Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen. Welcome to the SkyWater Technology First Quarter 2023 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. [Operator Instructions]

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

Claire McAdams

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

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

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

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

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

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

Thomas Sonderman

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

into over defense forecast representing due quarter, year. to $XX.X our record previous the urgency demand record strong set XX% million. period growing for at X% start revenues our growth We to the are existing from revenue going increased XXXX programs. another a the exceeded set pleased QX expectations last revenues we to in on chiefly in QX exceeded quarterly QX report as same and strong multiple The growth

execute. to ability our demonstrate to continue We

previously awarded contract extensions and of expansions the several quarter, In completed we were awards. existing

increased program result, well As clarity revenue a the we initiatives. the defense overall multiple as have accelerated XX% quarter of as execution also and with our on This objective XXXX, scope notwithstanding, increased approach we strong demand confidence in our with an that greater XXXX provides can us macro annual entered growth for environment. long-term and concerns semiconductor in softening demand year the

margin margin quarterly as performance growth gross deliver especially flow-through QX to we of our Our in improvements demonstrated incremental gross also strong continue well-ahead on schedule. revenue

revenue factors, positioning XXXX quarterly gross a tool will on As customers And number and recognize in ecosystem. to revenues. in of semiconductor the SkyWater's our ATS unique on Steve our detail margin performance programs, will derived depend important and of later, most it's notably mix

to includes conditions of year-over-year in growing Our XX%. due company period environment a macro allow top-line through our is component. diversified and A&D challenging margin portfolio, which growth approaching by performance, to revenue again, This deliver increases EBITDA driven gross should strong this our us

us allowed improved a highlights This operational growth the a years ago. strong over revenue demonstrate communicated XXXX to financial was Reflecting little last on two call, progress IPO and from our the year earnings objectives of operational achieving since important towards quarter's leverage execution. and

quarter last last component in initiatives strategic investments. rad-hard year government's to strong other and increased record government on strategic revenue A growth stage The the revenue for and XXXX's of helped revenue vital commitment drive year SkyWater a QX. achieved set the achieved with was increased another this growth US momentum

development desire delivery milestones. first on the scope increased of to the of quarter, these sense defense an key of key obtained During programs several and we increases indicating urgency accelerate

major DoD uniquely beneficiary new execute. of we partnership be a Furthermore, to because believe with ability us commitments, our Our successful funding. specifically customers CHIPS our the made to these of positions

ability growth with our level of greater clarity in outlook SkyWater’s entered and year targeted our with we as financial however, confidence an increased remains achieve story to consistent our the objectives.

industry many the In year. by have the and partners case, offset headwinds programs We have space. been of SkyWater's and softness witnessed scale many all incremental the segments of have our growing these the scope this in we with commercial semiconductor in key A&D in

improvements We to we improved as on customers in continue come production unique take advantage year, of we and wafer to our which ATS later capabilities services continued will in expect this modest this transitioning market. additional focus growth in productivity, anticipate year from ongoing the pricing

weakness We continue semiconductor macro be decoupled will to believe relatively from ATS year industry. this the story in growth our

mentioned, US rad-hard, and only On we ramp productization is are funding of continue the scale and established on DoD the government production to these planned in Our rad-hard progress XXXX. qualification make increased of to prepare platform XX-nanometer year-to-date. as programs scope has secured for SkyWater's and and the programs

In a unique the these We period best-positioned in the review are to allowing to customers commercial space, us customer this industry see as R&D to prioritize opportunity programs accordingly. through long-run, investments of tightening. continue which this specific succeed overall

our value using viable, corrected as general-purpose program qubits a quantum model brings Service to of PsiQuantum. million our our scales This to the photonics. that pursuing the computer bold that air example vision partner, deliver ecosystem. one expansion a program rapidly is beyond Technology One announced with is PsiQuantum industry's recently silicon this commercially evolving demonstrates the

their of Photonics which intelligence, are Quantum has and demand artificial and to AI-enabled unique across the materials innovation range scalable pursuit a PsiQuantum’s incorporating continues our building Technologies with achieve technology. blocks novel to for the their of process goals integrations of architectures, systems. Computing enable future the

mature supporting in of and support our their ramp. production government. in transportation healthcare, facility pace is ultimate and we XXX-millimeter in the this this The as position as climate, finance, Minnesota technology SkyWater technology emerging such enablement for various program will PsiQuantum industries, energy, and critical rapid state-of-the-art advances

