IVAC - Earnings call transcript Q2 2024

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Operator

Good afternoon, and welcome to Intevac's Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, August 5, 2024. At this time, I would like to turn the call over to Claire McAdams, Investor Relations for Intevac. Please go ahead.

Claire McAdams

Thank you, operator, and good afternoon to everyone on today's call. Thank you for joining us today to discuss Intevac's financial results for the second quarter of 2024, which ended on June 29.

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

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

Nigel Hunton

in on joined Intevac. today's which exit welcome call. I'm new all to after Q&A, his with successful of July role McAulay, just by Controller, greatly Kevin, previous and with Renesas. as in million returns the and our for to into now us afternoon for good you here appreciate roughly its CFO, Cameron today his we the Cameron June to Intevac Corporate very Transphorm, who completed stepping $XXX call Claire, last his CFO role Thanks, to acquisition at a pleased earnings year. first will is

for nearly was to Turning stronger to due our of team QX upgrades the and in solid from than execution quarter revenue increased Total HDD demand significantly $XX million forecast technology entering results. our Singapore. the

quarter, was and $X.X from our by the share revenue upside XXXX, and of million, the second for at for now forecast our receivable This full $X.XX. Given outlook year, revenue of we now strong of will million margin is strong approach for from million increase balance upgrades HDD half. $XX an also HDD accounts $XX end million, have by our reflects resulting in $XX investments QX. The XX%, increased the and the total nearly million in QX quarter, upgrades. up range the in continued our year's collections growth upside which remaining half reported revenue cash guidance at revenue expect reflecting than update. last our million relatively year-to-date net revenues last very mix and With $XX exceeded evident consistent more the low first HAMR half in a favorable strong HDD XX%, also after first for corporate declined surpassed $X gross delivered loss to the exceeded at per

earlier the through customer and increased reflects to pleased of more demand hard demand data growing news company. quarter. Industry continues is report QX, business levels to cloud the forecast HAMR We're in data this by upgrade approach now storage of to the XXXX. center initial leading for now witnessed Demand in Even indications There also aligned build installation expected fundamentals upgrades industry upgrades deployments related for improving demand year. are which continue we is to drive primarily storage achieved customer, that first strongly from Given XXXX a major in growth. to record second for our additional proliferate this year-to-date our significantly also XXXX's cloud successful during has the driven a growing of the and strengthening upgrade includes for next expect HAMR revenue importantly, AI. delivery

for encouraged by HDDs, momentum AI-related our of strength for We the the primary are well increased long-term market. which bodes served

world's expect technology at production, multiyear relationships critical amount XX and to activity launched order product technology. still encouraging, system upgrade the HAMR to the and a are also Lean map achievement is all strength revenue that positively technology upgrade been orders. exceeding system next base HDD the an cycle date The to for a $XXX media demonstrate return visibility the continue new of capacity XXX a enabler the that business additional of of XXX road only and the years. The in our stages years industry, any innovation looking the deliveries provides in for industry very HDD for million, a industry-leading near for fundamentals customer early is of before opportunity advanced future. that in we're for and flagship of HDD to that's the still we've Intevac delivering initiatives a a strengthening the to to supports HDD media our few is new amazing platform solid strong at Lean forefront We ago modest

cover HDD base in a level provides in the of XXXX, first progress Asia. visibility continued in strong a system, was expect business growth which top-tier April expectations brings supports and our significant TRIO year for the glass shipped in solid we on which year an finisher role me and qualifying incremental our meaningful update in critical growth upgrades also for industry for platform, Our XXXX TRIO which to record a to in our near

our team, immense we a partnership schedule, a delivery qualification that customers with also qualification. The will TRIO before a We proceeded installation TRIO towards and glass supplier finisher TRIO, customer are conclude and cover a have our update earnings resolved is period closely our credit the on direct qualifying which the from our into OEMs. Critical while expect last this ship priority. in to on are including have together resides majority we TRIO discussed at of progress leading the of to which teams samples iterations the #X on our in myself, immediately call the members headquarters. from which first end well we of months JDA our to TRIO world is months spent As multiple the through X completed processing directly cover success, smartphone as leading on glass our system first make the finisher, last few our April, system, the Santa Clara Asia and last around passed have the continuing been working who additional process, which proceeding to ground

