Company's long-term debt, excluding unamortized debt issuance costs, are as follows: Remainder of 2023 $ 1,387 2024 4,275 2025 4,354 2026 2,172 2027 1,219 Thereafter 31,137 Total $ 44,544 |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective tax rates for each of the three- and nine-month periods ended October 1, 2023 and October 2, 2022 differ from its 21% U.S. statutory corporate tax rate due to the impact of state income taxes, permanent tax differences, the tax impact of restricted stock unit vestings, and changes in the deferred tax asset valuation allowance. The effective tax rate in any quarter can be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective income tax rates for the three-month periods ended October 1, 2023 and October 2, 2022 were 1.4% and (1.4)%, respectively, and the effective income tax rates for the nine-month periods ended October 1, 2023 and October 2, 2022 were 0.4% and 0.1%, respectively. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance as necessary. Management recorded a valuation allowance of $26,354 and $19,855 at October 1, 2023 and January 1, 2023, respectively, to reduce the net deferred tax assets to the amount that is more likely than not to be realized after evaluating whether taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income supported the realization of these net deferred tax assets. No liability has been recorded for uncertain tax positions. If applicable, the Company would accrue income tax related interest and penalties in income tax expense in its interim condensed consolidated statement of operations. There were no interest or penalties incurred during the three- and nine-month periods ended October 1, 2023 and October 2, 2022. In August 2022, the U.S. enacted the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (the "CHIPS Act"). The CHIPS Act provides incentives to semiconductor chip manufacturers in the U.S., including providing a 25% manufacturing investment credit for investments in semiconductor manufacturing property placed in service after December 31, 2022, for which construction begins before January 1, 2027. Property investments qualify for the 25% credit if, among other requirements, the property is integral to the operation of an advanced manufacturing facility, defined as having a primary purpose of manufacturing semiconductors or semiconductor manufacturing equipment. Currently, management is evaluating the impact of the CHIPS Act on its business. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Oct. 01, 2023 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders' Equity On September 2, 2022, SkyWater entered into an Open Market Sale Agreement with Jefferies LLC with respect to an at the market offering program (the "ATM Program"). Pursuant to the agreement, the Company may, from time to time, offer and sell up to $100,000 in shares of the Company's common stock. During the nine-month period ended October 1, 2023, the Company sold approximately 2,081,167 shares at an average sale price of $10.10 per share, resulting in gross proceeds of approximately $21,029 before deducting sales commissions and fees of approximately $631. The Company used the net proceeds to pay down the Revolver and fund its operations. As of October 1, 2023, approximately $74,930 in shares were available for issuance under the Open Market Sale Agreement. |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Oct. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation Equity-based compensation expense was recorded in the interim condensed consolidated statements of operations as follows: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Cost of revenue $ 438 $ 444 $ 1,242 $ 2,018 Research and development expense 218 115 597 449 Selling, general and administrative expense 1,197 1,033 3,834 4,175 $ 1,853 $ 1,592 $ 5,673 $ 6,642 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Oct. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, "Fair Value Measurement and Disclosure" ("Topic 820"), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The Company uses the fair value hierarchy defined in Topic 820 to categorize assets and liabilities subject to fair value reporting into three levels, as follows, based on the inputs used to derive the fair value of these balances. • Level 1 – Quoted prices in active markets for identical assets or liabilities; • Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 inputs were used in the valuation of the Company's contingent consideration obligation. The change in level 3 assets measured at fair value on a recurring basis is summarized as follows: Nine-Month Period Ended October 1, 2023 October 2, 2022 Beginning balance $ — $ 816 Payments — (816) Change in fair value — — Ending balance $ — $ — Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Non-financial assets, such as property and equipment and intangible assets, are initially recorded at acquisition cost when purchased, or at fair value if acquired via a business combination. Non-financial assets are remeasured at fair value only if it is determined the carrying amount of the asset, or asset group, is not recoverable pursuant to ASC Topic 360, "Property, Plant and Equipment." |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation From time to time, the Company is involved in legal proceedings and subject to claims arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the resolution of these ordinary-course matters will not have a material adverse effect on its business or consolidated operating results, financial condition and cash flows. Even if any particular litigation is resolved in a manner that is favorable to the Company's interests, such litigation can have a negative impact on its results because of defense and settlement costs, diversion of management resources from its business, and other factors. Capital Expenditures The Company has various contracts outstanding with third parties that primarily relate to the completion of a building expansion project to increase manufacturing capacity at its Minnesota facility. The Company has approximately $6.5 million of contractual commitments outstanding as of October 1, 2023. Center for NeoVation On January 25, 2021, the Company entered into a technology and economic development agreement (the "TED Agreement"), and a lease agreement (the "CfN Lease") with the government of Osceola County, Florida ("Osceola") and ICAMR, Inc., a Florida non-profit corporation (also known as "BRIDG"), to lease and operate the Center for NeoVation (the "CfN"), a semiconductor research and development and manufacturing facility in Florida. Under the CfN Lease, the Company agrees to bring the plant to full production capacity within 5 years, and then to operate the plant at full capacity for an additional 15 years. At the end of the lease, SkyWater will take ownership of the facility. The Company is responsible for taxes, utilities, insurance, maintenance, operation of the assets, and making capital investments in the facility to bring the facility to its full production capacity. Investments and costs required to bring the facility to its full capacity will be substantial. The Company may terminate the TED Agreement and CfN Lease with 18 months' notice. In the event the Company terminates the agreements, it is required to continue to operate the CfN until the earlier of either a replacement operator is found, or the 18-month's notice period expires, and it may be required to make a payment of up to $15,000 to Osceola. Build Back Better Grant In third quarter 2022, the U.S. Department of Commerce Economic Development Administration granted funds to Osceola and BRIDG for continued development of Central Florida's Semiconductor Cluster for Broad-Based Prosperity through the Build Back Better Regional Challenge, a portion of which is committed to the expansion of the CfN and purchase, installation, and qualification of equipment in the CfN. In February 2023, SkyWater committed to a 20% matching share contribution of the project costs to Osceola totaling approximately $9,100. SkyWater's commitment to fund this matching contribution is limited to $1,000 in any single calendar quarter. As of October 1, 2023, SkyWater has not been obligated to pay any portion of the matching contribution to which it has committed. