IVAC - Earnings call transcript Q1 2022

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Operator

Good day and welcome to Intevac's First-Quarter 2022 Financial Results Conference Call. A brief question-and-answer session will follow the formal presentation.[Operator Instructions] As a reminder, this conference is being recorded. Please note that this conference is being recorded today, May 9th, 2022. At this time, I would like to turn the call over to Claire McAdams, Investor Relations for Intevac. Please, go ahead.

Claire McAdams

(ph). Devin you, Thank everyone. afternoon, good And Thank you results ended discuss financial today April joining the first us for which to quarter second. Intevac's for of on XXXX,

our recent In we the to forward. company's addition will discussing discuss outlook looking results,

like as before forward-looking of report we Nigel. and XX-K as that to made quarterly undertake over turn forward-looking including statements as a Intevac. to filed May Hunton, include this but to then forward-looking statements, with Joining of our Executive remind and no materially the our completed during projections on and I'll and Jim limited current relating certain subject and financial in various XX-Q risks with this to Financial represent factors Nigel contains will other Officer, future actual of comments me regarding the which his of now Q&A. with to results report Chief Xth about the today, Chief well The Commission, results discussed will the Moniz, differ review are President uncertainties and us quarter, risk call the update begin including today's are to our These turning Exchange Jim projections performance documents contents statements regarding prepared recently that not on conference comments most could on future preparation of over result Form our call to connection and in Form conference call XX-Q. Officer. the results company's events today's based annual by statements upon I'd the Nigel financial statements call these and remarks everyone adjustment Form remains time-sensitive call. for financial and call our fiscal obligation forward-looking Securities as expectations

Nigel Hunton

over and period a afternoon. Intevac, and been hearing new started I It's XXX and for just with good very time more both for days joining and Thank Intevac. productive and exciting now of Claire, the me about been since Thanks, you has us company. today the a

consolidated I've management a We programs return. and develop of have development the started positive that top our efforts, I've stocked suppliers. to deliver I've wouldn't our traveled to a employees, new eliminated customers, and with team, met major Singapore and lot management,

in on revenues total upgrade upside I let focus moment, these a all some busy record the also for as year. expand bookings beyond quickly the of expected. in business, had million. active our in $X.X first, of but initiatives business areas. to HDD very me to core to get start results We announced So our and recap our business, resulting in will and the HDD identified a which We've into growth market our HDD quarter financial came how in

achieved Our severance disposal new which excluded fixed primary restructuring in orders highs. so on XX-year quarter million to both better share, non-GAAP $X.XX of with of the and results highlights $X.X assets, forecast. center The and of than related per backlog, non-GAAP costs, record resulting including loss and

XXX now and $XX expansion of the Lean capacity announced XXXX to industry's us backlog. million years. equipment The backlog includes backlog system-by-system in multiple for November's million, the the over highlight million Lean year, firmly we $XX QX. for May was XXX sequential incumbent and Lean $XX capacity. XXX year, nearly was increase XXX One be choice XXX than company storage with program XXXX. leading orders Lean major New of an on the a In the early XXXX. the the into few the at of end platform a have remaining announcements the will this system press suppliers added in $XX XXXX Lean basis capacity received system platform. million our at backlog order spares, we on since order, orders. of $XX a orders over million of refurbishment $XX a of quarter-end. end that consists at of quarters Lean agreements company place next platform And will field recent end to the system Valued of end being the ordered expect beginning of in very enabled HDD QX in month's mark frame. will $XX of major less of systems. $X some ship order this QX deployed the beginning in agreement upgrades, November $XX systems February's received last for release over announcement end orders since includes quarter multi QX on to as service. as The QX the largest of And XXX and ship to totaled media in we add To plans Lean our rather million The orders. $XX of backlog four announced But most data also over February, released given million established entire put storage to which XXX At being the grow new time recap, QX, the of agreement and this with the significant upgrade million additional [Indiscernible] million, backlog than at million reported agreement new finally, in

similar year As the I last $XX will around last confirm I'm happy million. mentioned we revenue HDD call, in at expect be XXXX to in to