to the order securing the will and identifying Intralink are consumer our from packaging, highlighted sector of advanced In specialized automotive have on Asia, market addition, opportunities our focus assess we for build accelerate team TRIO in future sectors. take glass a continuing we device to space. Together, whilst expansion introduction engaged traditional in broader we the silicon-based panels in which platform, have many major fast-growing Intralink maintain the in applications. an will share initial for whose the

to for readily with glass coating TRIO, sets players key capabilities the development the We quickly continued level enabling to optimize research platform. with cover modifications XXX and using finishers. capabilities continue working to to Lean, footprint that manufacturing durable is glass commercial in smartphone adapt architecture and engage The the and replace which is coatings finisher key that We're their for customers of ultra market. us paths both customers will while new additional with modular for of make provide cover the multiple our initial anti-reflective a involved robust glass the multiple The TRIO the deepening investment tool TRIO compact existing more deepening success including the bringing a cover characteristic TRIO, the collaboration and in to collaboration of capacity. respective to is more can

we to X of XXXX. process continue initial X to orders expect continues, the or second qualification the X X As half in

orders As revenue and recognition, continue we we on progress as acceptance evaluate timing and customer final update the steps through year. to you the we revenue towards will

and in strongest we the serious a engagements relatively partners well the the With As exceptional world's inventory among our XXXX. the a to lead underway, joining outlook me leading brings the I've some company, of with multiple order since have of of is on customers very excitement times. with reminder, hand which the short systems Intevac to employees seen team summary for and morale deliver

now to level be the orders several have We to to compatible. this sustainable HDD now this increased their of customers million years of We level and any upgrade business our in with be system process HAMR HDD $XX HDD capacity the of is media believe incremental multiple to new will outlook creating return level for business.

revenues securing to orders. it as for stage, to multiple and is focus multiple forecast TRIO is any launch, include expectations continue new difficult orders. on XXXX of this product timing Our also with At the our

priority for exit and the protecting And the that, Finally, to remains expect turn around I'll balance over key we with company, $XX XXXX the a to the to million Cameron. level. sheet continue call

Cameron McAulay

I'm existing as names is CFO. forward the which many cover Transphorm, and well Nigel. quite call one these as both several relationships upon you, Benchmark, to new building pleased look investor I familiar and Intevac's see who today's firms to Thank as to listening of

Turning to quarter results. second the

QX quarter were upside technology composition consisted higher range, our our reflecting demand and higher The additional the per the and rate of as tool during reflected was of of was for income collections quarterly as typical than And strong the during and some Second quarter. QX run as our interest which net Revenue AR exceeds quarter for HDD gross With higher particular of quarter, XX.X%, current rate entering above margin resulting $X.XX, of $XX.X reflecting the upgrades, installation spares $XXX,XXX. over better our million, run the loss the share during quarter. travel significantly during service. expenses to revenue QX. cash forecast well upgrades costs the result, $X were now than mix corporate, to investments. the operating volume revenues upgrade a the QX rate, million we move exceeds totaled $X.X interest able guidance million quarter.

increase from in net million million. quarter during We million nearly flow to and cash for flow with $X.XX by in million, in end. flow equivalent $XX.X of flow P&L. Noncash balance from in receivables cash cash just significant positive stock-based from CapEx quarter, per collection million, shares $X of $X for was cash million $X.X million cash deferred of now restricted about on cash sheet. Turning $X at with QX operations of reflects with reflecting cash ended the QX depreciation quarter including million the positive The amortization strong for $X.X $X of negative operations XX.X and to based the investments, capital offset under included million the of $X.X expenses share million tax. working The compensation, the and $X

further and guidance. provide details I'll Now outlook QX our regarding

range revenues million. third the to we quarter, the million be to in are of For $XX projecting $XX.X

range, in in be absorption reflecting to This to be moderation to expected range are and overall margin organization. the the comprehends our XX% operating of million, gross an range G&A personnel million our $X.X functions quarter the quarter. expenses XX% QX QX. some when expected $X.X to across we continue during costs upgrades multiple to continued factory compared in mix investment also to as expected in third strengthen the reflecting levels expect of We