their in innovation positioned never to and accelerate are early-stage strongest market for we while the an we to some observed standards their for solutions. proof demand customers time important a facing redoubled raising rests. best So that point customers surge capital, observe do that higher they This is as have also the efforts experiencing the for support,

to Our TAM large customer stay attract we innovators and with pipeline stronger. visibility task continues long-tail confidence applications can has with addressing opportunities. demand never that Today, our model been

opportunities growth and Of and efficiency which aggressively requires course, ever-increasing automation demand we efforts. for expanding our modernization gains, strong are driving through

yields EBITDA metrology gives the balance to more we generate the in of two as these of productivity other further includes installation This sheet. our efforts extract in us are The result bringing of of the accelerate and strong from excellence a new expect and and software online the strengthen variety that in capabilities margin business continue and fabs. XXXX we ability to positive to operational our confidence improvements to

the will in are year us revenue believe to XXXX, continue our we secure with funding Looking in remain existing forward, margin gross the we capabilities industry our unique position to XXXX, grow for profile. We sites now in to Purdue efficiency State our in confident continues the at the our SkyWater another we Minnesota build that and momentum in and expected strong of fabs partnership transforming chips Indiana. our will institutionalizing with including expand ability the gains expand Florida, to while in as

be government While we by we commercial be largely more year between XXXX expect strategic will XXXX driven customers. believe and the revenue balanced programs, in will growth when a be A&D growth will our

the efforts ensure their a of many TaaS product allows readiness new and potential mentioned, their targeted our of previously an partners maximize are markets. accelerating to proper model positioning capability to R&D to for highly transition from differentiated critical manufacturing, SkyWater's launches As on development in unique platforms. product efficient buying,

providing are our clarity the and current ready. partners, synergistically Challenges we to for is environment ready in when ensure both we the work as macro us are market

Wafer levels lead fixed margin anticipate costs and to increased improved higher pricing and gross and year, business, Services to mix. more due our Florida revenue favorable for fab expectations from will our absorption next for from As contributions investments RadHard we performance of our

Therefore, as wafer to gross highly providing time, just that all we semiconductor of will And to exit believe margin be Further, the the XX%. positioning margin come most continue to technologies. XXs advanced the fully be expect leading gross last quarter, components level, the low high to business XXXX. communicated pure-play we margin XXXX our into By target our as front-end and packaging be when firmly as year SkyWater both together. XXs of anticipate the acceleration nearing model we expect established solutions foundry, and country's we fabrication objective differentiated integration SkyWater next-wave gross we

accelerant for weakness currently aggressively we In summary, business of growth. to we facing pursue funding unfolds. not uniqueness be to achieve believe our the could pipeline strong is be growth it years we and Also, an our intend do to SkyWater the several long-term the do positions as consistent of This a semiconductor independent chips macro believe since it to decade clear, industry. the we belief customer our model, but model of require

multiple have with we funds for ramping specifically, year otherwise XXXX the DoD revenue scope during soft and We growth our this are semis. believe For objectives derisks committed. and increased programs this scale

to continue on markets to clear, commercial execute where priority high customer and on schedule. to are volume plan programs remains also to the production end secure We ATS funding the transition

and continued A&D to expected growth are programs existing deliver commercial our in scale XXXX. to efforts for Our company

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

Act this as $X look be being XXXX revenue drive critical to as of due the made beyond in we decade, onshoring semiconductor our foundry decade. to in manufacturing objective we that strategic the part the pure-play company CHIPS finally, within And confident accelerated investments our device half second remain growth the we to billion a towards to aggressively long-term ignite will semiconductor

by and close to confidence our growth conveying ability I have all long-term successfully want strong SkyWater our us towards and to profitability objectives. at execute the of

growth in delivered ability intend well. have consistent to execute on amazing your and Our to quarters. several for build continue now future confidence as objectives to execution our our employees profitability We

