Earnings call transcript Q4 2022

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Operator

Please standby, we’re about to begin. Good afternoon, ladies and gentlemen. Welcome to the SkyWater Technology Fourth Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode and please be advised that this call is being recorded. After the speakers' prepared remarks, there will be a question-and-answer session. Instructions] [Operator

time, Investor over go Relations. this McAdams, Ms. ahead. turn of Head Ms. I'll at to things Claire And McAdams, please

Claire McAdams

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

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

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

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

financial QX to Investor You earnings well our these our can of find available in measures both presentation earnings in our GAAP of reconciliation website. financial measures non-GAAP as as which Relations on a release are

over Tom. turn call I'll the to that, With

Thomas Sonderman

afternoon to everyone Thank the you, on good Claire call. and

second half EBITDA. QX records were EBITDA to our gross for strong This revenue metrics with our revenue strong a report improvement significant revenues, margin helped XXXX QX. drive $XX.X record XXXX positive QX previous the in helped of in pleased and growing level, set included a million, overall higher $XXX record EBITDA the revenues drive for fiscal quarterly XXXX in year. and target for gross record XX% long-term performance than exceeded and record new along We upside with generation XX% are above the in our expectations full profit growth million achieved to our to financial year. The finish the which

a to fourth and revenues program timing event or revenue the in. program recognition the Unique occurs $X.X is quarter when pulled which the was and was a are the onetime for million. total of noncash revenues that This by ATS fixed increased particular duration expected

certain reduced witnessed and programs we revenues with of elongated each fixed, example, could revenue program recognize For the quarter. were effect XXXX when delayed in total or this opposite the amount we

in see expected to resulting million of partly and revenue we gains activities increase event, therefore, are increased In recognized successful this our a the revenues expect to and of for new by government in be still of completion Unlike $X.X that levels for recognition required grow. our earlier higher program stronger the ability the quarter upside the to than our quarters pleased ATS the costs. originally the forthcoming fab. quarter this but level from and without revenue today and continue we the program the the bit quarter fourth which forecast multiyear a any $XX revenues associated number to than all baseline report productivity the driven gains to XXXX, scheduled were remaining to the in Absent million came fourth as impact, we productivity the from

The approximately gross well associated had event expansion gross benefited no points. ahead in by of margin QX continued Our which strong margin plans. margin revenue revenue incremental the flow-through performance new also quarterly gross margin demonstrated on growth. in set costs our recognition gross We QX XXX basis records

margins between $XX gross expect we at XX% we SkyWater, level. quarterly XX% million-plus for as and the year growth to anticipate continuing another range enter we revenues As

SkyWater and one on Yet expected margin year and that in relatively a detail challenging established, from ATS quarterly revenues. growth revenue mix resulting be the programs, factors, As gross notably our most our performance tool Steve our aspect in derived unique macro is of a will later, customers programs. funded Wafer to and will XXXX number will this depend environment of on and ATS secure derived growth Services

of achieve XX% we revenue that result, long-term our a growth expect in to annually. As XXXX approaches objective

for I longer-term further Today, ahead will and into high-level how financial that in are XXXX, performance the SkyWater's improvements and XXXX. then accelerate made focus look in on remarks, business we comprise the objectives drivers progress the my we to next XXXX prepared look and at driving year

comments keep our In I areas my advantages that such for will elaborated each brief details relatively call. RHXX. and important on the we XXXX RadHard platform, competitive several on today's earnings our our Note us, calls, and growth supporting strategic as of

components believe major Minnesota all CHIPS funding, are also to only positioned but we other in our the we fab also projects benefit have growth Florida. the not We uniquely ways of Purdue for for and Act detailed from

our our with relevant consistent and National calls enter we and Technology, collaborations remain All of DECA, Trusted CAES, We partnerships previous story and Institute and have QuickLogic, our Standards more. Semi, Nano, NanoDx, Adeia as discussed strategic with highly the these discussions XXXX. Weebit Google, on