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Oct. 01, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In August 2022, SkyWater entered into an agreement with Oxbow Industries to provide funding in an amount up to $12,500, if necessary, to enable the Company to meet its obligations as they become due. In March 2023, the agreement was amended to extend the term through March 2025. No amounts have been provided to the Company under this agreement. Sale-Leaseback Transaction On September 29, 2020, SkyWater entered into an agreement to sell the land and building of its Minnesota facility to Oxbow Realty. In the fourth quarter of 2020, SkyWater entered into an agreement to lease the land and building back from Oxbow Realty for initial payments of $394 per month over 20 years. The monthly payments are subject to a 2% increase each year during the term of the lease. The Company is also required to make certain customary payments constituting "additional rent," including certain monthly reserve, insurance, and tax payments, in accordance with the terms of the lease agreement. Future minimum lease commitments to Oxbow Realty as of October 1, 2023 were as follows (such amounts are eliminated from the Company's condensed consolidated financial statements due to the consolidation of Oxbow Realty, see Note 13 – Variable Interest Entity ): Remainder of 2023 $ 1,245 2024 5,031 2025 5,132 2026 5,234 2027 5,339 Thereafter 78,776 Total lease payments 100,757 Less: imputed interest (72,956) Total $ 27,801 |
Variable Interest Entity
Variable Interest Entity | 9 Months Ended |
Oct. 01, 2023 | |
Condensed Financial Information Disclosure [Abstract] | |
Variable Interest Entity | Variable Interest Entity Oxbow Realty was established by Oxbow for the purpose of holding real estate and facilitating real estate transactions. This included the purchase of the land and building of SkyWater's Minnesota facility with proceeds from a bank loan (see Note 6 – Debt ) and managing the leaseback of the land and building to SkyWater (see Note 12 – Related Party Transactions ). Management determined that Oxbow Realty meets the definition of a VIE under ASC Topic 810, "Consolidations" ("Topic 810"), because it lacks sufficient equity to finance its activities. Furthermore, the Company is the primary beneficiary of Oxbow Realty as it has the power to direct operating and maintenance decisions of the Minnesota facility during the lease term, which would most significantly affect the VIE's economic performance. As the primary beneficiary, the Company consolidates the assets, liabilities and results of operations of Oxbow Realty pursuant to Topic 810, eliminating any transactions between the Company and Oxbow Realty, and recording a noncontrolling interest for the economic interest in Oxbow Realty attributable to the Company because the owners of SkyWater's common stock do not legally have rights or obligations to the profits or losses of Oxbow Realty. In addition, the assets of Oxbow Realty can only be used to settle its liabilities, and the creditors of Oxbow Realty do not have recourse to the general credit of SkyWater. The following table shows the carrying amounts of assets and liabilities of Oxbow Realty that are consolidated by the Company as of October 1, 2023 and January 1, 2023. The assets and liabilities are presented prior to consolidation, and thus do not reflect the elimination of intercompany balances. October 1, 2023 January 1, 2023 Cash and cash equivalents $ 54 $ 16 Accounts receivable 7,099 — Prepaid expenses 21 860 Finance receivable 40,596 37,652 Other assets 746 256 Total assets $ 48,516 $ 38,784 Accounts payable $ 5,944 $ 117 Accrued expenses 296 1,581 Contract liabilities 1,334 — Debt 35,990 36,778 Total liabilities $ 43,564 $ 38,476 The following table shows the revenue and expenses of Oxbow Realty for the three- and nine-month periods ended October 1, 2023 and October 2, 2022. These results of Oxbow Realty are presented prior to consolidation, and thus do not reflect the elimination of intercompany transactions. Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Revenue $ 1,462 $ 1,264 $ 5,411 $ 3,786 General and administrative expenses 183 492 728 671 Interest expense 313 332 944 991 Total expenses 496 824 1,672 1,662 Net income $ 966 $ 440 $ 3,739 $ 2,124 |
Leases
Leases | 9 Months Ended |
Oct. 01, 2023 | |
Leases [Abstract] | |
Lesses | LeasesSkyWater as the Lessor In March 2020, SkyWater executed a contract with a customer that includes an operating lease for the right to use a specified portion of the Company's Minnesota facility to produce wafers using the customer's equipment. The contractual amount that relates to revenue from an operating lease was $21,000, and is being recognized over the estimated lease term of 4.5 years . The total amount was prepaid by the customer and recorded as a contract liability (see Note 4 – Revenue |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The interim condensed consolidated financial statements include the Company's assets, liabilities, revenues, and expenses, as well as the assets, liabilities, revenues, and expenses of the Company's subsidiaries in which it has a controlling financial interest, SkyWater Technology Foundry, Inc. ("SkyWater Technology Foundry"), SkyWater Federal, LLC ("SkyWater Federal"), SkyWater Florida, Inc. ("SkyWater Florida"), and Oxbow Realty Partners, LLC ("Oxbow Realty"), a variable interest entity ("VIE") for which SkyWater is the primary beneficiary and an affiliate of the Company's principal shareholder, CMI Oxbow Partners, LLC ("Oxbow"). All intercompany accounts and transactions have been eliminated in consolidation. |
Liquidity and Cash Requirements | Liquidity and Cash Requirements The accompanying interim condensed consolidated financial statements have been prepared on the basis of the realization of assets and the satisfaction of liabilities and commitments in the normal course of business and do not include any adjustments to the recoverability and classifications of recorded assets and liabilities as a result of uncertainties. For the three- and nine-month periods ended October 1, 2023, SkyWater incurred losses of $7,568 and $20,431, respectively. As of October 1, 2023, the Company had cash and cash equivalents of $17,346. SkyWater's ability to execute its operating strategy is dependent on its ability to maintain liquidity and continue to access capital through the Revolver (as defined in Note 6 – Debt ) and other sources of financing. The current business plans indicate that the Company may require additional liquidity to continue to operate for the next twelve months from the date these interim condensed consolidated financial statements are issued. The Company has identified specific actions that can be taken to reduce operating costs and improve cash flow, including reductions in spending and delays in hiring personnel. If such actions are taken, it may require the Company to decrease its level of investment in new products and technologies, or discontinue further expansion of its business. The Company also obtained a support letter from Oxbow Industries, LLC ("Oxbow Industries"), an affiliate of Oxbow, to provide funding in an amount up to $12,500, if necessary, to enable the Company to meet its obligations as they become due for the twelve months following the date these interim condensed consolidated financial statements are issued. Based upon SkyWater's operating forecasts, its cash and cash equivalents on hand, available borrowings on the Revolver, potential cost reduction measures it could undertake, and the support letter from Oxbow Industries, as needed, management believes SkyWater will have sufficient liquidity to fund its operations for the next twelve months from the date these interim condensed consolidated financial statements are issued. Additionally, the Company could seek additional equity or debt financing, including a refinancing and/or expansion of the Revolver, however it cannot provide any assurance that additional funds will be available when needed or, if available, will be available on terms that are acceptable to the Company. SkyWater has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. To the extent that the Company's current resources and plans to potentially reduce expenses are insufficient to satisfy the Company's cash requirements, it may need to seek additional equity or debt financing. The Company's ability to do so depends on prevailing economic conditions and other factors, many of which are beyond SkyWater's control. |