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

Steve Manko

first of and Tom. the first of up revenue QX's you, XXXX Total than for was record higher first quarter $XX.X services QX last than of Wafer record million, quarter Thank $XX.X lower up quarter was was year. year. last the from which X% a from XX% X% XX% million, the and revenue

million in reminder, $XX.X than was closed recognition QX improved revenues to pulled to the in exceeded As of in customer of ATS portion the revenue set QX over terms the programs, also effectively bolsters revenue $X previous million our and in year. of a these up QX large expectations and compared and revenue of year slightly QX growth higher ATS on defense that the forecast last with certain record certain in believe in was pool revised our later of of services and demand resulted a Record confidence last of revenue scope customer our year. year QX for the due full historical a of the wafer expected the quarter. the aerospace we of which the revenue programs acceleration contract XX% expanded

able resulting XX.X%, non-GAAP gross this consistent revenues upside team capture above fairly The cost well prior to revenue with margin with of of was remaining the was the also our quickly expectations. and quarter,

non-GAAP range performance the XXXX, gross demand to customer was in we on -- in of margins gross model enable gross in normalized year. range of second would margin margin pool of the the than typically that year we the a we better quarter XX% which performance that entered us XX% our our to volumes. of would through achieved half expectations these at last deliver first The As was our be this basis, did

above flow-through increase stated the able gross which was $XX breakeven through such For in of margin high above achieve the objective million threshold of plus. approximately well to We revenue our cost example, our our less was than XX% flow XX%, revenue was forecast. were because

to programs. but revenues Our coming was increase expected the $XX actual level from the QX, non-GAAP costs cost increase ATS our due of in million growth to million to by was closer revenue lower $XX higher-margin to

gross As prior revenue had a XX.X%, to by lifted margin in quarter, gross margin XXX benefit when our comparing of our QX basis reminder, the a QX million approximately program with previous $X.X costs, margins quarter associated no points. included completion which

tool first the As able and at our in the QX kick carry level of do expect look in deliver to of increased gross while the same We pull-ins as to we in our ATS confidence margins quarter. us previous we performance gives will these revenue XXXX that of high-margin expectations. revenue saw being not in upper-end ahead, pass-through components

brings mix with revenue lower continue gross similar raise for result baseline profit up to is quarters last combined revenue expectation result for in level, to the will expectation QX a as new the the from XX% XX% us high-teens-to-low vary, pull-in, the expectation forthcoming of that Our discussed XXXX for to slightly margin quarter-to-quarter. will varying a QX, XX% gross quarter. contributions to to which This, the

Moving which operating $XX.X million now expenses $XX.X basis, million, excludes GAAP expenses QX. to operating basis, operating of in million expenses, QX. were about compared on XX% were a up non-GAAP On compensation, to a from equity-based $XX.X

The majority of the on bad to basis. SG&A, that in the requires pronouncement a increase adoption which expectations, prospective accounting us above to estimate in of was quarter-over-quarter an debt came our due allowance

EBITDA expense of event. GAAP represented profit the was was of benefit net revenue strong million $X.X revenues, Given reminder, as $X.X and in XX.X% million performance, was EBITDA of quarter from pure adjusted net of million revenue quarter's the margin share and and million a no in last the to $X.XX $XX.X $X.X share. gross included loss record the loss the $X.XX recognition quarter, per tax Interest non-GAAP per with adjusted

turn from in million given as which working pay and $XX.X our cash I'll equivalents, to the revolver. year-end, to declined to use quarter expected, plan the sheet. capital Now our We down with balance ended cash

declined $XX.X and for $XX.X our revolver, unamortized included costs. financing, debt to million issuance our Total million debt on million variable and entity $X.X tool interest from million excluding outstanding $XX.X

registration QX. for filing continue place our we August, growth. alternatives, at-the-market completed during Since proceeds shelf million of into equity our funding which $XXX have universal put million as we from includes This additional plans $X we

and last the as debt EBITDA quarter profile. turned We funding have larger alternatives over of growth financial flexibility and year a believe us expected our the facility past fund is increased help our will these provide our strengthened with success liquidity positive reflection new that announced we and credit

Quarterly P&L the stock-based models, expenses additional the in development your the following update are to anticipated for year million is research components our excluding you for $X.X SkyWater the ahead. various some As range, color of million $X.X compensation. and

per expenses million from $X.X million, compensation are anticipate compensation. SG&A $X.X Quarterly stock-based to We expected million be quarter. million approximately $XX $XX.X stock-based approximately to to to range excluding

XXXX $XX accounting. purchase We RadHard with as expect Within for depreciation similar profile year was total. million which associated to the amount, program for we this and related reported million $XX full $X approximately million was XXXX acquisition was

QX on As go a QX, per reminder, expect the phase to will in Florida of the of XXXX, $X.X million between depreciation through an expense remainder accounts will million $XX were in revenue million Total of of annual and range we quarter down and XXXX. million basis acquisition-related after out investments these $X.X $X.X depreciation we to by about half. expect

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

back With that, to I'll call Claire. the turn

Claire McAdams

Thank Steve. you,

and June on CEO the the activities Boston XX. investor in other Conference June York visit Conference as Conference include on Cowen directly presentations. May Craig-Hallum section X, upcoming please for feel X in reach Stifel upcoming Our the on New Sector in Investor Cross on of the range Annual to XX, Minneapolis The in Tech out or July a free meeting. And of me our San Relations website to to Francisco always, call Summit Please

please the open for Operator, line questions.