developments. progress we years objectives execution and improved continued These the the strong XXXX, was financial highlights important as key our believe built a summarize and towards of we'd the come. an in growth are we and operating importantly, leverage fiscal for takeaways and results to foundation year our of like to significantly Reflecting business from financial from on long-term year the business it

demand, commitment R&D included growth revenue Wafer on velocity net reflected customer to significantly our our for responded nearly The both the as terms growth growth the pricing in tool our XX% stage for reflected this ATS in for anticipated major First, increased well RadHard programs. productivity accelerating government's also significant a XXXX the This improved on with believe growth strategic the business of we funding. team the the to chips in in set U.S. year. objectives during the to mission-critical of confidence business, of and of beneficiary ATS achieved executed Services programs U.S. our our continued growth This aggressively strong increased revenue We improvements government has sales. us investments. also positions types on the multiple year-over-year be these subsequent success SkyWater from The fabs. in ATS

in on commitments excess executed deliver we XXXX, our in XX%. strong of profit gross Next, flow-through to

a positive our just our execution ended, increased of each these result, debt. refinancing deliver our customer the of combination backdrop a sheet of investor We raises takeaways and from targets we equity year are now generating increasing the of business With balance EBITDA objectives. strengthened We demand. our and through that progress new towards as improved consistent in against a continued and financial to demonstrated confidence ability trust we have key

important our for quite that of a to to intend which play we this and all few metrics to expectations believe look we we favorably are for indicative SkyWater out expect communicate year. XXXX, we As objectives our performance, of

in we production come expect we further which take market. additional continued gains, Services ongoing capabilities improvements pricing our First, as a transitioning will see in customers and to ATS productivity growth this the advantage of as year unique later to Wafer we of result in anticipate

strategic ATS to investment, for government DoD several programs Provided programs be of other and year. funding our macro development on reasons. year and industry are throughout this believe U.S. growth semiconductor will milestones we from In and RadHard areas weakness established is relatively the continue our decoupled secured. these We the in execute

during well-funded, R&D programs, our remain customers' our even growth. and investments In this robust in industry commercial pause

important is arrest. while industry downturn, recognize demand So the innovation may overall the experiencing it for semiconductor to a that be of

Taas with applications addressing [ph] continues attract to Our long-tail model business TAM large opportunities. innovators

be to XXXX with deliver approaching of to annual once we long-term again XX%. us provides able our in revenue this that All goal expect confidence growth

modernization. expect and We also continued new capabilities, tools a of This improve of achieve result going more a gains productivity online includes capabilities installation yields variety bringing as forward. software manufacturing efficiency of our that we that will and the to are and automation

remain the Purdue continued funding to balance strengthening Our at with XXXX to our confident unique and objectives transforming industry existing capabilities expand CHIPS partnership. growth carrying further also while include of the sheet. the EBITDA further our sites We positive

preparing this month round March. in is first for team early their due or Our later submissions of funding aggressively

we momentum year we grow the of continues programs grow ATS commercial will pipeline expand believe well with to as and revenue XXXX, another continue build us us strong to which positions we profile. for We in our believe aggressively will our margin along position Furthermore, and in XXXX efficiency beyond. for year gross gains expected next our

When commercial fab new coupled mix, While to fixed XXs improved contributions our a acceleration investments revenues and programs more high this by Florida programs, to we ramping gross level the increased year uniquely of will in subsequent continued be of RadHard absorption growth production year. towards due XXXX. SkyWater margin cost will our consistently we anticipate that XXs as believe our from in we see when we are Services low favorable growth exit from XXXX strategic positioning business and multiple be XXXX government expect we in our with driven Wafer

believe line that technologies. growth create will time, We while foundry that around advanced both anticipate fabrication year year established that our And together. will RHXX wafer the will front-end the country's SkyWater seem manufactured a really right be pure-play By profile. we margin is it the most may top significant leading-edge for an differentiated important products corner, highly we now, our solutions tailwind firmly on packaging of which from platform and our a time gross XXXX long at model be from driver is the semiconductor comes providing expect