$XX place positive key we profitability us million the back for level. to brings the priorities. $XX a confidence me of the support million in year future. at in in our this Which have to be will generation The backlog giving cash achieving XXXX, in revenue flow Importantly, XXXX already and

out ensuring pleased key Singapore, to of with and I both assessing each I'm First, in Singapore. XX the growth Intevac suppliers, customers organization, met existing I a potential customers, our the strengthening opportunities. and potential and my understanding and A more days, end first through existing our of positioning future prospective visit my our our customers in met great in prospective. entails as relationships as start that say employees, USA customer-driven each business which with and with markets, that key promised, importantly, to all

our the opportunities significant core core Next, prospects. equipment made of and outside to quarter I've on vastly have approach of in revenue worked model new the a internally XXXX, support align our cost more at business HDD growth a market. on streamlining first with tangent business, HDD with focus structure growth resources we media and our any our progress of pursuing In

development that mentioned also As the can forward. each new the the company leverage I a investing propel program strengths earlier, of by we're in to management supported focused leadership person team

management, company maintain And total of Photonics still support emphasis the working the in able were of our third, the customer-focused support million. limit investments to balance redeployed supply were to We and positioning structure. We A layer revenue the with the strong ended prospects, in cost a We of capital our management control in our R&D to simplified future soon we structure executive of our made to effectively transaction-related capabilities and we targeted a QX will profitability We in eliminated for of to preserving profitability control total cash on chain, and achievement of sale core million the into strength growth with an now adding while quarter, in With cash as of have our profitability. foundation as growth. sheets. by an our entire return investments initiatives, business, selectively managing a a of while great team. solely a enabling for most the cash growth which us significantly for prudent related about We as investments. forward possible and support to $X $XXX balance operating our business. costs additional HDD the decline growth Media significant move and

Our specific today are very media applications. on core HDD focused business sole of outside activities our

market capability clear the could pursuit to While compelling differentiated coatings. provide in become these that optically we at assented unique to what believe of ballistic large opportunities. into a believe our solution prize disrupt offers We right the cost-effective, on and revenue

addresses machine productivity also leverages Trio is is importantly concept, Trio, approach and very Lean the a new at customers. which new small XXX on based these needs on high cost-effective substrate recent producing that in The specific perspective films market Our our feedback a brand tool platform. expertise our from advanced a

vision, the I move we progress and look approach are I approached each began is forward as Intevac, on for several companies We clear company with believe quarter. updates have growth and have Intevac's stopped and the to a longer transmission. applications validate and for order it's to since opportunity providing forward with CEO, optical strategy. with enabling fit coating in this superior ballistic enhanced the you to our to due customer-focused we partnerships strategic pursuing This from protection properties technologies existing adhesion, the multiple improved our of thin-film resistant and that service initiatives revamped technology when to combination Trio with and strength, durability no hardness, provides compared scratch We that

volatility around rife for the drive for of we core provide of headlines the growth increased demand, much see to few speculation and which trends more. market. pockets turning of softening are the the and business of more These HDD our of mass however, comments in debate the industry, signs call particular are impact HDD Intevac's a what Jim, trajectory media bound Before I'll highlighting. The in the around near-term are over challenges, are capacity data-centers, HDD media markets. that result in worth supply dynamics to a few There chain drive

growth for are First, to overall, foreseeable future. to returned in a a media HDD XXXX remain decline, growth expected units and industry industry while is in HDD the being

This the by drives. data-center which bit days, stripped expected shipped HDD small of narrow Second, has being max in many fact, of those And ten of to next to not in XX% fraction not is be on narrowed and cannot served estimated The is cost at hard X:X in annually, upward in being still of driven over near-line for for which drives, the exabytes capacity demand is expectations as advantage Solar discs years coming a prosper five as contain growth years. by terms age. fully SSDs the media on meaningfully unit eight market. growth [Indiscernible] storage