Operator

Thank TD line of you. from with [Operator Cowen. the first Your Krish question Instructions] comes Sankar

is open. line Your

Unidentified Analyst

calling my taking for Thanks guys. This Stephen of Krish. behalf question. is Hi,

commercial main your regarding had I markets. Tom, customers question for First in the

do customers. and to sort bit wanted of that industrial Just little market a on automotive

on larger that of previously, exposures. think customer said going your I well fairly you was based some

pair And slowing would and color additional And your order automotive Just signs be curious any helpful. throughout any that customer in QX, quarter? adjustments? sense, or like the that in investor exposure how did of

Thomas Sonderman

and seen at they any look that that be to robust automotive I has is industrial the automotive way The we've on consumer Stephen. side up the on made continue Hi, been weakness than industrial. Yeah. more

up about and revenue, that market makes to robust our it So we healthy see overall of in XX% space. continue

Unidentified Analyst

I little of about more this guess, year, XX the And Great. for range to follow wanted ask range. I Okay. a high-teens rest the, margin the gross updated my for follow-up,

more might that are function Just helping as it metrology other cost mentioned you. this adding types of and of tools potentially, cycle curious, help on focused more, if there that is big about portion achieve cost inspection earlier, that gross of and I a more like, that, I the or revenue and time you and so, optimizations in year initiatives is that the think that or be should investments Thank a still coverage for will levels guess, higher -- the hitting guys you margins? revised

Steve Manko

things take was mentioned lot from the that those what Good works. you though, elements Yeah, This his an what you afternoon, that there saw are here. on, optimal it upfront. this are about focus A question Tom that are talked really is really Steve in remarks, quarter, I'll and I'll in All quarter. of sure. is prepared

at the the remove you first that communicated. in look like the the expectations the our million after especially the the above we growth you we ATS, as achieve the with that through gross of did in in year, we of ATS If pure quarter mix fourth coming pass-through non-GAAP last that can growth was we from quarter came profit that the had, $X.X we had above this quarter so this first expectations. we saw year is was our revenue That quarter. much And margin was why of

to the a watch a is have in presented could just the though, revenue couple increase ATS also that done that cautious in the of high-profit have on row, for we come we from through. of, we've What Now for to like previously. tool pull range we what comfortable why we that's we've revenues, potentially to quarters that had were some be to

whatever through, have the that comes and we at be revenue with for saw year. that's in no the were first of same comfortable expectation the revenue that a it. the that to similar level in have quarter, margin we'd upping the but it don't this why quarter full what of significant we portion first didn’t pass-through carries really the And range little year, that of We

Unidentified Analyst

Okay. inspection detection? element and level thought is metrology for important guess on bad But cost the I two what's improvements, of, I in tools I so, that and a of, terms times guess, guess, also delivery metrology an

Steve Manko

of small large driver. the bunch impact is Yes, that there's little again, end big think have a investments -- anything is fact, a at an But the in don't element. a changes I It's and a that day. little of

I those because the mentioned like carry So don't ATS in the said, be evidencing. what out those Tom full we revenue That's weight going past just of they the good communicating, quarter. Again, there. the since especially to important what we've that's that really and drives are but like through, saw the flow been it's drivers, year what's first

efficient, what flow see stress they margin more than believe currently a the Wafer through should really and that enough Anything gross can we'll Services where optimization. the Wafer of be driver through we flow-through. But have the we that's can't we're revenue again, making on though get and more as of I flow-through do side, are the profitable and focusing will today, the we benefits well, ATS to coming good Services that

Unidentified Analyst

the -- result. Okay. strong Got congratulations it. And results on

Steve Manko

Thank you.

Thomas Sonderman

Thanks.

