- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. I would like to welcome everyone to the SkyWater Technology Third Quarter 2022 Financial Results Conference Call. Today's conference is being recorded. [Operator Instructions] Thank you. the to turn Relations McAdams, will SkyWater. for I conference Claire over Investor And Ms. begin your may you McAdams, conference.

Claire McAdams

after me today operator. you to President Chief fiscal With Financial SkyWater's you, and third the Thank available at Good and being call like quarter XXXX shortly afternoon, that Chief Executive Officer. on website conference Steve Thomas presentation I'd slide webcast SkyWater live call. our are is On from posted website, the and Officer; today's welcome on Sonderman, Relations call webcast Manko, also ir.skywatertechnology.com. call. our for remind to will IR be call Investor SkyWater's The to have accompany replay investor concludes. we an

and to forward-looking are results During forward-looking statements and business risks to These the cause any financial are differ made call, statements. our subject statements that about uncertainties could our actual materially. results future

For including forward-looking on we such a filings XXXX obligation risks made Securities our no these our All and on the and XX-K of today, uncertainties, as any earnings are assume to to refer fiscal filed our statements. March and please discussion update X-K today of XX. Exchange statements release Commission, with and Form filed

will financial discuss During this call, we measures. non-GAAP

of that, And of Tom. to are You release website. measures both the on QX available to as our Relations can our on turn Investor with well find measures which reconciliation financial call these presentation, earnings earnings a our non-GAAP GAAP financial I'll as over in

Thomas Sonderman

over QX year. QX XX% which XX% last everyone over Thank revenue to call. record Today, million, you, the of we reflects on of pleased to from report growth and afternoon growth good are quarterly sequential approximately Claire, and $XX

our our XXXX. continued to primary we sales are multiple profitability with the gross business driver million sales margin QX now are With achieved the flow and and in QX. sequentially gaining demonstrates were Wafer we've and that growth ATS we revenue exceeding QX significant with Our performance key momentum XX% year-over-year, quarterly delivering on Services reflecting year-over-year. the similar QX incremental a in was revenues margins up XX% in level, $XX customers since XX% to through up of

with As growth, revenue ATS is XX%. revenue well incremental the all of our year, gross driver flow-through communicating we've being our margin been to above

we fact, the prepared forecast In his will as remarks. in exceeded our significantly gross for margin detail quarter, Steve

despite in year. We target been long-term from revenue With services quarter have wafer weakening quarterly this improved revenue the that our sequential terms our outlook customer will strong grow, achieve each been we communicating delivering exceed revenue environment. year which in on macro our current or the baseline performance of XX% for growth pricing improvements we quarterly QX QX, and our with raised have we expect this to also and legacy

last objectives our $X.X increased healthy results, X% We progress in but we in in production. well RHXX expected the of of and in successfully on focused uptick This Phase in we award more to efficiency improvement are Last qualification and the imminent, our this made not the million business the gross against very our been performance delivering consistent visibility are output With to pleased we've million, and the award of generate sequential revenue. at program. our our driver more our August brings and made call, the and the microelectronics. Phase strengths predictability to sales strategic applications. financial investment our for competitive of strongest QX, Build primary as on stated this with anticipated the the Throughout me equal in execution that environment margin. available extreme leading Challenge important of indicated and in increasing volume announced EBITDA, two with was Back XXXX, our corner the adjusted Purdue to technology better promises Since our successes towards X in we collaborations very level RHXX phase, objectives. the reporting and fab of Rad-Hard improving towards fronts I more, achievements this on several consistent call, the revenue was turn which On we award our execute Act highlight the positive award extreme additional year, was X additional of was award. stated in achieving make as the A its and supply. with the our that are the did it multiple we foundation country's only Florida sequential a QX partnerships gaining throughout been pleased revenue pipeline, Institute Technology, significant announcement as ongoing Rad-Hard announcements that as Google, in projects, up above this X funding Phase Phase the areas, award progress for National Valued Phase of a Trusted number important our has in $XXX the QX. as demonstrates award funds the for nearly funding XXXX, significant our million announcements X Better important for make environment for well the and Regional leading of a further in growth Phase the program, and growth X launched on we've semiconductor SkyWater quarter, CHIPS strengthening up strategic continue and the upon commitment to build platform DoD momentum as on of Semi continue fab NanoDx, level These expansion the starting the Like player last aspects will revenues the earnings and and other award to discussion progress Standards quarterly $XX been we quarter, option to which September. growth establishing future important significantly productization included and platform critical several years SkyWater a funded next have with QX a X and modest announced