All multiple but associated with approaching depreciation target startup margin be of of These also company's related diversified Florida of depreciation. this unabsorbed a also be whether the our that the will we completion volume We long-term RHXX business expect a most margins customers year This of path their we more that XXXX. absorbed Services of only us. the also believe are production. not of our profitable that include to behind acquisition-related to and end have today's gross cost as move expect profile improved operation revenue have with we costs the Wafer and by to clear means XX% the ATS

we And aggressively decade, chips-enabled our our strategic company semiconductor billion we half and to drive this $X of long-term towards foundry in XXXX finally, be revenue SkyWater growth as accelerated within expects second beyond objective the ignite to our initiatives to decade. as capabilities the other look

the SkyWater consistent our strong positions currently business summary, facing semiconductor model the macro of pipeline weakness the of industry. customer uniqueness of In and demand for years despite several we believe growth

revenue XXXX, semis. for year multiple specifically, we derisked are and the which our funds growth otherwise objectives substantially believe For soft this ramping programs committed DoD are during

strategic highly R&D funnel to programs by these and ATS expect our of this that further us to our commercial growth build customers are investments multiple Each expected considered for XXXX. We are with become funded in well partners. meaningful revenue drivers year and

margin improvement fruition. We also expect we financial gross years, several earlier. to described to expected model to target driving I in have year be multiple our as first coming profile for But the see tailwinds long-term XXXX can our

close strong expect to record by our of execute in towards confidence have to and our our With ability build our as ability want XXXX, the we long-term to objectives. well. I consistent to conveying successfully execute we to confidence continue profitability your in growth in execution

turn quarter outlook. as financial and performance information Steve? the Steve for SkyWater's now call our I'll the fourth further on details in on to over more well as operational

Steve Manko

QX and which Services for was consistent fourth with XXXX Thank million fourth the event million revenues up $XX.X of $XX.X Total a that revenue XX% were last ATS at Tom noncash and QX Tom. from year. of earlier. quarters revenue $X.X was you, million than which Wafer quarter $XX.X Included represented growth year-over-year. in the XX% the higher prior nonrecurring revenues of X quarter million was described XX%

earlier Given were cost was recognized revenue revenue than program the for project no remaining revenues the and expected, we that in fixed QX all associated. deferred of concluded the program there total and originally

a which on execute of programs, The with stronger As to a profit which leading modestly of productivity us were approximately what time result, baseline stronger we ATS to this still Phase baseline as gross million us we higher program, allowed exited ATS XXXX from gains XXXX $XX grow. revenue of than and primarily such to X be last performance which quarterly can the revenues in to was revenue expecting level RHXX with attributed large exit a quarter. new

equity-based which a revenue XX.X% gains favorable these On incremental revenue sales, approximately QX significantly $X.X us million and productivity And Importantly, benefited gross event resulted program basis gross as more that episodic of profit flow-through the generate or significant to million XXX of margin margin was Florida compensation revenues. profit. gross adjusts non-GAAP and recognition for enabled GAAP start-up to impact tool customer profit mix more in points. increased which XXX% of was mentioned gross XX.X%. to Tom profitable costs, basis earlier, and $XX.X in by

our ATS new enter roughly and XXXX now higher level the execution that margin revenue expect and margins. baseline We we improved The million in is baseline for at operations. we revenues as the high-teens $XX the ability continued of gross increase tool result our gross is This in increase attrition with availability. moves manufacturing productivity fab the reduced same wafer along overall our of headcount with as to time includes improvements and automation and levels reaching stabilizing at target

steadier and given ATS enabled more which execution profitably our plan. us cost of of All to move reduction through our fab the wafers faster,

of operating I our adding program Florida accretion that out ATS we we X utilization, and will significant costs to various and my to structure. for Wafer of through moving components of of quarter levels the in details target per or each of calls and comments high increase million X components R&D such our In wafers reflects but the few become through the flow you of detailed to invite order refer fab model driving last as revenues. keep volume margin our the how illustrate of essentially, are years. our as to calls, $X RadHard brief, million all I'll operations absorbed phase next X there in of those earnings either To fab $X grow the leverage cost the cost our Services to