Operator

next of comes the Your Needham Raji from question with & Gill line Company.

open. is line Your

Raji Gill

the question good congratulations I results. on Yes. a Steve, really tool Thanks just echo and revenue. on my

associated some more revenue story. no create that with terms the Can the was the us the My program potential could tool a XXXX because revenue a timing understanding margins. related RadHard margins in that you revenue? volatility sense that to mentioned in of give it's that, of was You of and

we're get want of just accordingly? year we much to how sense so tool get it can model this I it revenue expecting and to of of a kind ahead So try

Steve Manko

first wasn't that's the bit revenue in saw through, roughly around uncertainty $XXX,XXX we tool Yes, the way say roughly contributor around a quarter, in significant the little good today it $X.X it in, margin a XXXX What with you in release tool we little will had The I comes -- that revenue comes when a was coming million. question. there's of in. is

be it is our It tool what in this say is levels is won't later the be saw we expectation that see to pass-through probably wouldn't in we tool will higher revenues of would the than year, through. some I revenues my in expectation half XXXX, XXXX but that What in XXXX. and we saw coming there be revenue that -- will

get quarterly we give of expectation try of we'll that this revenues. there be some second more to those would what from clarity definitely revenue we're basis year. When forecast of to type there a coming of expectation But should now, an that flow-through what our seeing a that, right half better the on is in be

Raji Gill

would are revenue straight kind By and have been just higher more those then and levels costs fixed and two it's the pricing. and time, of programs absorbed terms like in high will gross well. of and costs, accelerating commentary then revenue level particularly anticipating margin XXs sort be the variability you absorption of RadHard the leading to to And about reasons fixed for margins revenue pricing long-term quarterly these gross about exiting low and and Understood. better mix of Okay. mix on as just that level all are XXXX immediate get XXs, projects Florida helping what I'm curious, that to benefit number? the were also to

how on Just -- substantiate comment? the you curious that

Steve Manko

be different the saw I'm the revenue it's a give -- different this we careful going dependent modeled to going not like be would roughly revenue we quarter, come again, mid-XXs a number mix, going because to through gross expect to profit. on just Yeah. to cost to on have we it's to flow level, very

cost goes will will production. side. point at in is I'm I cost fully to a again, number. What when expect RadHard the program to time, so It be XXXX, -- going production that sometime So don't for absorbed until say program it be won't in not to into that fixed the give our you fully revenue on fixed be be careful I'll assuming absorbed

while come we that. On do $X.X I be scale at we fixed with costs had we remember to you as have course ramp that the fully and more of costs million probably be XXXX costs, those not over expect Again, would business. Florida XXXX. we Again, that of that absorbed a a good pretty in programs There's path the first gross production our of margin we'll with XXXX number absorbing and in those bit development start-up with profit for facilities. still the program. those phase clearer these Florida costs facility. the of to in had both in be the of to a the through quarter RadHard so said

will costs So take bit time more that little absorbed. fully are a those until fixed

Raji Gill

I it. fully of then kind not that there's a Got just XX% going to of low uncertainty -- what's the levels around lot you of terms high are guess absorbed just XXs, XXXX? revenue fixed and of giving I'm if be confidence the asking still until costs below in XXs,

Steve Manko

would The fully I two those absorbed the Yeah. from on cost separate being of visibility revenue. fixed things. the is separate clarity

those margins. us visibility gives revenue profit gross what in confidence the So is

year those make those the which, the we that's can timeframe. on be from conversation at not cost, said like So but and again, statements, would that's Tom absorbing XXXX the fixed fully discussion separate margins, where earlier, escaping absorbed until a

Raji Gill

expanding And mentioned, are in kind of the strong obviously was Tom, some also numbers, programs but some revenue last Understood. The that then scope. really my Okay. question. also pull-insurance, just you of that A&D

et you dollar outlined that? Can that does but and the past, in defense Because the and more about phases? talk than what it's Does program. you the different are just by the been the driven and in programs, expected Thank -- phases seem program cetera. And so aerospace in expanding initially Because size kind different you it's like of you -- commercial, is could the you greater on the about it that the talk -- RadHard program that? award you. DoD

Thomas Sonderman

Yes.

the what driver. again, about a not RadHard program did healthy program have beyond we That expand before. continues talked So be to

we sense other And for those and urgency. the an of due we it we've increased expand. did As do to pull in then of mentioned, as DoD, both have think expansion that programs

still we essentially, So said in it program, program. an on capture the has accelerating that is working able program faster. been more independent think very the of upside to able that on the of customer put you The years. and terms multiple were we to DoD RadHard but being for were been important But deliverables. brought quickly of when want We to that resources as in, expanded initiative timeline, which we've move

Raji Gill

what remind just me QX topline? for in thoughts of are your And terms

Thomas Sonderman

said his Steve still the year, slightly XXs. in QX think remarks, I from prepared down in this of

Raji Gill

it. you. Thank Got

Operator

Your the Winkler comes from Natalia next question with Jefferies. line of

is line Your open.