Use of Estimates | Use of Estimates The preparation of the interim condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods then ended. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations, and various other assumptions that management believes are reasonable under the circumstances. Actual results could differ from those estimates. |
Net Loss Per Share | Net Loss Per Share Basic net loss per common share is calculated by dividing the net loss attributable to SkyWater by the weighted-average number of shares outstanding during the reporting periods, without consideration for potentially dilutive securities. Diluted net loss per common share is computed by dividing the net loss attributable to SkyWater by the weighted-average number of shares and potentially dilutive securities outstanding during the reporting periods determined using the treasury-stock method. Because the Company reported a net loss attributable to SkyWater for the three- and nine-month periods ended October 1, 2023 and October 2, 2022, the number of shares used to calculate diluted net loss per common share is the same as the number of shares used to calculate basic net loss per common share because the potentially dilutive shares would have been anti-dilutive if included in the calculation. At October 1, 2023 and October 2, 2022, there were restricted stock units and stock options totaling 2,258,000 and 2,222,000, respectively, excluded from the computation of diluted weighted-average shares outstanding because their inclusion would have been anti-dilutive. |
Reporting Segment Information | Reportable Segment Information Operating segments are identified as components of an enterprise about which separate financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. SkyWater operates and manages its business as a single operating segment, and as a result, only has one reportable segment. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-13, "Measurement of Credit Losses on Financial Instruments", later codified in FASB Accounting Standards Codification ("ASC") Topic 326, "Financial Instruments – Credit Losses" ("Topic 326"). Topic 326 replaces the preexisting U.S. GAAP guidance that only required the recognition of credit losses when losses were probable and estimable. Topic 326 now requires recognition of credit losses based on SkyWater's expectation of losses to be incurred while the financial instrument is held. Topic 326 was effective for most public business entities for fiscal years beginning after December 15, 2019. As an emerging growth company, SkyWater adopted Topic 326 on January 2, 2023 using the modified retrospective approach. Upon adoption, the Company increased its accumulated deficit by $375 for the effects of increasing its allowance for credit losses as of January 2, 2023. All other impacts to SkyWater's consolidated financial position, results of operations and cash flows were immaterial. Significant Accounting Policies |
Revenue Recognition | Revenue Recognition Revenue is recognized when control of promised goods or services are transferred to the Company's customers, in amounts that reflect the consideration the Company expects to be entitled to in exchange for those goods or services. To recognize revenues, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the customer contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the customer contract; and (5) recognize revenues when or as we satisfy a performance obligation. The Company accounts for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of transaction price is reasonably assured. At contract inception, the Company applies judgment in determining a customer's ability and intentions to pay amounts entitled to the Company when due based on a variety of factors including the customer's historical payment experience. The Company primarily derives revenue from the performance of ATS wafer manufacturing process development services and the manufacture and delivery of wafers via Wafer Services. ATS - ATS contracts are focused on the performance of wafer manufacturing process development services, the output of which is a manufacturing plan that defines the steps and activities needed to produce customer wafers at high volumes and with high yields. Wafer manufacturing development services do not include services to manufacture customer wafers at scale. ATS contracts are complex and wafer manufacturing development services are often either the lone performance obligation in an ATS contract, or the performance obligation to which the majority of the contract value is allocated. The Company has both fixed price and time-and-materials contracts with its ATS customers. The Company's ATS customers receive the benefits of these services, and revenue from performance of these services are recognized, over time as they are performed. Revenue on fixed price contracts is recognized using either an output or input method based upon the method that best measures the value of the services performed for the Company's customers. Whether an input or output method is selected is judgmental and subject to thorough analysis of the terms of each fixed price contract. The Company consistently uses either its output method or input method for similar performance obligations and in similar circumstances. The Company's output method of revenue recognition evaluates the steps and activities needed to complete manufacturing development services and relies on surveys of steps and activities completed and partially completed as of the reporting date in relation to the current manufacturing development plans to measure the level of progress on the service. There are many steps and activities included in the Company's manufacturing development plans. The time and effort to complete the steps and activities are very similar which demonstrates a level of uniformity. This uniformity accurately conveys the steps and activities successfully validated during development in relation to the development plan and therefore provides a faithful representation of the progress achieved on wafer manufacturing development services. Based on the level of progress, the Company records the proportion of the transaction price allocated to wafer manufacturing development services as revenue in the period. Manufacturing development plans are subject to change as data is analyzed and the plans are revised. Development of production plans are technical endeavors and adjustment to manufacturing development plans may impact the percentage of progress achieved and result in cumulative adjustments of revenue. The Company uses the input method of revenue recognition for larger customer programs that are focused on development of new applications or whose manufacturing processes will rely on new or emerging technologies. Wafer manufacturing development services for these customers is inherently more complex, requiring more changes to manufacturing development plans over the period of service performance. Given the level of technical complexity and the expectation that there will be more changes to manufacturing plans as compared to other customer programs, the Company measures progress for larger customer programs by comparing costs incurred to date to estimated