the of RHXX our early and program partners. program and on for to from ecosystem. several phase Engineering, and included of components or rigorous public-private semiconductor coupled development, $XX announced providers This next engagement the Last manufacturing how both for Congresswoman with During accelerate we access systems, establish our of success last the Semi mission-critical in engines, ASICs memory the Trusted strengthening and to capability, solutions. Heidi compilers IP the and discussed DoD SRAM DoD our applications. month, for last produce are productization and Undersecretary ensuring RHXX for initial our leveraging to partnerships to for proposition month, and will driving for the X ecosystem. evolution multi-project the quarter the it example importance partners which the Bloomington. IP environment McCollum technologies we platform mission-critical more host of the expertise partner and program in were that and MPW headquarters with the partners the programs. to strategic FPGA phase, security devices shuttle highlighting DoD our that key with IP critical This PDK, IP demands Trusted design is multiple Defense further Case designing effort IP firmly qualification award embedded of efficient We Both a at partnerships RHXX and with further wafer, The the is our of announced with is we are an meets commercial with growing we of we value a that PDK Also focused Shyu, work to states RHXX and Phase enable RHXX make develop associated needed RHXX processors, the how of prime other and includes interface the Ms. Case. Betty reliability development their platform, on discussion manufacturing for libraries Solutions a domestic development company's Semiconductor testing pleased our and design collaborators providing ecosystem radiation expect and rigorous approach extreme our DoD's million differentiated ecosystem and for our Research libraries base funding both of

multiple the discuss Purdue's officials semiconductor Purdue's model, In the served also Purdue partnership Act Brian to a My variety a is federal last and both to provide of the with reported Vice and state all start have campus. Purdue a D.C. on us stringent partnership Career the our to and and Day Lafayette. discuss our host play commercially of into Government commercial domestic low virtual solutions. manufacturing multiple developments role Annual levels enable for and these is and XXX we innovation, affairs build and attended based the extensive me crucial for included long-term solutions a intend Indiana. defense Purdue in public-private our and plans our our expansion applications. September, in business of SkyWater's keynote executive in of secure track ICs to quarter, deepening national CHIPS Washington, universities we that I we government strengthen Brian Lenihan and State CHIPS unique University having of industry over to future, government. and I'll imaging that like ROICs, creating brings on announcements further Sky planned of strategies our to within Brian earth roundtable programs service foster recent including an public which related the fast how readout on as live and Last All the to and complement with workforce into an charged with students historic importance visit Indiana to update model and These component is demonstrate infrared our government to of which orbit XXX-millimeter semiconductor partnerships with with a Indiana SkyWater's quarter, for funding. Purdue pipeline unique security. appointment growing I realm. of State Last to private furthering the as Relations. future of our will brings new Act, government, President U.S. in strategic the semiconductor in towards technology RHXX, satellite month, partnerships allowing with supply our chains to the within to customers manufacturing, relationships synergistic leverage position less roles policy we suppliers, public in unique the discussing West engineering experience, returned As detailed the create include fab

led our and be Senator that well and efforts American player announced long to positioned since held resurgence Purdue CHIPS States, Klobuchar but not nation's we cornerstone fab call. are our brings a visit we all Act integration positioned that we growth to and the Klobuchar boost semiconductor build of press point in in Bloomington technology of prime of the continue our headquarters, believe recipient leverage Amy momentum strategy of another the for resurgence strategy in future country key and uniquely competitiveness funding With the manufacturing proof our enable to to self-sufficiency Minnesota operations was in me last to to serving four our conference as economic This our Bloomington highlighting as earnings to August, heterogeneous the critical a Which United only a developments yet are of Florida we our continued Florida. providers Indiana, a importance and also semiconductor at has CHIPS Minnesota. Senator in in and funding. exciting pillars