This platform. manufacturers capacity capacity drive current add out. the XXX industry working media maxed the and solely is are to on leading the with effectively Intevac Third, Lean

order we a for track backlog return for with program, and provide challenges, making for supply established, the and certainly So while visibility and near-term business media hard volatility market revenues, drive the plus combination secure profitability we're foundation firmly restructuring to for chain future our of mid-XXXX. headlines. on have shipments, competence is and in growth core The today are fluctuations, the volume our by

Lastly, to turn prepared forward with I customers, organization that, stockholders, management team, build board, will I And new now a our suppliers, remarks. with the our the continue our completes the we look and over Intevac. working Jim. call to entire our my as That

Jim Moniz

Thank you, Nigel.

which million, The adjustments, in just below severance, million been well quarter. certain Net of charge grant which our by Consolidated operating consisted solar of million. expenses guidance restructuring in Cover the discontinued generations to net and and SG&A have was was division. non-GAAP results. $X.X share. reserve inventory, impact our XX% would QX first in $X million efforts. our XX.X%, the revenues for were expenses as reserves, of to Turning longer and first was HDD margin these upgrades, lab dispose operations of gross $X.XX our loss and stock largely to service. the $X.X totaled the due $X engineering and have QX would million. R&D Panel attributed million inventory as offset no $X.X guidance. $X.XX XX% our of above will was or excludes Display Without Photonics of been QX Above where reserves equipment, guidance margin per older from million quarter our guidance pitchers these net focus million inventory gross of we or mainly below and of $XXX,XXX to included $X.X per $X.X $X loss The quarter share spares, charges of

million expenditures decrease were at ended the during net of $XXX,XXX $X.X quarter to $XX $XX.X $XXX was million year-end $XX orders, capital operations million QX quarter-end. on the $XX costs was cash from share the current and amortization equivalent for to based shares was The cash transaction additional XXXX $XXX,XXX the million at backlog and the restricted quarter. per systems cash related Photonics the as quarter. Our investments, close, backlog flow in were booked to sale of announced cash in the the quarter-end, quarter. We quarter. and builds million, business by including used for limited million with of of new depreciation reflecting $X.XX the which Post-quarter orders we an

Now moving to QX, XXXX guidance.

million consolidated be projecting spares, we million. revenues in reported higher range in and the are than to to of a We HDD QX. fuel service level of $X.X Reflecting upgrades, $X revenue

For XXXX.Given the expect are HDD XX% and first mix of the a increase gross half revenues million. of of about second quarter in XXXX, favorable in be what $X upgrades, business we around million to operating represents around to be this half versus the QX QX we first reported $X.X higher expenses margins to XX%. expected the

$XXX,XXX expense expense expect income the will tax We interest in non-cash. quarter. GAAP tax of be and around the of $XX,XXX Most of around

$X.XX to We based per the outstanding. a net million of on share $X.XX in XX shares are projecting loss range

as revenues This year, XXX Nigel year around therefore of $XX to includes similar full and be mix last continue we upgrades. hard mentioned, Lean to one a will slightly expect lower million. drive the at system For

we Given high gross XXs. year, second year the be this expected expect level half. deliveries XX% At over the in mix, margins and anticipate revenue of recognized XXXX the will for the timing the in be we will during revenue of

expect cash-based last operating ongoing compared year. will expenses decrease We to

million. Devin, to expect part balance for we we and least equivalents, investments a at XXXX of Finally, are That cash of end $XXX questions. with fiscal presentation. of our formal the completes total ready cash,

Operator

you. Thank

poll please, question-and-answer will for Instructions] a now while [Operator conducting We One be questions. session. we moment,

Benchmark proceed please your the with line of Miller Our with first Mark the question. Company, from comes question

Mark MIller

Congratulations and your orders. on cash your also management

So that's good news.

issues, Just terms wondering for been supply of chain has of that much a how in headwind you?