level how long-term is favorable quickly what we our efforts gross our is with While ahead in can the to margin margins expected indicative targets programs we ATS certainly conditions. schedule gross cost XX% of from towards drive ramp business various reduction of and

of increased new quarter, $XX normalized for will similar XX% the in that first at level the XXXX. quarters the this revenues million achieved levels of to to of in in baseline expect forthcoming tool high as expectation time, within to subcontractor range varying XX% between mix contributions year. our to level and look the to we the grow gross to later vary, profit expected margins to XX%, revenue $XX XXXX. we expect in or pass-through continue we we be low As $XX range revenue with This will including from gross result gross the XX% from quarter-to-quarter we revenue level potentially continuing expect is above the in result half second to At the million level which will margin the the million

expenses. write-off compared now an of the excludes in of customer were basis SG&A and accounts QX. equity-based Florida the Of in the a primarily QX. receivable. QX the while $XX.X $X.X basis, of due Moving R&D favorable On increase increase, operating expenses start-up performance higher XX% $X compensation in to to below million up million came costs, about $XX.X variable were due which to non-GAAP expectations, from were in expenses expenses million and operating million On million to GAAP operating $XX.X a compensation

significant Given $XX.X adjusted This margin, event. the strong adjusted improvements revenue growth in profit record of million. EBITDA includes in the from EBITDA pure record and was quarter million the $X.X revenue recognition gross a

on million We about a was the expect EBITDA was GAAP was in share. $X.XX included non-GAAP positive loss $X.XX the and with share charge for the XXXX. $X.X benefit, refinance loss which the $X in of million tax adjusted quarter per net per no expense continued and Interest net generation debt

sheet end facility plan the X-year working use with as secured revolver, refinancing completed $XXX to new company that sheet. our to much cash available We do the contains million. expect expands to our of of increase maintain on in allows turn that 'XX borrowing at quarter and The to the amount capital credit sending feature capacity. a balance to company's to we credit the not the million the the a senior our I'll balance after down the revolving new facility $XXX accordion quarter equivalents revolver. of $XX size first ended Now, million as we cash cash pay as an of the facility We similar

as $XX.X plans and million. for we with equity universal unamortized help issuance of additional funding expected our $X EBITDA reflection at-the-market continue and which increased well our variable $XX costs. equity million debt for proceeds these $XXX us excluding funding a that alternatives the revolver strengthened growth positive to September completed entities, over Total we in million believe with November includes our into net as August, growth. liquidity included financial of larger financing as debt turned and alternatives outstanding for our $XX.X million credit an and of on million interest place for past our filed the have and We a This larger $XX.X new flexibility in registration program Since statement million will up shelf proceeds to from we profile. as fund year increased success have we our is the facility provide put

update various you additional following components our of SkyWater the color your is some for models, P&L year As ahead. for the

$XX to acquisition million per of million, SG&A excluding was $X.X development $X.X million research million to purchase program anticipate the Total associated was in Quarterly stock-based million, be accounting. $X.X the compensation. are depreciation excluding to for and $XX.X RadHard anticipated $XX.X million compensation. $X $X.X approximately million are stock-based to the XXXX expenses to range, expenses approximately stock-based related compensation approximately from range which with $XX million expected quarter. to Quarterly We million was and

expect XXXX. for similar profile depreciation a We

expect quarter we these cost in in investments $XX $X.X were per million to average revenue million of will $X.X XXXX. and Total in approximately million XXXX Florida

tax assets to neutral our in XXXX. no from benefit expect tax We

on back welcome your to turn and questions With the call Claire SkyWater. that, I'll

Claire McAdams

Steve. you, Thank

include held Technology Please X. feel to of March investor meeting. the for free section reach the upcoming Investor And presentations. always, as our visit activities directly Our me to Conference Susquehanna virtually or a please upcoming call website Relations arrange to being on other out

for the Operator, please open line questions.

Operator

& at take this first We'll from Sankar our Cowen Company. question Instructions] Krish [Operator afternoon

Krish Sankar

Tom and Steve, have congrats X on results. really good I questions.

First roughly think versus How And expect you do growth XX% volume Wafer one, revenue. and to Service year about or the how pricing? you so about think ATS? in this on

Thomas Sonderman

Yes.