total cost required to complete wafer manufacturing development services. The Company records that proportion of the transaction price allocated to wafer manufacturing development services as revenue in the period. Costs include labor costs, manufacturing costs, material costs, and other direct costs incurred while performing the services. The estimation of total costs requires significant judgment and any adjustment to estimates of total cost may impact the proportion of progress achieved and could result in cumulative adjustments of revenue. When contracts are fixed price, the Company completes an evaluation of onerous ATS contracts as of the reporting date for each separate contract, not for separate performance obligations in each contract. The Company recognizes losses on onerous ATS contracts depending on whom the customer is based on the following: • U.S. Federal Government – The Company designates all ATS contracts with the U.S. Federal Government as production-type service contracts; accordingly, it accrues liabilities for onerous contracts in the period it becomes evident the contract will result in a loss. • Customers other than the U.S. Federal Government – As the Company generally develops wafer manufacturing plans for its customers under ATS contracts, ATS contracts with non-U.S. Federal Government ATS customers do not represent production-type service contracts; accordingly, the Company recognizes losses as the losses are incurred; it does not accrue liabilities for anticipated losses. Wafer Services - Wafers are goods that are generally customer specific, highly customized and have no alternative use to the Company. Wafer Services customers contract with the Company to manufacture wafers based on their manufacturing design specifications. The terms of Wafer Services contracts dictate when control over wafers is transferred to the Company's customers. For contracts where orders are non-cancelable and the Company thereby maintain enforceable rights to customer performance, including rights to payment for partially completed wafers at reasonable margins, control over wafers transfers to its customers as wafers are manufactured. For these contracts, the Company recognizes revenue using an input method. This method measures the percentage of completion of wafers still in the manufacturing process by comparing total costs incurred to date to the total estimated costs to manufacture the wafers. The Company records that proportion of the transaction price as revenue in the period. The input method provides the best method of progress as it considers the steps and activities needed to manufacture a wafer and the costs associated with those steps. Costs include labor costs, manufacturing costs, material costs, and other direct costs required to manufacture customers' wafers. The estimation of total costs requires significant judgment and any adjustment to estimates of cost to complete manufacturing may impact the proportion of completion achieved and could result in cumulative adjustments of revenue. When the Company's contracts allow for orders to be canceled and it does not maintain enforceable rights to customer performance on canceled orders, including a right to payment for partially completed wafers at reasonable margins, control of wafers transfers to its customers at the point in time when wafer manufacturing is complete, and wafers have been shipped to the customer. In these instances, the Company recognizes revenue based on the agreed shipping terms with its customers. The Company has a long-standing relationship with a significant Wafer Services customer. The terms and conditions of this relationship have evolved over time and have dictated the manner in which the Company recognized revenue for the manufacture of their wafers. Prior to 2021, transfer of control of wafers, and revenue recognition occurred, as completed wafers were shipped to the customer. In 2021, this customer requested that it be able to purchase wafers and for those wafers to be shipped to them at a later date of their choosing. With the introduction of these bill and hold terms, transfer of control of the wafers, and revenue recognition occurred, as wafers completed post-manufacturing electrical testing and became available for shipment to the customer. In March 2022, the Company signed a new contract with this customer pursuant to which orders became non-cancelable and thus there was a right to specific performance by the customer, including an enforceable right to payment for the cost of partially completed orders plus a reasonable profit margin. Given that the wafers produced for this customer are for customer-specific applications with no alternative use, the introduction of these contract terms demonstrated that control of the wafers transfers to the customer over time as the wafers are manufactured pursuant to ASC Topic 606, "Revenue from Contracts with Customers" ("Topic 606"). Accordingly, the Company's revenue recognition method for wafers produced for this customer transitioned from point in time to over-time using the Company's input method of revenue recognition. In March 2022, the Company recorded a one-time, cumulative adjustment to revenue of $8,290 for wafers still being manufactured at the time the new contract became enforceable. Between 2021 and March 2022, wafers manufactured while bill and hold provisions were in place, were separately identified as belonging to this customer, the wafers were denoted as ready for shipment to this customer in their then current form, and the Company did not have the ability to direct or sell the wafers to a different customer. Upon completion of post-manufacturing electrical testing, the Company had the right to invoice this customer. This customer also obtained legal title and the risks and rewards of ownership at this point. |
Basis of Presentation and Pri_2
Basis of Presentation and Principles of Consolidation (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Computation of Basic and Diluted Net Loss Per Common Share | The following table sets forth the computation of basic and diluted net loss per common share for the three- and nine-month periods ended October 1, 2023 and October 2, 2022: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 (in thousands, except per share data) Numerator: net loss attributable to SkyWater Technology, Inc. $ (7,568) $ (6,939) $ (20,431) $ (36,550) Denominator: weighted-average common shares outstanding, basic and diluted 46,445 40,669 45,002 40,246 Net loss per common share, basic and diluted $ (0.16) $ (0.17) $ (0.45) $ (0.91) |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | Note 4 Revenue Disaggregated Revenue The Company recognizes ATS and Wafer Services revenues pursuant to our revenue recognition policies as updated and revised in Note 3 – Summary of Significant Accounting Policies . The following tables disclose revenue for the three- and nine-month periods ended October 1, 2023 and October 2, 2022 by product type and the timing of recognition of revenue for transfer of goods and services to customers: Three-Month Period Ended October 1, 2023 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 30,905 $ — $ 30,905 Fixed price contracts — 25,062 — 25,062 Other — — 1,167 1,167 Total ATS (1) — 55,967 1,167 57,134 Wafer Services 124 14,366 — 14,490 Total $ 124 $ 70,333 $ 1,167 $ 71,624 __________________ (1) Total ATS revenue includes $3,243 of tool revenue. Three-Month Period Ended October 2, 2022 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 21,021 $ — $ 21,021 Fixed price contracts — 12,984 — 12,984 Other — — 1,167 1,167 Total ATS (1) — 34,005 1,167 35,172 Wafer Services 1,645 15,509 — 17,154 Total $ 1,645 $ 49,514 $ 1,167 $ 52,326 __________________ (1) Total ATS revenue includes $219 of tool revenue. Nine-Month Period Ended October 1, 2023 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 86,651 $ — $ 86,651 Fixed price contracts — 68,299 — 68,299 Other — — 3,500 3,500 Total ATS (1) — 154,950 3,500 158,450 Wafer Services 7,312 