NIgel Hunton

Just orders in. the demand if coming knows, was placed is, out. chain is and the I for And XXXX, placed supply for orders we -- everyone as extended we up for look significant extended that inventory,

within the level to got we manage So of constraints from can a we've pretty million level XXXX, we've numbers confidence a $XX that for confidence and supply-chain committed around. achievable, at high are the

So are on mentioned we on I the trying the XXXX to number But around and And release XXXX, we around a in, chain to additional the XX the come moment, I but being pretty supply challenging I call, are chain think we potential doing think the have, XX, supply around I on think if that. we're is deliveries confident as supply actually level team upside good of very the the that, chain challenge I guess opens big up push confident around well. job based it think conservative you're revenue for the drive dates at if as and high volumes --

Mark MIller

In which margins. a hits number we quarters? inventory done this been of last up? future inventory Has with in the reserves -- took impacted you on cleaned Are quarter, terms the

Jim Moniz

-- know, inventory and Yes, the we're look this. concerned, We we're big done with done the then Yeah, are. of stock Mark, with hits. room in believe as as lot a a we far took any of fixed we hit as We in hit you are at QX. took thorough major and finished a that did in QX, some more we goods last

Mark MIller

share. then ship expected And one is to Lean XXX the

You third mentioned Is to the in this. quarter? going be that

Jim Moniz

that will No, originally quarter the in as scheduled. fourth be

Mark MIller

Thank you.

Jim Moniz

Thank you, Mark.

Operator

you. Thank

next Intro-act. Our Please your of question. line proceed comes with question Wright from the with Peter

Peter Wright

is question is XX there's in first my embedded mean my upgrades question. Great. million for out XX system? taking XX Congratulations Nigel days. Does that understanding first backing in I'm your refurb amazing But, XXX million. XX that It backlog. of Thank on your million if you the about

Jim Moniz

good number Peter. of, Yes. a That's

Peter Wright

from year, this sell that is what would or million on come the in precision come from? the my the today. today Would to the question of the half backlog XX, opportunity same if you're from And it it business and what customers in backlog but second of probably into My ish I are incremental come look active not customers? the right if so is around that, XXXX, XXX would -- just I new add it

NIgel Hunton

that it, feel XX that year. we customers. number range HDD think that existing two in XX we to the up, around are have next, sore confident And realistically, about a pretty the I given three to talked think have around connection could years, I if being we revenue the going mean, supply opened shoot trend so makes is I to I to chain in some out. components the but was constraints supply be be for extending So the upside, think realistic, we've gone business

time. lead two-year So

that revenue we in year. to you make sure we actually we're will put a have the know that number confident have in So that

Peter Wright

orders, the they've were of for XX get customers you of side demand period you that kind are you from reflects deliveries? at other to a the bid on or visibility best full of the think starting those If time look kind of those do to and

NIgel Hunton

we've well, one upgrade I orders million $X less as got mentioned that the think the Mark than which already other as million, to thing order. so they taken was of of we've $XX the

for So coming that additional there be through well. as will orders

that we year there that. say with So But $XXX through. any for this these sort roughly will and beyond coming through be confidence significant I orders we see book the just the coming under systems, some don't more older new expect upgrades million of today, that because is Lean in

Peter Wright

question very margin the last gross assumption. is And just

well. in If behind of the most you kind doable is of ramp quarter XX number you cost look and an to point as kind any number mix is as thoughts the share this XX and where offset there, at at with a heavy the of to cuts OpEx then is margin be sales the the on system lifting as X would the

Jim Moniz

next margins quarter, given but depending expect to the certainly mix to XX year below XXs. in XXs, would on XX any the I question, first low in The be

second you that. for gave a room look in we're in included And I on year question, that be some year that, think good observation. there half backlog? could million number to OpEx, $X I again? be just is a first -- million, million giving Keep in your at of ask think still is we think clarification like rate $XX Your for not observation guidance then going to upgrades could beyond mind our the run I this is $XX or Because around about

Peter Wright

got Correct. system in there. I Is that -- there's and another it.

systems? XXX So versus $XX that breakdown non does million, upgrades of how Lean -

Jim Moniz

-- low an going know those be number's talked that the to are refurbishments upgrade. we don't I think about, I because that actually systems

if at in closer to QX, $XX look of and field you $XX the so million And that's at there's the spares. probably upgrades, backlog million end service, around

Peter Wright

How far out does that go?