Wafer I what as QX. look would to similar we a So at ATS, fairly and exited Services having mix

ATS to to we but Wafer continue grow grow pace will businesses both those expect Services at faster of XXXX. these obviously will than We throughout both a but grow

Krish Sankar

Got a your it. the with to Very Or historical helpful. is which automotive you Infineon, one existing And then you mentioned customers in believe, Is as expanding projects? largest with them? relationship to some more exposed industrial the for this And are exposure, side? pricing you're also because follow-up, this of past, salable I terms. your their had the

Thomas Sonderman

Yes. Good question.

better So in given space strategic in in product industrial more part commitment a much put an is the is but the pricing to very the their Infineon concentration yes, only fab of overall our Minnesota. aligned that obviously, trajectory think to also and also with relationship I not stronger automotive from integral them here SkyWater.

We very a aligned we very the with sector. work of of the do, are because needs much it's of the to type not lot exposed consumer much Infineon. And of

decrease relationship some say, volume manufacturing and the that percentage, so those eventually, expect active move do over Infineon. said, concentration and But And we that ATS will programs on I that be should dependence And are that time, XX all will, we into underway. also foundational. have to

Krish Sankar

really it. see Thank a you. Got the execution. Tom. And nice Thanks lot, to good

Operator

at now & Raji go to Gill next Company. We Needham

Raji Gill

really the margin solid the all echo across I metrics. results good And on congratulations and improvement Yes. That's see. to gross

on the question a margins, I Steve, if can. Just,

QX. XX% the in So gross margin

program it's out from to margin. recognition back the impact XX% point basis that you related ATS, about revenue that XXX If gross

XX% XX% to guiding in a XXXX. of kind on quarterly You're basis to

XX% that just $XX tend basis? kind be would an So million on on the you run that of maybe kind might walk have again I gross apple-to-apple to when rate can expect margins a you mid-teens me margin kind a basis, go-forward through QX of of know, higher as you in

Steve Manko

good question. Yes,

reasons. put want we there that out couple I think for range that of to a

like sure may invest that be of off, make about, talked we First want to we to the opportunity I when revenue ahead coming. have

and So we in we're up Getting integration that doing Florida. advanced running with talk what a and started. packaging lot and heterogeneous about fab

that I into ahead Minnesota start not want that project -- come investing we're held into Florida make can of for XX% a here when margin business well. sure So go XXXX a just growing could revenue being in we as to to our expectation or to really going even need

Additionally, saw tool what XXXX. for we some Probably what but like through XXXX. we more in likely in than customer in XXXX not have expect revenue to we potential coming saw

the that So through flow again, our typical that doesn't but can comes through like ATS we see revenues flow-through from have as be good revenue other that well.

math right. your is think I that, with So

it So the of right from question expecting not point there. and you're at starting why growing XX% we're a is valid and

core but comes we flexibility the I margin well. carry think that some the our that's also for obtainable as XXXX do ahead pass-through as want revenue in we'll investing as well through as that the additional revenue same doesn't

Raji Gill

the I Yes. appreciate transparency.

the on of potential. question the revenue Just tool

the margin than about XX% but gross some it more revenue to XXXX than less talked XX% sort you XXXX. -- contemplates range tool of So

That's do will believe just we a what think a put sense So $XX XXXX was When million huge million. revenue. I of the it, tool a $X.X revenue we'll tool range. on was XXXX be. of to bracket get

-- you timing? we're So model that terms of the in can

Steve Manko

Yes.

earnings that a from want is. we that question but revenue also the our like I release, tool we transparent tools along be just the comes think go cost about of great that the not tables with revenue in because that's to only what in show

in quarter. we still coming tool very first So had minimal revenue in, the

in as have pass-through well the range some revenue coming what transparency and costs on the quarter, of likely as better be tools will I through. is think second talk we'll about what very revenue we'll from

give earnings And next what very XXXX say fair call. very large range that I color additional our can of announced will be the think we saw to a it's we quarter it XXXX. but range in and to between likely that in somewhere