41,767 — 49,079 Total $ 7,312 $ 196,717 $ 3,500 $ 207,529 __________________ (1) Total ATS revenue includes $4,715 of tool revenue. Nine-Month Period Ended October 2, 2022 Topic 606 Revenue Point-in-Time Over Time Lease Revenue Per Topic 842 Total Revenue ATS Time and materials contracts $ — $ 59,929 $ — $ 59,929 Fixed price contracts — 28,140 — 28,140 Other — — 3,501 3,501 Total ATS (1) — 88,069 3,501 91,570 Wafer Services (2) 18,369 37,915 — 56,284 Total $ 18,369 $ 125,984 $ 3,501 $ 147,854 __________________ (1) Total ATS revenue includes $1,516 of tool revenue. (2) As discussed in Note 3 – Summary of Significant Accounting Policies , in March 2022, the Company signed a new contract with a significant Wafer Services customer that resulted in a change from point in time revenue recognition method to an over-time, input revenue recognition method. As a result of the transition, the Company recognized a one-time, cumulative adjustment to Wafer Services revenue of $8,290 for wafers still being manufactured at the time the new contract became enforceable. For the nine-month period ended October 2, 2022, $11,049 of Wafer Services revenues were recognized using the point in time method related to the period before the new contract was enforceable and $35,080 of Wafer Services revenues, inclusive of the one-time, cumulative adjustment, were recognized using the over-time method after the contract was enforceable. |
Schedule of Revenue by Country | The following table discloses revenue for the three- and nine-month periods ended October 1, 2023 and October 2, 2022 by country as determined based on customer address: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 United States $ 67,064 $ 44,902 $ 185,185 $ 125,811 Canada 1,889 1,020 6,395 4,245 Hong Kong 289 1,562 6,291 4,603 United Kingdom 265 1,868 4,139 5,402 All others 2,117 2,974 5,519 7,793 Total $ 71,624 $ 52,326 $ 207,529 $ 147,854 |
Schedule of Revenue by Major Customers by Reporting Segments | The following customers accounted for 10% or more of revenue for the three- and nine-month periods ended October 1, 2023 and October 2, 2022: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Customer A 27 % 18 % 23 % 19 % Customer B 19 % 29 % 19 % 31 % Customer E 19 % 17 % 16 % * Total 65 % 64 % 58 % 50 % __________________ * Represents less than 10% of revenue. |
Schedule of Contract Liabilities | are as follows: October 1, 2023 January 1, 2023 Contract Deferred Revenue (1) Lease Deferred Revenue Total Contract Liabilities Contract Deferred Revenue (1) Lease Deferred Revenue Total Contract Liabilities Current $ 20,007 $ 4,667 $ 24,674 $ 23,519 $ 4,667 $ 28,186 Long-term 52,525 3,111 55,636 61,356 6,611 67,967 Total $ 72,532 $ 7,778 $ 80,310 $ 84,875 $ 11,278 $ 96,153 __________________ (1) Contract deferred revenue includes $62,103 and $68,917 at October 1, 2023 and January 1, 2023, respectively, related to material rights provided to a significant customer in exchange for the customer's assistance funding the expansion of the Company's Minnesota fabrication facility. Of these amounts, $11,123 and $10,882 were classified as current as of October 1, 2023 and January 1, 2023, respectively. |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Balance Sheet Information [Abstract] | |
Schedule of Allowance for Credit Loss on Accounts Receivable | Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Allowance for credit losses - Accounts receivable Balance at beginning of period $ 4,209 $ — $ 1,638 $ — Add Adoption of Credit Loss Standard (Topic 326) — — 168 — Provision for credit losses 490 — 4,113 — Deduct Accounts written-off — — 1,220 — Less recoveries of accounts charged-off — — — — Net account charge-offs (recoveries) — — 1,220 — Balance at end of period $ 4,699 $ — $ 4,699 $ — |
Schedule of Contract Assets, Allowance for Credit Loss | Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Allowance for credit losses - Contract assets Balance at beginning of period $ 186 $ — $ — $ — Add Adoption of Credit Loss Standard (Topic 326) — — 207 — Provision for credit losses 41 — 20 — Deduct Accounts written-off — — — — Less recoveries of accounts charged-off — — — — Net account charge-offs (recoveries) — — — — Balance at end of period $ 227 $ — $ 227 $ — |
Schedule of Inventory | October 1, 2023 January 1, 2023 Inventory Raw materials $ 5,189 $ 3,991 Work-in-process 22 359 Supplies and spare parts 11,437 9,047 Total inventories, current 16,648 13,397 Inventory, noncurrent 3,166 2,605 Total inventory $ 19,814 $ 16,002 |
Schedule of Prepaid Expenses and Other Current Assets | October 1, 2023 January 1, 2023 Prepaid expenses and other current assets Prepaid expenses $ 2,371 $ 2,395 Prepaid inventory 374 129 Equipment purchased for customers (1) 4,277 5,669 Deferred contract costs 1,407 2,097 Other 225 — Total prepaid assets and other current assets $ 8,654 $ 10,290 __________________ (1) The Company acquired equipment for a customer that is being installed and calibrated in its facility. Prior to the customer obtaining ownership and control of the equipment, the Company recorded costs, including the acquisition costs of the equipment, incurred to date within prepaid expenses and other current assets. |
Schedule of Property and Equipment, Net | October 1, 2023 January 1, 2023 Property and equipment, net Land $ 5,396 $ 5,396 Buildings and improvements 88,182 88,141 Machinery and equipment 193,495 187,276 Fixed assets not yet in service 9,664 9,746 Total property and equipment, at cost (1) 296,737 290,559 Less: accumulated depreciation (1) (130,919) (110,644) Total property and equipment, net (1) $ 165,818 $ 179,915 __________________ |
Schedule of Intangible Assets | October 1, 2023 January 1, 2023 Intangible assets, net Software and licensed technology $ 10,889 $ 10,277 Less: accumulated amortization (6,046) (4,669) Total intangible assets, net $ 4,843 $ 5,608 |
Schedule of Remaining Estimated Aggregate Annual Amortization Expense | Remaining estimated aggregate annual amortization expense is as follows for the years ending: Amortization Remainder of 2023 $ 344 2024 1,018 2025 816 2026 590 2027 308 Thereafter 1,767 Total $ 4,843 |
Schedule of Other Assets | October 1, 2023 January 1, 2023 Other assets Inventory, noncurrent $ 3,166 $ 2,605 Operating lease right-of-use assets 108 141 Other assets 1,779 944 Total other assets $ 5,053 $ 3,690 |
Schedule of Accrued Expenses | October 1, 2023 January 1, 2023 Accrued expenses Accrued compensation $ 10,245 $ 5,705 Licensed technology 1,000 1,500 Accrued commissions 380 30 Accrued fixed asset expenditures — 20 Accrued royalties 3,348 4,734 Current portion of operating lease liabilities 46 44 Current portion of finance lease liabilities 636 786 Accrued inventory 1,527 1,294 Accrued consulting fees 7,720 — Other accrued expenses 14,479 11,099 Total accrued expenses $ 39,381 $ 25,212 |
Schedule of Other Noncurrent Liabilities | October 1, 2023 January 1, 2023 Other long-term liabilities Finance lease obligations $ 9,402 $ 9,257 Operating lease liability 64 100 Accrued customer payable — 3,728 Licensed technology — 500 Total other long-term liabilities $ 9,466 $ 13,585 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Outstanding | The components of debt outstanding at October 1, 2023 and January 1, 2023 are as follows: October 1, 2023 January 1, 2023 Short-term financing Revolver $ 48,461 $ 60,093 Unamortized debt issuance costs (3,208) (4,276) Total short-term financing, net of unamortized debt issuance costs 45,253 55,817 Long-term debt VIE Financing 36,035 36,826 Tool financing loans 8,509 3,037 Unamortized debt issuance costs (2,574) (2,827) Total long-term debt, including current maturities 41,970 37,036 Less: Current portion of long-term debt (4,241) (1,855) Total long-term debt, excluding current portion $ 37,729 $ 35,181 |