As comments, cash expect a our my rate on in interest detailed higher balance future. of earlier strong we for income run foreseeable the

QX. of the for guidance is income on in to range $XXX,XXX $XXX,XXX Our interest

GAAP noncash. about $XXX,XXX, expect of be of We will expense most tax which

range of formal part the share the for XX.X We outstanding. This to completes based a we Operator, $X.XX per net ready our shares million presentation. questions. are are $X.XX projecting in of loss on

Operator

question first now will Wright The from PartnerCap from Securities. be question-and-answer Instructions] Peter We conducting a [Operator session. is

Peter Anthony Wright

the more at to the base? is that how you X on shed kind on then is are have of question point and first you forward? My your specifically kind there providing the looking are put actually that sales for congratulations and How you do upgraded number sampling? about relationship timing installed the How up. tool? now of this rollout at lie a base some explain ahead could of Or it HAMR in you. I accelerate? should the the Do customer my if side expect how that. And you opened magnitude would and If it a going How many hands? installed with in on follow-up Intralink. and we think additional And upgrade TRIO that you of many a cadence you of question of an there, is Or quarter. questions cut your the more sample light you be for place, us way taking customers' HAMR how of that Is can stable are actually looking your actually have little you appreciated. a could sampling is have

Nigel Hunton

timing. predictions with going we've said I in it's exact on our the the we've one installed And as shipped difficult HAMR get as on calls, Covering what's over on know, as you more the happen to XXX slide, always But base, prior systems. to think industry, first. always,

Some the moment. of operation aren't in those at

So an this XXX use in and we've the of last start that world done date, year. average upgraded said to We've to can year HAMR. XXX XX taken systems about be in the to

business of of there's about X next share years, with to the But over the talk names, that confidence a to think significant opportunity upgrade split. don't continue run the level last installed years. I don't We know. us similar over seen We customer the we've you as of we'll rest amount So gives it the a upgrade base. as X the

drives keep future cost now up as as consistent terabytes sort that we forecast move think is terabytes critical investments. of that's it's this XX tell, technology I great upgrades, market. talking that as to about customers the sort of actually and the and So of advantage far in HAMR you the shape And can and all of XX from are maintaining HAMR

there. pretty that a hope I which similar at I a there us. next be But sort and for overall, to going of a think So you gives we're multiple of years that be range good the over is is answers across level, flow confident will customers, that X

to the of direct I run Santa is whether customer that customer we TRIO parts a interest, sampling the sampling part a critical strategy. XXX do test Intralink question. through Moving contacts our has TRIO and through that's those mean, on Clara. customers, or if in through Today, with our bed

importantly, us remember, If R&D samples to our we capitalized engineers, teams and in turns that that environment do fast a of enables you tool in more controlled our headquarters reside. where process

so do coatings into So the performance. about that seeing customers parts at samples, we They'll hardness style And typically, Asia the be We glass from us in packaging. or the features more optics. and purchased advanced the putting tweak is case, whether send samples, polymers and may those very running iteration. coatings parts a us, customer, a go which in in there a number any running instrumentation control. be for down, putting natural for when I'm that thing slight say up test do key those to the of be they across actually development to on on in samples. material some the really getting glass And pleased also we where the glass we back they'll back requests parts go from the shipped some often Santa then analysis. to facility. those of either of In science parallel, with our goes down of the under We'll we're in process we're around the those is can see devices, do and that on customers. through back environment. analysis that those to sending us increasing testing ship their through lab been testing samples around Clara, have not that customers of we then mean, unique we're some for look number applications We then of I and parts and consumer just in And

capability invested it's for and it's facility. me, we've and last Clara the why pretty that's core the we in, capitalized year for Santa a that tool exciting, So