Raji Gill

Appreciate that. Great.

drivers the Tom, commercial outlined of programs growth thinking commercial in of the mostly the about XXXX some programs more this types you can XXXX very you So of and you're the the talk about some kind we're When of that then going in looking be at. the the and side? How -- terms are end the customer hitting customer increasing Any What to commercial you your base diversifying about of that your that base? are in commercial much would XXXX model strategic new clearly government markets the of outlook, year, on side? programs. on potential be

Thomas Sonderman

Yes. excited Good new to how about a and we've doing ultimately question itself talk and been it the again manifests development products. lot of in

talked ones the last of One we was lot about a year biomedical.

later We for of year have expect strength that are that next through Photonics year. our an programs us. go production pipeline area we Obviously, into multiple into to is and moving this

multiple have both a data We and center industrial towards applications. that targeted space. as in space. other engagements as the are well These Applications in automotive

with be IoT again, we've of applications we'll course, our we space. into traditional exposure different arena configured. to a CMOS will are our of ASIC-based area the going foundation But received they the There's that being the it, XX-nanometer and call the part, commercial Cypress. just most verticals for with lot limited talked is that Of given XXX-nanometer technology from about, a another on

Raji Gill

for Great. And question it. Got me. last just

the excluding Are Infineon? of that about a question still kind Krish raise kind the we of nodes contracts, type imbalanced? respect pricing volume maybe pricing process versus your next to of the Any can you ability over being talk the on In to mentioned, in for of those in favorable terms over capacity this commercial demand terms pricing and of year. position maybe thoughts year and course of the with

Thomas Sonderman

are things with SkyWater The our our being of sourced. I that single here we one technologies be that at customers. technologies SkyWater the cocreated unique customers will Again, think about Yes. is creating with are

technical capabilities. our that's to attractive And to get the thing ATS of definition, more pay going our much ability they we're more go going on pricing our by we've demonstrated execute, as to pricing programs to access Part customers as have for getting are market. is we're to to other better capabilities, our willing unique so

we the negotiation. these single that strength as products going the of obviously position take so fact that haven't as And engagement the be market our ramp not to we the enter in we been they as products before. source that only new an have And volume, we advantage technologies to provider. on we think in we're are But

control definition, is by the them to lot The profile to ultimately market able pricing over proactive have that terms nice products lot manufacturer thing the about takes again, the a that as get get have the we So and And as pricing. company, get matured to been grown you how influence we've being and market. we a arrangements. how more a those to create in of we of

Raji Gill

congratulations, again. and you Thank

Operator

Thank Winkler go now to you. We next Natalia at Jefferies.

Natalia Winkler

Congratulations results. on the strong

that believe. your was you guys where helping One of but how longer-term kind appreciate program? program help that with And growth million, I of guys Can around over it's out support the things multiple you is figure had that just I your and kind years I are [ph]? $XX of running probably 'XX, expansion wanted to confirm was CapEx in I think us this you back

Steve Manko

That's further a talked Minnesota. about move into Yes. like investment we previously. offering GaN of technology in combination continuing building process as SkyWater, just That was capacity and our a out well supporting our as

through we back as lot in of moving that XXXX. go So that we're to CapEx committed saw against coming cash balance investment year our statement the on this that investment the sheet side the the flow along we way. you from made mentioned, do and you investments A

will in XXXX. into continue be through fact, going multiyear So and still even will over a that XXXX and phase the of course

Natalia Winkler

guess, of your helpful. Tom this of I really idea about of this very $X And reaching of question mentioned billion also CapEx kind Understood. by has the being And light, Steve, other That's right? XXXX. is kind goal model

what's So capacity up right really expansion, your if the to I'm model and XXXX revenues guys kind of would for to beyond you any, curious way the really about think to that? like ramp in need kind to think to us of see

Steve Manko

Yes.

term. place from near you portion we about we'll customers. talk to first our our in we're a currently it with I'll the have as that plan because the well that Really, as in getting what focus we're CapEx alluded So XXXX, which that model investments our doing with on of