Schedule of Future Principal Payments | Future principal payments of the Company's long-term debt, excluding unamortized debt issuance costs, are as follows: Remainder of 2023 $ 1,387 2024 4,275 2025 4,354 2026 2,172 2027 1,219 Thereafter 31,137 Total $ 44,544 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Equity-Based Compensation Expense | Equity-based compensation expense was recorded in the interim condensed consolidated statements of operations as follows: Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Cost of revenue $ 438 $ 444 $ 1,242 $ 2,018 Research and development expense 218 115 597 449 Selling, general and administrative expense 1,197 1,033 3,834 4,175 $ 1,853 $ 1,592 $ 5,673 $ 6,642 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Change in Level 3 Assets Measured at Fair Value On a Recurring Basis | The change in level 3 assets measured at fair value on a recurring basis is summarized as follows: Nine-Month Period Ended October 1, 2023 October 2, 2022 Beginning balance $ — $ 816 Payments — (816) Change in fair value — — Ending balance $ — $ — |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Future Minimum Lease Commitments | Future minimum lease commitments to Oxbow Realty as of October 1, 2023 were as follows (such amounts are eliminated from the Company's condensed consolidated financial statements due to the consolidation of Oxbow Realty, see Note 13 – Variable Interest Entity ): Remainder of 2023 $ 1,245 2024 5,031 2025 5,132 2026 5,234 2027 5,339 Thereafter 78,776 Total lease payments 100,757 Less: imputed interest (72,956) Total $ 27,801 |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of VIE Condensed Balance Sheet Statements | The following table shows the carrying amounts of assets and liabilities of Oxbow Realty that are consolidated by the Company as of October 1, 2023 and January 1, 2023. The assets and liabilities are presented prior to consolidation, and thus do not reflect the elimination of intercompany balances. October 1, 2023 January 1, 2023 Cash and cash equivalents $ 54 $ 16 Accounts receivable 7,099 — Prepaid expenses 21 860 Finance receivable 40,596 37,652 Other assets 746 256 Total assets $ 48,516 $ 38,784 Accounts payable $ 5,944 $ 117 Accrued expenses 296 1,581 Contract liabilities 1,334 — Debt 35,990 36,778 Total liabilities $ 43,564 $ 38,476 |
Schedule of VIE Condensed Income Statements | The following table shows the revenue and expenses of Oxbow Realty for the three- and nine-month periods ended October 1, 2023 and October 2, 2022. These results of Oxbow Realty are presented prior to consolidation, and thus do not reflect the elimination of intercompany transactions. Three-Month Period Ended Nine-Month Period Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Revenue $ 1,462 $ 1,264 $ 5,411 $ 3,786 General and administrative expenses 183 492 728 671 Interest expense 313 332 944 991 Total expenses 496 824 1,672 1,662 Net income $ 966 $ 440 $ 3,739 $ 2,124 |
Basis of Presentation and Pri_3
Basis of Presentation and Principles of Consolidation - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Jul. 02, 2023 shares | Aug. 17, 2022 USD ($) | Jul. 03, 2022 shares | Oct. 01, 2023 USD ($) | Oct. 02, 2022 USD ($) | Oct. 01, 2023 USD ($) segment | Oct. 02, 2022 USD ($) | Jan. 01, 2023 USD ($) | |
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Numerator: net loss attributable to SkyWater Technology, Inc. | $ (7,568) | $ (6,939) | $ (20,431) | $ (36,550) | ||||
Cash and cash equivalents | $ 17,346 | $ 17,346 | $ 30,025 | |||||
Number of operating segments | segment | 1 | |||||||
Number of reportable segments | segment | 1 | |||||||
Restricted Stock Units and Stock Options | ||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Units excluded from computation (in shares) | shares | 2,258,000 | 2,222,000 | ||||||
Funding to Meet Obligations as they Become Due | Oxbow | ||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Funding agreement with related party (up to) | $ 12,500 |
Basis of Presentation and Pri_4
Basis of Presentation and Principles of Consolidation - Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Numerator: net loss attributable to SkyWater Technology, Inc. | $ (7,568) | $ (6,939) | $ (20,431) | $ (36,550) |
Denominator: weighted-average common shares outstanding, basic (in shares) | 46,445,309 | 40,669,322 | 45,001,998 | 40,245,736 |
Denominator: weighted-average common shares outstanding, diluted (in shares) | 46,445,309 | 40,669,322 | 45,001,998 | 40,245,736 |
Net loss per common share, basic (in USD per share) | $ (0.16) | $ (0.17) | $ (0.45) | $ (0.91) |
Net loss per common share, diluted (in USD per share) | $ (0.16) | $ (0.17) | $ (0.45) | $ (0.91) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 1 Months Ended | |||||||
Mar. 31, 2022 | Oct. 01, 2023 | Jul. 02, 2023 | Jan. 02, 2023 | Jan. 01, 2023 | Oct. 02, 2022 | Jul. 03, 2022 | Jan. 02, 2022 | |
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Stockholders' equity, including portion attributable to noncontrolling interest | $ 67,830 | $ 62,882 | $ 53,977 | $ 36,081 | $ 37,629 | $ 59,927 | ||
Wafer Services | ||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Revenue | $ 8,290 | |||||||
Accumulated Deficit | ||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Stockholders' equity, including portion attributable to noncontrolling interest | $ (114,878) | $ (107,310) | (94,072) | $ (91,029) | $ (84,090) | $ (54,479) | ||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Stockholders' equity, including portion attributable to noncontrolling interest | (375) | |||||||
Cumulative Effect, Period of Adoption, Adjustment | Accumulated Deficit | ||||||||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Stockholders' equity, including portion attributable to noncontrolling interest | $ 375 | $ (375) |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | Jul. 02, 2023 | Jan. 01, 2023 | Jul. 03, 2022 | Jan. 02, 2022 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||||||
Accretion of deferred contract costs | $ 43 | |||||||
Amortization of deferred contract costs | $ 486 | $ 757 | $ 1,080 | |||||
Contract assets | 37,973 | 37,973 | $ 34,625 | |||||
Allowance for expected credit losses | $ 227 | $ 0 | $ 227 | $ 0 | $ 186 | $ 0 | $ 0 | |
Contract liabilities recognized in revenue (as a percent) | 20,000% | 12,000% |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Disaggregation of Revenue [Line Items] | |||||
Lease Revenue Per Topic 842 | $ 1,167 | $ 1,167 | $ 3,500 | $ 3,501 | |
Total Revenue | 71,624 | 52,326 | 207,529 | 147,854 | |
ATS | |||||
Disaggregation of Revenue [Line Items] | |||||
Lease Revenue Per Topic 842 | 1,167 | 1,167 | 3,500 | 3,501 | |
Total Revenue | 57,134 | 35,172 | 158,450 | 91,570 | |
Time and materials contracts | |||||
Disaggregation of Revenue [Line Items] | |||||
Lease Revenue Per Topic 842 | 0 | 0 | 0 | 0 | |
Total Revenue | 30,905 | 21,021 | 86,651 | 59,929 | |
Fixed price contracts | |||||
Disaggregation of Revenue [Line Items] | |||||
Lease Revenue Per Topic 842 | 0 | 0 | 0 | 0 | |
Total Revenue | 25,062 | 12,984 | 68,299 | 28,140 | |
Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Lease Revenue Per Topic 842 | 1,167 | 1,167 | 3,500 | 3,501 | |
Total Revenue | 1,167 | 1,167 | 3,500 | 3,501 | |
Wafer Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | $ 8,290 | ||||
Lease Revenue Per Topic 842 | 0 | 0 | 0 | 0 | |
Total Revenue | 14,490 | 17,154 | 49,079 | 56,284 | |
Tool | |||||
Disaggregation of Revenue [Line Items] | |||||
Total Revenue | 3,243 | 219 | 4,715 | 1,516 | |
Point-in-Time | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 124 | 1,645 | 7,312 | 18,369 | |
Point-in-Time | ATS | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 0 | 0 | 0 | 0 | |
Point-in-Time | Time and materials contracts | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 0 | 0 | 0 | 0 | |
Point-in-Time | Fixed price contracts | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 0 | 0 | 0 | 0 | |
Point-in-Time | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 0 | 0 | 0 | 0 | |
Point-in-Time | Wafer Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 124 | 1,645 | 7,312 | 18,369 | |
Deferred revenue recognized | 11,049 | ||||