Osceola Rubio the the the semiconductor capacity and manufacturing million at and First, of accomplishment a Kissimmee United with IP Marco from in integration discuss Department September, partnership and Then to facility at States. to Florida Commerce an secure protection Florida expand was Florida in the August, required incredible partners in and $XX grant the hosted heterogeneous we announced BRIDG. of in SkyWater facility of our importance we funding Senator our vast fab. our our County team expand provides in This and for majority capabilities to

expand to only award Back example ability EDA's to was semiconductor our public-private Regional Challenge, semiconductor Build Better this another company of the the recipient domestic leverage of production. As partnerships unique

position in Purdue, continued visit the strong believe Kissimmee Based related Klobuchar's to recipient the awards. Challenge semiconductor and an Commerce directly not momentum of Build another essential success we our yet Senator rebirth are the our the our to Act, that we're Better the uniquely demonstrated government relationship building is with and to only between the in Bloomington, illustration Rubio's we of positioned prominent While visit building of Defense, excellent receive Departments in be CHIPS being profile Senator to semiconductor in on Back industry and in country. additional player

there work a As Adeia. are in road our reminder, Florida, elements Deca with technology map three underway IBAS, of our and

capability X establishing and now of This BRIDG completion stages we emerging X expected a critical completed Phase interposer to of program, Phase platform interposer program security in technology strengthen development technologies. support into IBAS, proven fabrication with for the government-funded national Phase For early has the moved XXXX. X to development

offer We demonstration to support we packaging equipment with are which continuing level Deca's a initial vehicles. adaptive preparations technology, our of Working suppliers working capability technology. external to wafer for Deca of process engine, Deca, completed our service fabrication and M-Series our is fan-out with the have installation patterning enabling key also the

Florida. within for next be of the expect few part we Build our the capability of support in Back equipment first placing orders to to As pieces Better months award, our key M-Series

wafer Adeia transfer We efforts bonding hybrid continue our technologies. DBI for ZiBond and technology with

on are bonding we to technology extremely ETS and domestically systems be and sourced Demand bonding beyond. first in QX compact engagement. customer micro with addition, our continues customer enable and expect solutions to alpha powerful additional engagements hybrid heterogeneously integrated high, In hybrid an for more working we

high-performance This ready nano for revolutionary towards brain we Now strategic response. NanoDx, to a and I'll to critical turn yield and commercially In on-site announced connectivity. growth first diagnosis step partner, biosensor our the a traumatic August, biohealth commercializing of product new initiatives and injuries. our is a protein

SkyWater, all important driving discussing forward the connectivity development series in to interest. upcoming product of space. for We the Additionally, we we innovative of it strong detail funding A biohealth remains look market which other expanded have are an and in in and biohealth area introduction to and technology believe several more continue engagements customer growth calls. customers, receive platform capabilities new

domestically to in to has technology Our of create it we FD-SOI source applications. Google expected is open SKYXXX source wave new automotive design work high-performance as a generate industrial sourced trigger offering and with platform is interest with commercial will new underway derivative a XXX-millimeter XX existing an The initiative. that open a and to for provide low-power nanometer of the activity collaboration significant differentiated range expect our embedded of

for solutions we design recent the accelerate for open In Google source believe researchers highlighting collaboration of of these platforms. further NIS addition, the the will targeting these announcement adoption types

chips IoT, memory an with entering announce Weebit's important have establishing Finally, for platform to of a phase. solutions. milestone our and I'm SXXX pleased qualification management broad ReRAM fully recent a advanced and been step emerging now the for one differentiating is computing a towards architectures. integrated test range next-generation SkyWater's onshore power This of are performance memory technology

strong program award, of positive corner expect the expect turned can continue portion upon and and growth sustained potentially we a growth which incremental sizable award we current margin for in second growth For XXXX, XX% we while wins the exceed X to levels in significant we additional the have X now meet the revenue that demonstrated including our is in derisks beyond. necessary robust months half Furthermore, first growth by we of XX% executing growth as a to the our important our continued the above considerable are objective. substantially progress the quarter. long-term we gross This XXXX, RHXX build nine improvements XXXX for on pipeline in in design Phase in QX awards, and year. recent of improvement achieve revenue XXXX target profitability have Therefore, or EBITDA, supported growth Phase and driving revenue our this

to country's examples SkyWater's and turn above-industry uniquely quarter, comes call prominence On expect in from foundation how Steve? of multiple in operational forecasts third two-third our for revisions the information our and more to I'll over and weakness overall around for quarter. Steve I industry to SkyWater and communicated financial decoupled downturns we macro relatively the budgets. trends. demand demonstrate performance believe buffered are R&D detailed from that ecosystem, to business we provide industry apparent, our now specific in Last have on from of semiconductor I remains the future revenue concerns SkyWater's is While growth the years which semiconductor today's come. these downward call,