I think capacity various that some states about. will the to the of And end what to there additional we've of the to decade, continue the years, take alluded haven't we well talk where a allow the by to us by Clearly, partnering very likely those that can would go to control, needed larger from with end growing our talking grow that over we investments, complete on Tom really term levels with invested through. XXXX those current on that's of investment decade. about what to been the to of to be the received coming to we've levels couple return in. we think our on But But levels we grow to lends on what XXXX grow near we model next communicate. focusing focusing would already

Thomas Sonderman

And just is enable investment customers to come partner required essentially but add, still the to the means we our to with that into our CapEx-light capital model facilities.

model way that continued is growth frankly, the will longer-term that the exploitation, part we've So achieve of created. through we of decade second half

technical our and combination We customers' our together customer products will to that bring investments get manufacturing market. be to leveraging to and our capabilities

Natalia Winkler

Steve, I And clarify from helpful. very prepared That's the to one thing wanted remarks. just little

for provided right? of lines? think the that forward? million of is I the number in kind think think catch I of are Is the the that the us you to costs, also And have a like going to Did the the million moment I split a around sort $X still between ramp $X per and start-up Florida there at way about up related mentioned which quarter model RadHard. you right, in different to that past, you

Steve Manko

million would to I The ranges start-up about wasn't the be to. of costs. did related million million know absorbed but million. don't off the talked flowing my next that within of the to one the $X.X some expectation $X.X the exactly in $X of to or not I you're which through quarterly are relation $X expenses it fall for either an quarterly will But are about our that prepare operating that Yes. I referring couple of comments, on various costs we there components in be years. know

that cover be at a can that So to listen something or time. different we replay may the

Natalia Winkler

much again. very Understood. Thank you congrats, and

Operator

We next Piper now to go at Stanley. Harsh Kumar

Harsh Kumar

and guide. well. congratulations Excellent as My quarter

to million the upside take wanted that's majority where come -- the more any it business was Or would existing stepping was might it I the customers or of Even X was color have if helpful. Tom, provide up? out I $X.X be got, it, X I just coloring from. So of can you customer? onetime you revenues, more understand Or nonrecurring kind that as an guess,

Thomas Sonderman

up RadHard Yes. a stepped was program think X into clearly just the company. high was Phase needed the the and hit it able trigger award We to Overall, level execute I the very a that and was that to milestones big team announced the revenue the program, at driver. to back were

our we year. I've then overall I running And think we're a half certainly also so that complicated manufacturing doing very said in execution a of team volume and the just last development the that fab. was while of And that and the in for a before model, institutionalizing component that second the Infineon big driver lot behaviors job a the XX running scale like And really we've stepped up and done able to be has grow a integrating programs. created. and want great to company model of

And of excited type about before. ever model dividends. from very I seeing no as it. we're R&D we're side high-level this potential that done we're seeing manufacturing one's to think And scale efficiencies, about continue we are a lot productivity, this a the grow all and facility the volume automation think investments the and those really I the the of in pay beginning we have capabilities, And talked to

Harsh Kumar

for Fair also guidance then start went cited Steve, you very a the million similar on enough. question kind it in will you $XX a by just the being record think, Or giving even And in that starting and base program? that you and the base XXs going the the I RadHard And stepping XXs of forward. in helped low Is kind the high having as customers that business. and as in on. productivity confidence up year of is more that finish the goes

conversations and of this in and is time? then backlog driven also, you're at was I in So that by point that curious sort just is being Or -- having?

Thomas Sonderman

and as again, I role to year into to No, prepare I an actually mean, important in XXXX. think, 'XX, we RadHard play start will making this continue products

as just and talked gotten that programs XXXX is And increase both a other QX, before the programs other grow. to of in the of think confidence talking The will discussed, a baseline I think we've back where grow now have tends we as the really phases, this just and various that lot give continued gates. ramp through year. we those various plus larger us components, programs go of The were we throughout to productivity we continue I become improvements just spending exited

advantage we but have customers I'll maturing call industry discussed right are we that of the that how is how as lot business is next a it, semi we we to business, of products just the bring of of, And the upturn. for their predict really customers into then and excited with work there's do earlier take how them now. lot revenue correction thing to market the in I about not other a and The a only getting

in at can and is confidence advantage that so unique XXXX in the a And taking to show way allows level capabilities that And gives us XX% our I is it grow of combination really to close are continue unique to model what our a we think us or it. way. in that what