Over Time | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 70,333 | 49,514 | 196,717 | 125,984 | |
Over Time | ATS | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 55,967 | 34,005 | 154,950 | 88,069 | |
Over Time | Time and materials contracts | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 30,905 | 21,021 | 86,651 | 59,929 | |
Over Time | Fixed price contracts | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 25,062 | 12,984 | 68,299 | 28,140 | |
Over Time | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | 0 | 0 | 0 | 0 | |
Over Time | Wafer Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Topic 606 Revenue | $ 14,366 | $ 15,509 | $ 41,767 | 37,915 | |
Deferred revenue recognized | $ 35,080 |
Revenue - Schedule of Revenue b
Revenue - Schedule of Revenue by Country (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 71,624 | $ 52,326 | $ 207,529 | $ 147,854 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 67,064 | 44,902 | 185,185 | 125,811 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,889 | 1,020 | 6,395 | 4,245 |
Hong Kong | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 289 | 1,562 | 6,291 | 4,603 |
United Kingdom | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 265 | 1,868 | 4,139 | 5,402 |
All others | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 2,117 | $ 2,974 | $ 5,519 | $ 7,793 |
Revenue - Schedule of Revenue_2
Revenue - Schedule of Revenue by Major Customers (Details) - Revenue Benchmark - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Customer A | ||||
Disaggregation of Revenue [Line Items] | ||||
Customer percentage of revenue | 27% | 18% | 23% | 19% |
Customer B | ||||
Disaggregation of Revenue [Line Items] | ||||
Customer percentage of revenue | 19% | 29% | 19% | 31% |
Customer E | ||||
Disaggregation of Revenue [Line Items] | ||||
Customer percentage of revenue | 19% | 17% | 16% | |
Major Customers | ||||
Disaggregation of Revenue [Line Items] | ||||
Customer percentage of revenue | 65% | 64% | 58% | 50% |
Revenue - Schedule of Contract
Revenue - Schedule of Contract Liabilities (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Disaggregation of Revenue [Line Items] | ||
Current contract deferred revenue | $ 20,007 | $ 23,519 |
Long-term contract deferred revenue | 52,525 | 61,356 |
Total contract deferred revenue | 72,532 | 84,875 |
Current lease deferred revenue | 4,667 | 4,667 |
Long-term lease deferred revenue | 3,111 | 6,611 |
Total lease deferred revenue | 7,778 | 11,278 |
Total current contract liabilities | 24,674 | 28,186 |
Total long-term contract liabilities | 55,636 | 67,967 |
Total contract liabilities | 80,310 | 96,153 |
Customer Contract Including Funding Assistance For Facility Expansion | ||
Disaggregation of Revenue [Line Items] | ||
Current contract deferred revenue | 11,123 | 10,882 |
Total contract deferred revenue | $ 62,103 | $ 68,917 |
Revenue - Schedule of Performan
Revenue - Schedule of Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-02 $ in Thousands | Oct. 01, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue obligation amount | $ 159,159 |
Revenue recognition period | 6 years 6 months |
Balance Sheet Information - Sum
Balance Sheet Information - Summary of Credit Losses, Accounts Receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Allowance for credit losses - Accounts receivable | ||||
Balance at beginning of period | $ 4,209 | $ 0 | $ 1,638 | $ 0 |
Provision for credit losses | 490 | 0 | 4,113 | 0 |
Accounts written-off | 0 | 0 | 1,220 | 0 |
Less recoveries of accounts charged-off | 0 | 0 | 0 | 0 |
Net account charge-offs (recoveries) | 0 | 0 | 1,220 | 0 |
Balance at end of period | 4,699 | 0 | 4,699 | 0 |
Cumulative Effect, Period of Adoption, Adjustment | ||||
Allowance for credit losses - Accounts receivable | ||||
Balance at beginning of period | $ 0 | $ 0 | $ 168 | $ 0 |
Balance Sheet Information - Sch
Balance Sheet Information - Schedule of Contract Assets, Allowance for Credit Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Contract with Customer, Asset, Allowance for Credit Loss [Roll Forward] | ||||
Balance at beginning of period | $ 186 | $ 0 | $ 0 | |
Provision for credit losses | 41 | 0 | $ 20 | 0 |
Accounts written-off | 0 | 0 | 0 | 0 |
Less recoveries of accounts charged-off | 0 | 0 | 0 | 0 |
Net account charge-offs (recoveries) | 0 | 0 | 0 | 0 |
Balance at end of period | 227 | 0 | 227 | 0 |
Cumulative Effect, Period of Adoption, Adjustment | ||||
Contract with Customer, Asset, Allowance for Credit Loss [Roll Forward] | ||||
Balance at beginning of period | $ 0 | $ 0 | $ 207 | $ 0 |
Balance Sheet Information - S_2
Balance Sheet Information - Summary of Inventories (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Balance Sheet Information [Abstract] | ||
Raw materials | $ 5,189 | $ 3,991 |
Work-in-process | 22 | 359 |
Supplies and spare parts | 11,437 | 9,047 |
Total inventories, current | 16,648 | 13,397 |
Inventory, noncurrent | 3,166 | 2,605 |
Total inventory | $ 19,814 | $ 16,002 |
Balance Sheet Information - S_3
Balance Sheet Information - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Balance Sheet Information [Abstract] | ||
Prepaid expenses | $ 2,371 | $ 2,395 |
Prepaid inventory | 374 | 129 |
Equipment purchased for customers | 4,277 | 5,669 |
Deferred contract costs | 1,407 | 2,097 |
Other | 225 | 0 |
Prepaid expenses and other current assets | $ 8,654 | $ 10,290 |
Balance Sheet Information - S_4
Balance Sheet Information - Summary of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, at cost | $ 296,737 | $ 290,559 |
Less: accumulated depreciation | (130,919) | (110,644) |
Total property and equipment, net | 165,818 | 179,915 |
Finance lease, right-of-use asset, before accumulated amortization | 13,332 | 12,521 |
Finance lease, right-of-use asset, accumulated amortization | (3,748) | (2,781) |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, at cost | 5,396 | 5,396 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, at cost | 88,182 | 88,141 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, at cost | 193,495 | 187,276 |
Fixed assets not yet in service | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, at cost | $ 9,664 | $ 9,746 |
Balance Sheet Information - Nar
Balance Sheet Information - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 6,719 | $ 6,635 | $ 20,275 | $ 19,349 |
Software and licensed technology | ||||
Property, Plant and Equipment [Line Items] | ||||
Acquired third-party intangible assets | $ 612 | |||
Weighted average estimated life of acquired intangibles (in years) | 3 years | |||
Amortization of intangible assets | $ 373 | $ 448 | $ 1,376 | $ 1,391 |
Balance Sheet Information - S_5
Balance Sheet Information - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, net | $ 4,843 | $ 5,608 |
Software and licensed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, at cost | 10,889 | 10,277 |
Less: accumulated amortization | (6,046) | (4,669) |
Total intangible assets, net | $ 4,843 | $ 5,608 |
Balance Sheet Information - S_6
Balance Sheet Information - Summary of Remaining Estimated Aggregate Annual Amortization Expense (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Balance Sheet Information [Abstract] | ||
Remainder of 2023 | $ 344 | |
2024 | 1,018 | |
2025 | 816 | |
2026 | 590 | |
2027 | 308 | |
Thereafter | 1,767 | |
Total intangible assets, net | $ 4,843 | $ 5,608 |
Balance Sheet Information - S_7
Balance Sheet Information - Summary of Other Assets (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Balance Sheet Information [Abstract] | ||
Inventory, noncurrent | $ 3,166 | $ 2,605 |
Operating lease right-of-use assets | 108 | 141 |
Other assets | 1,779 | 944 |
Total other assets | $ 5,053 | $ 3,690 |
Balance Sheet Information - S_8
Balance Sheet Information - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Balance Sheet Information [Abstract] | ||
Accrued compensation | $ 10,245 | $ 5,705 |
Licensed technology | 1,000 | 1,500 |
Accrued commissions | 380 | 30 |
Accrued fixed asset expenditures | 0 | 20 |
Accrued royalties | 3,348 | 4,734 |