Steve Manko

Thank slightly up and majority third year. Advanced million, last revenue XX% our and The of $XX.X business drove ATS, $XX.X or of XX% of was is providing you, Services with from down targets both and legacy several QX for Services, third XXXX. last year. quarter up revenue QX growth services from Wafer XXXX $XX.X base and higher a of revenue QX designs revenue up The the QX quarter which and XX% Services started ATS the the Wafer Tom. Total Services QX up grow, from year. XX% was Technology X support of XX% revenue was levels from the million, growth for wafer products was new and which of million, from to from we from continue our to and in higher customers. level Wafer last increased up

ATS continue programs, in ATS leading our to the also We quarter. current to increased expand revenues

Like incremental On limited our these through operator to inflationary revenues. adding recording was XX.X% or awards. to gross profitable of of and we significantly began QX higher initial of efficiency, reflects Importantly, of fab availability, improved in given of was of during fab exceeded the automation estimated improvements phases additions to margin employee more in reversal commencement our second non-GAAP in X achieve makes stage a wafers should manufacturing Rad-Hard progressing operations, us significant cost and on $XXX,XXX. performance our quarter, fab profile Minnesota towards and XX% our quarter, in a points. year, our benefit to all our We that reversal are the to headwinds, which indicated margin basis, and compensation half and plan. benefit to through than ramp the steadier efficiency utilization headcount our which increasing to the full XX.X%. gross completing were includes expected to for resulted fab for XX.X%, Rad-Hard subtracting performance. onetime expectations predictable. recent resulting our start-up gross to achieved revenue decline of a gross ATS gross benefited for flow QX, also million the QX, insurance this customer episodic of profit. the headcount in ongoing the had cost than in more in and margin equity-based cost increases significantly an hiring which Last sales, in for moving in the refunded and QX, overall forecast last which the in positively in Phase program, of level which which likely This due we look This QX, $XX margin to wafer fab been nonrecurring the as GAAP allowed execution continued of moves stabilize our from total of reduction a higher impacted In programs XXXX gross primarily the million quarter tool adjusts fab efforts the expense earlier XXX better QX which margin which expected a cost an tool through and around margin basis, program, reversal and our which be after would gross you related basis improving by to basis impact points. we margins profit non-GAAP of in more of $X.X XXX costs, QX increased the even we On a at

plant organization nitrogen quarter shut in as services decrease reduction areas spend headcount We cost as able as certain achievement in nitrogen our in the the expenses the for second outside of upgrades. was operational also the well fully plan reduce target the in our started a were as during see being of given our on of our quarter of after quarter XXXX to upgraded to our we third benefit down

on level sales. margin gross mix, to increased mid-$XX benefited given out above level flow favorable cost I model breakeven million incremental from how through, structure revenues revenue revenue broke expected, As XX% such components. the of To through illustrate was and high the more flow last our of to XX%. quarter, The above a ATS gross resulting major our margin operating well into also that three reflects leverage

legacy but services wafer which First, of business, utilization, generating cost, our absorbing fab of most our we the have represents majority a little fixed margin.

and ATS on through programs, increasing profitable are wafers hand, the quite dollars. that an more amount fab, the Our more of other as profit ATS gross contributes move business we

While pipeline as gross the ATS relatively fab resulting more to are revenue growing overall we margin which low output, significant ATS volumes is generate our programs. they far wafer per ramp accretion R&D compared in wafer, of

amount making structure company. costs of The third cost of the the growth are fixed unabsorbed we the component of our long-term to relates that for investments significant the reflect

we and out As expected are future our build integration Minnesota in significant capabilities heterogeneous drive revenue which growth. Rad-Hard to of in capabilities Florida, both

Rad-Hard revenue Depreciation incurred cost million total of to Our Florida related million QX. was program unabsorbed approximately QX of revenues cost of of the $X.X SkyWater million in in and included $X.X $X.X costs.