Harsh Kumar

much. so you Thank guys. Congratulations again. great, That's

Operator

Richard Hallum. now Shannon of take from our We'll Craig next question

Richard Shannon

echo on the I'll here. my some congratulations end year numbers nice of

the To of type expectations here. the the year with your programs. growth it's here And commercial understand Let's language think to about for about see on programs? that here. this But government funded customers and U.S. programs what talking used some fair I Tom do degree on confidence us won't please. way? a pulled that, together more give to and here the little what Just funded you any be of grow and expecting are actually help have confidence this that if you're us in put they kind ones nicely

Thomas Sonderman

Yes.

So but the strongly to I the additional very have, much and we have Obviously, feel financial in side things that as we our the our are side. are they a on the a our the color. with also technology put make as are of we do deliver maturity only I'll customers the in company And of who technologies start to high but of engage investors learned engagements not I how and life because Steve investments that R&D companies the into products that over to those technologies we think making advantage model confidence the in and my can deliver enablement of take very we company the sure prepared to only as any those on level is our market. one not commitment give involved remarks want to we get able of the

we lot the So business. when a a bring customer do into more vetting we

do obviously earlier We a have have of days. we couple our in where as should scars well didn't as we that

the year in choosing next And these before. some so we of like maybe feel I a place we've year as partners ones fruition think that had we and some that we're bring of the technologies that really than and enter this are go better into to

Steve, to add? anything

Steve Manko

That's good. Thanks, Tom.

Richard Shannon

and contract or any degree seems that implicitly revenue fab the in -- you're see used think last upside of you to language recognition about is this potentially questions being finished of does prepared at that's maybe more of X here call expecting your that year? margins, operations I productivity. Excellent. to the in and more not XX%, excluding improvement expecting what throughout where the XX% here just some one and stating and context maybe productivity. stabilization big gross calls comments To that in and other happen stabilization you're versus like next question My In could XX% you're you the expecting about not

Thomas Sonderman

clearly, the year. continue we're Yes. productivity improvement throughout going drive to I mean, to

think, I expect tool revenue year. earlier, we what also this mix into is anything, to if the said come some Steve it's that

We tied ATS, for program play come so aren't the to where R&D margins level same have ATS. the some subcontractors that into traditional RadHard are the our will as that

U.S. a So, here and in environment the in I what's -- the we'll terms call in very it level frankly, do a -- economy think macro we're at overall to cautionary going of

why this I be scale we and so we're that somewhat had about be think that the profile their different And is factors there continue will business our that going the to margin ability different year. hit to line than optimistic revenue are grow recognizing all some cautiously and but to what

your anything add? Does Steve, to answer that Richard? question,

Richard Shannon

If hear he didn't My was I sorry, I question... to did, Yes, respond. anything. last waiting for Steve

Thomas Sonderman

He just head. his nodded

Steve Manko

Yes.

Richard Shannon

I'll Last out all nodded, of question, jump here. right. line just He

if they Just for the or you please, but the you year, the to wonder and Steve? any will us can fourth it info XX% on XX-K customers give I quarter see for can give us the

Steve Manko

of repeat Sorry. Can the was you question, what what? XX%

Thomas Sonderman

customers. XX%

Richard Shannon

the What were either quarter or year? the XX% customers for for the

Steve Manko

we Yes. the their the and quarter. customers wait like we'll for for We'll consistently. be XX-K list just in will those Those believe out do I fourth

Operator

Again, Goodbye. thank wish our to today. much evening. Results And you thank all Financial and joining gentlemen, call. session conclude you for you question-and-answer the we SkyWater us a We'd so that so Quarter Fourth ladies and great for like all Technology will joining and much

SkyWater Technology (SKYT) 13 Feb 232022 Q4 Earnings call transcript