Current portion of operating lease liabilities | 46 | 44 |
Current portion of finance lease liabilities | 636 | 786 |
Accrued inventory | 1,527 | 1,294 |
Accrued consulting fees | 7,720 | 0 |
Other accrued expenses | 14,479 | 11,099 |
Total accrued expenses | $ 39,381 | $ 25,212 |
Balance Sheet Information - S_9
Balance Sheet Information - Schedule of Other Long-term Liabilities (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Balance Sheet Information [Abstract] | ||
Finance lease obligations | $ 9,402 | $ 9,257 |
Operating lease liability | 64 | 100 |
Accrued customer payable | 0 | 3,728 |
Licensed technology | 0 | 500 |
Other long-term liabilities | $ 9,466 | $ 13,585 |
Debt - Summary of Debt Outstand
Debt - Summary of Debt Outstanding (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Debt Instrument [Line Items] | ||
Short-term financing | $ 45,253 | $ 55,817 |
Unamortized debt issuance costs | (3,208) | (4,276) |
Total | 44,544 | |
Unamortized debt issuance costs | (2,574) | (2,827) |
Total | 41,970 | 37,036 |
Less: Current portion of long-term debt | (4,241) | (1,855) |
Total long-term debt, excluding current portion | 37,729 | 35,181 |
Financing loan | ||
Debt Instrument [Line Items] | ||
Total | 8,509 | 3,037 |
Financing loan | VIE Financing | ||
Debt Instrument [Line Items] | ||
Total | 36,035 | 36,826 |
Line of Credit | Revolver | ||
Debt Instrument [Line Items] | ||
Short-term financing | $ 48,461 | $ 60,093 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | 9 Months Ended | ||
Apr. 02, 2023 | Oct. 01, 2023 | Jan. 01, 2023 | Sep. 30, 2020 | |
Debt Instrument [Line Items] | ||||
Short-term financing | $ 45,253 | $ 55,817 | ||
Sale of manufacturing tool, aggregate consideration | $ 9,592 | |||
VIE Financing | ||||
Debt Instrument [Line Items] | ||||
Accumulated excess payment receivable | 6,230 | |||
Term Loan | VIE Financing | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate (as a percent) | 3.44% | |||
Principal amount of debt | $ 39,000 | |||
Periodic payment installments | $ 194 | |||
Debt instrument, term (in years) | 10 years | |||
Revolver | ||||
Debt Instrument [Line Items] | ||||
Remaining balance of revolver | $ 43,783 | |||
Line of Credit | Revolver | ||||
Debt Instrument [Line Items] | ||||
Short-term financing | $ 48,461 | $ 60,093 | ||
Debt instrument, interest rate (as a percent) | 10.70% |
Debt - Summary of Future Princi
Debt - Summary of Future Principal Payments (Details) $ in Thousands | Oct. 01, 2023 USD ($) |
Debt Instruments [Abstract] | |
Remainder of 2023 | $ 1,387 |
2024 | 4,275 |
2025 | 4,354 |
2026 | 2,172 |
2027 | 1,219 |
Thereafter | 31,137 |
Total | $ 44,544 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | Jan. 01, 2023 | |
Income Tax Disclosure [Abstract] | |||||
Federal statutory income tax rate (as a percent) | 21% | 21% | 21% | 21% | |
Effective income tax rate (as a percent) | 1.40% | (1.40%) | 0.40% | 0.10% | |
Valuation allowance | $ 26,354,000 | $ 26,354,000 | $ 19,855,000 | ||
Penalties and interest expense | $ 0 | $ 0 | $ 0 | $ 0 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - Jefferies LLC - Open Market Sales - USD ($) | 9 Months Ended | |
Sep. 02, 2022 | Oct. 01, 2023 | |
Class of Stock [Line Items] | ||
Sale of stock, ATM authorized amount | $ 100,000,000 | |
Shares issued in offering (in shares) | 2,081,167 | |
Offering price per share (in USD per share) | $ 10.10 | |
Proceeds from offering | $ 21,029,000 | |
Stock offering costs | $ 631,000 | |
Sale of stock, remaining authorized shares (in shares) | 74,930,000 |
Equity-Based Compensation - Sch
Equity-Based Compensation - Schedule of Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Equity-based compensation expense | $ 1,853 | $ 1,592 | $ 5,673 | $ 6,642 |
Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Equity-based compensation expense | 438 | 444 | 1,242 | 2,018 |
Research and development expense | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Equity-based compensation expense | 218 | 115 | 597 | 449 |
Selling, general and administrative expense | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Equity-based compensation expense | $ 1,197 | $ 1,033 | $ 3,834 | $ 4,175 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Contingent Consideration - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2023 | Oct. 02, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 0 | $ 816 |
Payments | 0 | (816) |
Change in fair value | 0 | 0 |
Ending balance | $ 0 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Jan. 25, 2021 | Oct. 01, 2023 | Feb. 28, 2023 | |
Commitments And Contingencies [Line Items] | |||
Contractual commitments outstanding | $ 6,500 | ||
Matching Share of Osceola Project Costs | |||
Commitments And Contingencies [Line Items] | |||
Matching share commitment (as a percent) | 20% | ||
Total amount committed | $ 9,100 | ||
Maximum | Matching Share of Osceola Project Costs | |||
Commitments And Contingencies [Line Items] | |||
Funding commitment per single calendar quarter | $ 1,000 | ||
Center For NeoVation | |||
Commitments And Contingencies [Line Items] | |||
Contract, termination period | 18 months | 18 months | |
Center For NeoVation | Maximum | |||
Commitments And Contingencies [Line Items] | |||
Contract termination fee | $ 15 | ||
Term To Bring The Plant To Full Production Capacity | Center For NeoVation | |||
Commitments And Contingencies [Line Items] | |||
Lease term | 5 years | ||
Term To Operate The Plant At Full Capacity | Center For NeoVation | |||
Commitments And Contingencies [Line Items] | |||
Lease term | 15 years |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - Affiliated Entity - USD ($) $ in Thousands | 1 Months Ended | |
Aug. 31, 2022 | Jan. 03, 2021 | |
Oxbow | ||
Related Party Transaction [Line Items] | ||
Funding agreement with related party (up to) | $ 12,500 | |
Oxbow Realty | ||
Related Party Transaction [Line Items] | ||
Lease payment per month | $ 394 | |
Lease term | 20 years | |
Annual percentage increase in monthly lease payments (as a percent) | 2% |
Related Party Transactions - Su
Related Party Transactions - Summary of Minimum Lease Payments Sale Lease back Transactions (Details) - Affiliated Entity - Oxbow Realty $ in Thousands | Oct. 01, 2023 USD ($) |
Related Party Transaction [Line Items] | |
Remainder of 2023 | $ 1,245 |
2024 | 5,031 |
2025 | 5,132 |
2026 | 5,234 |
2027 | 5,339 |
Thereafter | 78,776 |
Total lease payments | 100,757 |
Less: imputed interest | (72,956) |
Total | $ 27,801 |
Variable Interest Entity - Summ
Variable Interest Entity - Summary of Condensed Balance Sheet Statements (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Cash and cash equivalents | $ 17,346 | $ 30,025 |
Total assets | 299,709 | 305,764 |
Contract liabilities | 72,532 | 84,875 |
Total liabilities | 231,879 | 251,787 |
VIE Financing | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Cash and cash equivalents | 54 | 16 |
Accounts receivable | 7,099 | 0 |
Prepaid expenses | 21 | 860 |
Finance receivable | 40,596 | 37,652 |
Other assets | 746 | 256 |
Total assets | 48,516 | 38,784 |
Accounts payable | 5,944 | 117 |
Accrued expenses | 296 | 1,581 |
Contract liabilities | 1,334 | 0 |
Debt | 35,990 | 36,778 |
Total liabilities | $ 43,564 | $ 38,476 |
Variable Interest Entity - Su_2
Variable Interest Entity - Summary of Condensed Income Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Condensed Income Statements, Captions [Line Items] | ||||
Interest expense | $ 2,507 | $ 1,331 | $ 7,928 | $ 3,400 |
Net income | (7,568) | (6,939) | (20,431) | (36,550) |
VIE Financing | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Revenue | 1,462 | 1,264 | 5,411 | 3,786 |
General and administrative expenses | 183 | 492 | 728 | 671 |
Interest expense | 313 | 332 | 944 | 991 |
Total expenses | 496 | 824 | 1,672 | 1,662 |
Net income | $ 966 | $ 440 | $ 3,739 | $ 2,124 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | Mar. 31, 2020 USD ($) |
Leases [Abstract] | |
Revenue from operating lease | $ 21,000 |
Estimated lease term (in years) | 4 years 6 months |