a phase Additionally, acquisition of accounting million out reminder, related depreciation will early about $X XXXX. in per as beginning quarter our

the few years, absorbed can will we grow out gross how as at Wafer performance full, R&D quickly and ATS our to quarter become QX consider through the targets, the as in our to of a is we we next expect gross these $X significant you either to we per margin the of fab cost costs accretion volume components adding $X So wafers Service as toward be and see structure, million phase of margins margin moving million similarly keeping as ramp level three fab increase that programs these QX. long-term strong you or

split operating $XX.X SG&A. QX QX. which to in a Florida The On operating of a between consistent evenly costs, excludes million basis, over On operating non-GAAP compensation $XX.X from GAAP compared equity-based R&D increase relatively and to were million was now fairly expenses basis, start-up expenses. QX. Moving million were expenses and $XX.X

we operating last improvement and significant consistent turned QX, EBITDA gross indicated million. favorable was $X.X in to expenses, adjusted as in and margin at positive forecast relatively quarter the Given

the continued per for expect non-GAAP was ahead share. share per quarter, strong expense net was net loss loss benefit, with tax in EBITDA the and no $X.X We and million the was GAAP QX. Interest $X.XX $X.XX

unamortized with costs. plans Now million at last call, equivalents. and and I'll $XX.X million shelf debt have quarter registration sheet. million, cash variable to additional entities, the the for in into turn cash growth. alternatives Total disposal was million $X.X to put up balance statement for our place revolver our debt outstanding We $XX.X $XXX we funding universal our issuance ended $XX.X Since interest including In our excluding filed as our a we continue we million. for August, on

September, QX. a sold commenced our nimble the to capital enabling shelf quickly year of share with Now and $XXX over one this as through be and filing available under at-the-market per us We up shelf, is million that fund holistic growth strategic program we when as program see we planning part in to to us we to In an funding equity of initiatives. and price average of $X.XX opportunities and the act that $X.X current component structure million at an capitalization strategic arise. the for approach are view of increasing IPO, to flexibility alternatives our various we past this

company. was December private On we a million when the two put in debt place primary were interest years our $XX.X revolver the of apart that XXXX variable ago facility debt in a for nearly entities, side, from is our

and institutions markets, and are balance a as Now actively increased positive public our on company our refinance larger access the effort of a given increased we acquisitions our assets our with tool expand facilities that an our grown the adjusted are with several and engaged lending have equipment EBITDA, revenues additional capital to base. to sheet receivable through credit result accounts return in to we and borrowing

As additional XXXX for you components models, your is remainder of XXXX. the color for various the and update following of P&L our SkyWater early some fiscal

driven be expected will government's what at by program than QX. as fiscal Rad-Hard in to the programs incremental year sweep more of well resulted expect growth revenue the the This impact the primarily we with that growth reported in QX end ATS as momentum, funding revenue in our We contributing continued uptick modest to other albeit sequential in of strong QX. reflects the be

at As first continue quarter year-over-year you will model With show of strong current you XXXX, we growth. profile. a to our should XXXX expect the visibility, seasonality look similar

However, million acquisition $XXX,XXX with and operations, compensation. QX Rad-Hard after will $XX depreciation expected compensation on that annual into be associated sequential million $X.X run rate million which with QX and costs In the currently approximately to stock-based in associated Florida we continue compensation. to program fiscal million revenues recorded $XX million purchase $X.X Quarterly cost XXXX. a the is $XX we range, to at excluding to approximately million development start-up $X $XX.X are Total related to $XX XXXX is for to expect QX of the $XXX,XXX $X anticipated is approximately million, stock-based the expect Quarterly be accounting. XXXX. year-to-date. are basis, SG&A anticipate million, XXXX expenses be and similar in our year of million expenses expected to stock-based We excluding research be $X to approximately million for approximately to

We will per quarter. $X.X investments Florida expect revenue total in approximately average continue to of cost million

XXXX We that, in SkyWater. benefit our to XXXX. the With expect or neutral assets your call from on tax and questions welcome back turn no Claire, to I'll

Claire McAdams

you, Thank Steve.

for Summit York Needham our Operator, visit questions. in XX December January. Conference next presentations. investor please upcoming section the the website the Select upcoming for the other activities open Alpha and City Please New of line Craig-Hallum week, Growth Conference Our on the include Investor Relations

Operator

question Needham first our take will we And Instructions] & [Operator Company. Raji with from Gill

Your line is open.