Jim Moniz

result was That goes talk year. about in out turns in backlog -- still million I booking $XX we but we of or maybe that QX XXXX, covers as -- will -- backlog And the QX of business it have around there's about Nigel million there's to said, that somewhere million. and did covers that, of we're $XX the in part most like $X said, non-systems million the the $X

NIgel Hunton

comment right call the four that $XX probably it's on felt this years for was well, achievable. million worth was made I last next that a reiterating we the as that where year, number but And the the absolutely XXX year, over XX

and number touched that that is prospective that given other about the we gives I've a As remarks, of a demand that still look we're that visited the the customers, now, in confident and visibility I and prepared businesses, good the customers level says said me us feedback that's we've number. on confidence existing to

Peter Wright

XXXX? and just that million, clarify, includes $XXX to

NIgel Hunton

the about very the strategy customers. much but we're in much I last an we that's technologies, our of say more The of and I on been HDD focus, call four touchstone, would over said realistic years. important being wasn't the 'X, part really And is confident, growth our visited to much about getting 'XX, $XXX delivered existing just customers, focusing about four And understanding it customer really years, customer to and years closer a and million business be the requirements. the that's remember on said future not new there's three but the the that is it's 'XX, XXXX,

Peter Wright

review? strategic is Great, very that last did now at over you point this the with question. Is What that about the ongoing? restructurings that or

NIgel Hunton

about the talking about talking that? with we're So Presumably strategic you're review Greenhill.

Peter Wright

Yes.

NIgel Hunton

I've sure I to that we opportunities and much very strategic the Intevac But the is -- Photonics for value? much continues, how spoke regular focus why step was always key scratch So to around the do the opportunities. turn said And opportunities so Solar and the How still for that That's our leveraging on future XXX opportunity And increase coating. and very absolutely. the already make process. broken actually what accessing we this engagement focusing shareholder the new we one we we're real And we will customers resistance It's strengths. potential on And ballistic R&D stockholder can believe right and on putting our in me focus we technologies and first the are days. the talk the believe into?

it's The We from tool to the But to dialogue to take Intevac updated running. our each in the opportunity those everyone that and Greenhill. and doesn't engage comes the calls, is and And of how build stronger worked independently keep up we've an -- very is a going and first how go, an get the from develop of and now with and feedback to that maintaining have key and there, developments us to on opportunity future. sort own stop maintain customers. subsequent me focus hard for that grow me XX the

Peter Wright

and XXX answering in for especially you what days. done again, on Thank Great. doing last this my you've questions, congratulations, market, the

Jim Moniz

Thank Peter. you,

Operator

There you. to questions back his time. over at no like remarks. for floor Thank the turn I'd are closing to Nigel this further

Nigel Hunton

you. Thank

eager XXX investor investors and on as the days and Summit San investment, event, CEO July -- XXrd, our new a possible months, in the I creating I'm including is interested Francisco believe Intevac face-to-face many meet we've coming a tremendous at We -- conference with are compared As June ago, on Intevac. to the and the the with I a of look made XXth. the in today ideas over we was progress upcoming the where that what as feel to highlight virtual sound what's

reach So within And talk me our please, also website new we'll meet can out next week. IR follow to then Claire and updating deck please the a directly be to if her, and anyone with up you. face-to-face, wants investor to with slide to we

you So the and to download back today's that, I for support Intevac, also check conclude your invite And thanks and that. with say that, joining call, with I'll call. appreciate again I'll for

you. So thank

Operator

concludes today's teleconference. This

You at have may disconnect this time. lines your Thank day. and you wonderful for your a participation,

Intevac (IVAC) 9 May 222022 Q1 Earnings call transcript