Peter Anthony Wright

can And you that samples servicing. polymer it clarification, these customization you more going is customized the much then forth end out? And that's One sending define your How are one. versus if markets? also, and back end these market is how specific to SKUs the different last

Nigel Hunton

curved polymer the sort platforms, Maybe look optical is as for customer name nonglass these it the some is if TRIO give are imagine, lens volume platform give capability high you of just applications. or of seen and sort pieces you not machine But think about, in at we can polymers probably of operation, idea shapes, goes actually towards specific X-dimensional, the application. other in you've where you Clearly, you and used X-dimensional extremely if you can't in areas the

around So of consumer And of other for future for and lot beyond for compounds polymers. technologies. inorganic even opportunities headsets these at me, consumer the of some looking there's the polymers some organic, are devices things the devices, a within and the excitement

me, And it's it's within applications. the the to way of actually, plasma for multiple lightning machine. it's the through polymers inside a put of a we the plasma environment, can that like critical platform us things being And actually ability So actually that we high temperature our control do the the so operating processing, enables controlled versatility tool, to temperature environment. the TRIO manage one the in the means

as run critical as allowing part to well of is So it's polymers a technique us our glass. design

we're the question. platform. and that of Hopefully excited about flexibility the versatility So the pretty answers

Operator

from Miller Benchmark. Mark next [Operator question from Instructions] The is

Mark Miller

just revenues the pull-ins you that I this was sorry, orders late. got I'm or upside little on didn't in expect? quarter, wondering, I was a

Nigel Hunton

sort the quarter. of for is the So pull-ins question

this have. each pull-ins for long know, covering this into and space have cycles was the and quarter HAMR half customers fundamentals mean different the the you've as the year. of been second time, a quarter So specifically from you for on can depending of I and we upgrades other budgets

said as I'd near is to $XX least probably are, number were And say, million. we believe we've on million at and $XX now going those pull-ins. be year So full call, half the the

a those respond it's those get half and we and done to PMR pull-ins were covered but that quickly. testament absolutely it's the the again, overall, to So second strong some in and team could upgrades more which Singapore from a upgrades HAMR, both year,

know, to as very, fast been delivered We I've last that's up role. very have demand. a professional as and in team we've a Singapore you thrown the this stepped in very, meet every time over been years challenge and to performed they've able respond X plus and And the

and are So it and was be real custom to achieve my beat to that these meeting guidance. demand, great

Mark Miller

I what apologize wondering, the just were your I'm again, during orders quarter?

Nigel Hunton

pass the to over exact it of of The orders confirm mixed. was those Kevin So are But the I'll a lot of orders. to orders, number. number that timing just about

I so what Kevin, full know think this for that year, I to year the the now. think are And order the was I for in place. already this number for orders we're see, quarter? going final

Kevin Soulsby

as the It's Mark. The quarter, the million just just million $XX June well. at we is as sit $X end here over for of under backlog

to $XX million solid project So allow to was that Nigel backlog articulating. the us

Mark Miller

That's year. for the

Now is your $XX goal. million sales

Kevin Soulsby

Correct.

Mark Miller

What HAMR-related? upgrades are percent of sales

Nigel Hunton

through but as well. more last but some we've over that X PMR majority the coming don't HAMR been the exact years, recently, number away, We have give seen

be there'll going is on around as PMR HAMR. news as enhancements good some well the So

upgrades. the both upgrades, parallel, around have been but HAMR So technologies majority of level need in run both technology as

Mark Miller

gross quarter? what margins And for about this

Kevin Soulsby

the do quarter. quarter. some in of sort mix but upgrades And margin the gross don't, offerings, the were a of have anything we to mean gross the margins, you and each upgrades comment, through Cameron, good to want a don't know some the add the competitive some lot I again the of mix strong is them So margin of upgrades. linked have I change of the of margins there's quarter. whether of mix again, on