Raji Gill

And great results great you. on metrics. all That's the momentum to Thank congratulations positive see. across and Yes.

helpful understand. a really So cost question to just the that's breakout Steve, and on structure

offset unabsorbed the my that Rad-Hard So costs really and of by even either whether in for frame facility. and is how that time first kind the revenue that think ultimately fixed revenue or anticipating be you're see to you in those What margin get on is the Florida fixed gross going the absorbed in do from for long-term will costs just of and that the the investments you costs now then some really XXXX? more new you first of curious those Florida absorbed outlined, half current volume of the I'm Minnesota question sometime will for leverage the you it's could facilities model? basically see be fixed

Steve Manko

Yes.

about in go bit and RHXX Sounds about talk I'll Florida it have will the talk how integration. the absorbed for heterogeneous and Tom a I'll good. related the thanks adjust two more program, ways. I'll And the SkyWater as that question. amount operations be to little

So we that we we not look RHXX the being now. depreciation right look at the to the look right program, as at now absorbed way that at incurring related it, that we're

we that production on productization the will there integration. we put manufacturing heterogeneous to RHXX SkyWater when Tom some as we when starting as goes While development in absorbed talk that's about time. that That's can you that believe to that see getting being work place, currently cost talk programs depreciation a in about cost. is the taking We into Florida separate let from - at and XXXX manufacturing start be manufacturing to in and absorbed. and XXXX I'll costs RHXX. it see expect point those we When

Thomas Sonderman

much around Yes still team bonding. execute Raj, the are All of an go three to The continues to team and them production. in fan-out into is preparing really creating on hybrid interposers, fronts, very also ATS those multiple enabling mode. Florida technology well

towards that to our of driver As which their of production customers will sometime of one some we next XX of a That, we over absorption. course, biohealth XX will to believe be the happen months. talked move continues ramp,

as more because cost there'll to going some engine, the the just fab that of you'll is of other be The ATS more exercise on, course, which, begins more absorbed of see be revenue. activity generates

of frame. more help we will continuing As how use we activities production, in we the into running, talk, currency fixed is as business to absorb costs again, of in and prepare primarily define our always XXXX the which, go us to operation, volume activities increased Florida some time the the see to we're

Raji Gill

getting on the the details the relationship my follow-up. And I CHIPS we the facility. grants for to about in Wondering CapEx to CHIPS for You're Act? appreciate how should Act. Florida that. Thanks expand think

I think mentioned grant. $XX million the you

And the You're from obviously, build-out Indiana. getting Minnesota with there. then a help believe, to expand you funding, have longer-term fab I

facilities, at the help are government. coming to is So volume revenue which U.S. going expand government from and you for you CapEx these by to the helped have generate ultimately being the funding which

how think curious, about we Thank Act CapEx of of internal kind kind projects? your you. just relative should to the CHIPS So

Thomas Sonderman

Yes.

the on that tied Regional is Build Back Act. the not to at CHIPS first So Better Challenge, Florida all

That That's million flight. awarded. been in investment. So that government $XX has of is

investment. also that of $X with complement million own We our

that's model. a cost So share

initiated. We expect XX that to materialize when over get projects when the XX upon, again, depending to arrive, next tools months

Minnesota The until Department mid be sometime due. be the that and funding CHIPS the awards because some we is don't at aggressively far next As to an initial that look be awarded. would is most would the But year. metals facility, that it February of saying all is start to after has as one has of when adding be Commerce go would to facility, defined We will capacity. the any existing expect

can grant, the being to then to you then execution. being independent out Florida, And begin is Back all Minnesota proposals approved Purdue move into gated at going when of look further even taking that's submitted, immediate and Better with So CHIPS. and be CHIPS Build the on of advantage are but

Commons As I've is there's The been of to launched elements by billion. building $X Department Commons. There's CHIPS. program which tied Defense. billion also of said, four There's the $XX has fabs, to the

innovation is advanced And involved This Semiconductor is innovation. fab Technology the then actively billion are and there's is which around for centers This $X We tied concept, lab integration. - center billion to $XX create to National to heterogeneous packaging the concept. fab with R&D that. and

So for both investment I which believe starting well. as fiscal SkyWater in immediate we're And could in positioned that XX% is credit, equipment well which benefit is the for all then the procured of the for year, be last next began so October, an tax those.

Raji Gill

you. Thank

Operator

And will our take Sankar Cowen. we Krish with question from next

is line open. Your

Unidentified Analyst

behalf Hi, of is calling thanks Steven question. for taking Krish. the on This

on execution the in First also strong and off, results the the congratulations strong quarter.

I to program. The or Steve related about first either the ask wanted Tom question is RHXX to

understand here. program the embarking this DoD guys $XXX a on million again, I X are Phase few with trouble you details So which getting now that

over have two million that profile X, Phase the there the production certain as Phase we P&L? that from Or way Phase a to back think you X it completed the think next going Or eight decently to is another making for funding mentioned just quarter about X desk now? progresses quarters? there through revenues, spread ramp the First is its next has or over spending? still portion, of been for that should Phase I for related that being X the years, funding also $XXX to still until And two

Thomas Sonderman

Yes.

and program start, total the the color. I'll Steve development original was can million add award Yes, $XXX phase. for So additional

consumed award. the is for to We our another million a is option, $XX programs been This $XX This announced. we has around development. $XX option open is we've with source announced tied IP million. what that partners. two initiative million for except Google million. the $XX first that That's One then grant of call All for for and

So Solutions Semi And of Case a the of was other is this this second that Rad-Hard Google the In partners. RHXX million, platform. the around for one $XX the partner, far case design all creating Trusted for as the platform. it's Google, And derivative then phase. and are as the ecosystem is

first So was development. phase

work and series award, say would and more wouldn't the phase way now. again, and in the provide were let program been but for flows. Second execute much detail, a that Steve to once productization We then model received first options, It's is the it qualification. I'll multiple linearize like something lot going next there's a was a development able very that, There's ebbs you to the years I be of years. to just doing already quickly we've amount because of was progress the it over have because award two base

to to that exit productization work 'XX the and to anything continued RHXX that through add yield funding? producing entitlements towards be you really getting extensive into so then platform. from Steve, of of going the to can which product dollars. Services actually So process going Wafer movement a go start begin qualification terms frozen is to on to lumpiness would And on the 'XX, derived ATS away about this in when we and we dollars begin

Steve Manko

Yes.

some that purchases purchases. easy. doesn't million of We'll We can divide did I $XX we just over go program. just Just to evenly There's come of be of world it the also and will that be tool going real that quarters. like some through, the think didn't to in X work component a tool subcontractors using the next eight Phase

what of million next, call, in and production as way certain to portion we're that which quarter, years the two with are at in engaged parties that, moving in for revenue cost where vendors getting could mentioned, subcontractors So it times and there over faster, tool going increase using up our into that quarter. of we'll I be we'll the the two course and like phases, other XXXX. But of different And a that is all quarters a could well. be funding be $XX

Unidentified Analyst

related for much that so you question OpEx. Thank Great. to second is My color.

the So guidance quarter. Steve, for so the current for think I much

staffing have you Or ATS levels, I into of sized, head current revenue year? you of for that count is all Wafer outlook kind the appropriately wondering, more that currently, going your the next say needed would be of would opportunities growth given guess, Services? given Just you're in and terms current

Steve Manko

in close facility. operator those targeted facility, operators. headcount But challenges last ongoing opportunity also we've also an in we manufacturing those our is our We've we of from about some significant with were challenges. talked the of the Like we standpoint positive still had, We our going for but overcoming there quarter, able achieve Yes. results that to in mentioned, to the in for about talked some XXXX. believe forward that technicians challenges growth maintenance

do So expect techs continue to still and I we course within open over of for the that maintenance XXXX. requisitions have organization,

be and are to hire strong revenue-generating ATS Given organization. Again, typically looking our pipeline, our into additional recruiting we engineers. those will engineers

not hire have more business and of be It only and have. typically our quickly investment. on return So those over they will keep to move XXXX our can our current how engineers for a we a but talent competition business the with and so faster course programs we to growing really growing just nice that be

Thomas Sonderman

at Yes. get has important the getting to pre-IPO. stay And say And levels that people, trained, we getting previously. because because I time than our they're below that's just as hire shorter attrition ability how we're and also faster and cycle to at them our stabilized, what we we're investing a we move people do process making SkyWater is would really now wanting that call employee allowing much pace we've more training, been through effective effectiveness in to is the to

we're really feeling where at good with we're overall, headcount So situation. about the

Unidentified Analyst

Tom. Thanks Steve. Thanks Congrats Okay. again.

Operator

Kumar We Sandler. with from will take our question next Harsh Piper

is line Your open.