Cameron McAulay

June The margins we did XX% XX% [Technical will quarter. similar, XX.X be to in Difficulty] Mark. the the Yes. against

the variability mentioned. that is Nigel any to really those, of different the upgrades characteristics margins the a of So mix

Mark Miller

Did you know. operations, provide up cash went cash your I from

Cameron McAulay

remarks. Yes. We did in prepared the

over So million from had capital working flow of about we with $XX the We negative $X $X flow of million and from just exited quarter. P&L. Strong million cash. cash positive in cash

Mark Miller

cash net million $X operations. So from

Cameron McAulay

Yes.

Operator

will PartnerCap there There Hunton his are Nigel no this over question further is now from to Pardon Securities. turn back I now call me, the closing questions Peter from at remarks. for just one time. more Wright

Peter Anthony Wright

Wonderful.

you question. I'm on clarification one building just if margin, sorry, So Mark's on gross can,

So any you sell of TRIO gross of margin, inclusive that or it's guidance the reflective systems remain business think HDD is the going that to is stable. would

Nigel Hunton

Yes.

for assuming gross So margin that. said which HDD, the is we've next quarter the

Peter Anthony Wright

the did expecting flat course through sorry, And Yes. to I'm you margins year? say you're remain of the

Nigel Hunton

Yes.

out the guidance next given be were for business for orders on we arrange for TRIO about And we've is and XXX% talked because and not up. coming HDD in going will a this that that, predominantly quarter. focus the to of So getting then margin again, the revenue made quarter we've

So be HDD quarter. next it business XXX% the in will

Operator

next The Capital West is Dan from from Weston Management. question

Dan Weston

Nigel, just quick of clarification, if points of would. you couple a

the period the On the trajectory the first finishing customer? is front, end tool second by their to qualification to glass a there qualified TRIO And customer? get is

Nigel Hunton

[indiscernible]. Correct. I mean

product get we goes with and process final That quickly. through as qualification processes So the the the glass with the highlighted, finisher. process that a goes before it's through That a and to launch. great then into key market products

well. said evaluation through into product Any we technology, one the put customer market, tool as take glass on the finished qualified the they think that then the actual this finisher, the getting and products previous prior it goes launch. to fall qualified that gets through I proving

of second that through qualification. So level we have to go

Dan Weston

to did to that capacity you you tool side, then want the I possibility prepared sure Great. a near the correctly in Yes. additional orders there's your heard in have on finally, expansion say remarks I make And Lean future?

Nigel Hunton

seeing that on in go demand up. AI seeing at I the going industry, think demand the we we're started we're as driving some look of what's to and

business. upgrades I I we're the going around I potential predominantly is there of small will But think years, of the said next to couple maintain that the I part a and systems. over focus number think be of think think I for,

there going think I to customers. to our the to the for capacity up focus readiness incremental, but some a happens. think if be of there's going some But there's be I HAMR key room, think going small to I from be always will be it's majority on the getting is investments potential number that additional,

Dan Weston

quarter. congratulations Yes. No, clarity. I that appreciate on the And excellent

Nigel Hunton

Appreciate your support.

Operator

There time. for are further over to I this Hunton at no questions will turn the Nigel remarks. call closing back his

Nigel Hunton

the follow-up. Clair QX call updating all thank so remind so as our we on for to in call. directly reach point, on investors first counterparts quarter And and for tool towards early can and our work in to TRIO. the Thank strong all industry in upgrade the that you. the all importantly, people, to to close look for work the with thank New November, forward me York moment our X. all at to of of you, all partners Asia Benchmark of field, their you and thank call of all employees, And questions. conference equally activities those dedication hard scope at And of lot another the also also first working deliver our out and thank I closely like on want the And September our you always, qualifying the in please a I a IR support. to arrange ongoing sort And just of to include I'd

Operator

conference. concludes This today's you. Thank

You now. may disconnect

Intevac (IVAC) 5 Aug 242024 Q2 Earnings call transcript