Harsh Kumar

guys. Hi

had increased quick my question. momentum recently. Let me well I add congratulations this a Guys, as on here

the I You Could commercial talk a here? responding sort then going guys activity on the follow-up. activity fab? seeing had talked We're at the in with increasing customers How also along the some about government? increased your what's about numbers. you customers. nongovernment of And to momentum with of And that are they are

Thomas Sonderman

would The Yes, is your government Harsh. just the great voice, question and hear put good APs. way I to is it

And about actually percentage we've large XX engagements. development We them active a nongovernment. talked over are programs. have Again, ATS multiple of

a the positioned what that seeing. the the go see biohealth ups hit next long we've the the talked and that's want is And new things have, We of high-performance that energy the companies downs. space And And space, as about, happens to way, connectivity they're we're I market accelerator. been have exactly industry you into for computing you in around upswing. of always to get lot that contractions, as when There's these also and having one space. these the products

why what beyond revenue in fab. small years to been to rate the our and those I've hard The generate is of the that's to profitability. we can and accelerate tend our ATS spend into parallel. ramping but frame. ATS And is that services two then move ramp other working about, wafer as those and output, programs talked really that And really very a it kind exactly that's and get And they allows we're our multiple overall seamlessly is drives continue time engineers us of on also That's we've hire making faster. at to activities more programs. inside as each programs ATS seeing then And for about start doesn't what significantly so we wafer run focused these programs that we've as I've of - talked business affect relatively been they Steve this and has before, you a level is integrate the out company

Harsh Kumar

great was That a update.

There's I from in a the seeing geopolitical are this U.S. changing. government. affection Act CHIPS foundries tension coming, As follow-up, as of the lot and a attention world result. guess, increased a the money is

of kind on So that of the was with from to this, what's just going XX% here? feel comfortable with for in on, the in as commercial along with growth you're position well? sound are Do you here going that's you relatively like I kind ask XXXX activity, you're you stable you if how all as on a footing

Thomas Sonderman

Yes.

optimistic business inflationary a of of lot There's right an cautiously So running we're environment. the in we're we're as the we're with but cognizant also that fact now, unpredictability.

economy. the with geopolitically outlined just You

at fine-tune become begin chips and manufacturing new going any provide unfolds continue position our all volume of in to pace this put to with as We decade we we're customers of as we've it's our of that it's not our as a ability a this want aren't to I to point, dollars specific And for lot both very to lot couple some expecting of to I volume business where we're execute optimistic executing. company the That's believe we're we and dollars. that note a the committed and partners. we're continue at ATS will chips that But the And with the been historical realized. going so grow next as sit Infineon going us have to the And but most really R&D, important targets say creating our obviously, blended this customer customers nice think about that to well of a we model capability. importantly, to us. years,

there business that you think is execute look positioned uniquely to is attack CHIPS when is to now our model of the more. our think a that. country the plan within long we just derisk I Our to have. advantage of term at because And commitment do But take I

Harsh Kumar

congratulations And Thank well you. again. Very guys.

Operator

from take question Lipacis next Mark we Jefferies. will And our with

Your line open. is

Mark Lipacis

- right CapEx Hi, great. this receive Steve, investment and Could you accounting Thanks for in Does that you against treatment the all you. anticipate event for applying would that maybe credits? the or or for taking my questions. describe tax you grants go then Is you have relief funding assets put on sheet lower Thank treatments level depreciation that is to way for there Act? CHIPS lower. you. is your the different your the think you different balance a at get about and to that it? Or

Steve Manko

would Mark, would good on separate how location would larger though, Minnesota only through what current somewhat question. on the other that with talking in Florida a growth open-ended flow I more like on something anything call, little whatever Indiana. something XX% would the from ships would we the we clarity is I'll doing and to do, partnerships financing it Really tangible or monies planned about that pretty From that bit there, it's have be have what really for we're depends on CHIPS, come or different our whether a now. we goes. That one tax have right credit. say scale how we

time, those would flow and what use that So construct still at it's I would of money like truly the given would would understand look how the accounting point. partners really hard say, and occur, that at we how to this what that we're when specifically contracts flows, would trying of point to timing the say in this

Mark Lipacis

Thank had. I you. all enough. That's Fair

Steve Manko

Mark. Thanks

Operator

at time. gentlemen, for And conference your no are this and participation. further you there concludes we thank and call, questions today's this Ladies

You may now disconnect.

SkyWater Technology (SKYT) 8 Nov 222022 Q3 Earnings call transcript