Natalia Winkler

thank for here. Hi, taking a I questions. had couple you my

split an of So, should one first was update sort of on just of. kind my the we capacity that think

kind You mentioned the And more capacity split your Florida, some between could you on Minnesota of we ramp? the the floor color the about current should think kindly provide the how then and Florida facility?

Thomas Sonderman

Yes.

ramp most the we facility. over in and the is These ATS Minnesota. program programs. would services development mature stage when have. wafer just we program, here have through IVAS we are say, development all That's up long-standing our We inherited So, of we the Florida, business still activity took That's that we early DoD. have was where do which I that the it's capacity the the clearly, This and exists ATS. most that programs,

we a up progress. and the to have and we've we good Again, A&D milestone announced also ramping beginning continue both that previously that, be space programs, then contributor to several commercial a And revenues. that space in the our other to hit are major for make

as down of Steve amount about, that a are we but -- from is about up. we're fan-out feel there, the talked which We've IMEC, about where absorbing to ramp Expedia and costs fair DECA, Hybrid that There still our from we our our talked interposer Bonding from with really good is technology also technology the spintronic technologies. we're Audio, beginning Technology old three technology

ramp we'll to year plan, expecting programs as this well in ATS So, all targeted into a and and unfolds. that Florida moving see are customer we production then of down do have per moving as continue those those we're to start

Natalia Winkler

on focused And Steve Tom. think then model. is more probably helpful one of the very this That's I kind

specifically the off expect layering So, standpoint, of somewhere start-up you the potential Purdue I'm coming acquisitions capacity? from end depreciation any will if, to of the just you costs depreciation mentioned that additional Purdue the do program be previous and of from in your -- future some XXXX. the from the coming at the related curious in

Steve Manko

are would always clear be equipment depreciation something on. Yes. going amount the why time machinery to expense the again, Clearly, the Purdue, about we periodic as the there pretty goes capital to off. that be significant some but There's potentially. That's to stating increases to and acquisitions we're with seven-year add would baseline, that increasing understand that fall that if focusing Also, side over the that to place. portion making against would sure depreciation of would But QX a that at now. you been we'd on want off acquisitions of when time make to M&E I be again, clearly the XXXX. between have people that making falls and be of sudden net taking to the on on all some that's additional

Natalia Winkler

Thank you much. very

Thomas Sonderman

you. Thank

Steve Manko

Thanks.

Operator

question of Craig with Shannon next Richard Hallum. the Your line from comes

is open. line Your

Richard Shannon

you're talking signals the Great. my to Thanks commercial space. for when got questions. taking want here. in trends I I up this about clear something Tom, across I guys one, my guess, Maybe

was think indicating I one some was questions then here. release press the some you Your there said that responded And to, of strength weakness.

the also well? is talking the I And Are guess bucket? Wafer that. what define as understand within to ATS So you you I mean by commercial you about that within can customers Services if commercial only wanted customers, maybe

Thomas Sonderman

going continue we we When space. about we're Services, to today no. see and programs Infineon about Services that's where commercial When in ATS after robust we SA talk signal a have about that make are for talking Wafer Wafer a space, and Infineon, we of both, commercial a bucket talk robust customers, from that the customers that's and we the lot and of that ATS. see we Obviously, demand the are other targeting Yeah, predominantly continue handful that demand. to others

the seen a in overall automotive what's the decline offsetting Services, increase And weakness the we of so in weakness industrial which the is we've of think, driving saw some Wafer while seeing semiconductor modest is, I a overall in the than consumer side, in lot more market. we're

Richard Shannon

Maybe here. Okay. topic for Thank is CHIPS following up helpful, the Fair enough. on of just that. That Act Tom.

You of funds degree. as to impacting your somewhat sense been sound over the or this and suspect those to want months. negative guess, about And requirements any applying mechanism for flow way, confident and of priority to view the news I I get this you? stock couple in or onerous regulations like I funding there's for last becoming a a still you're just still is here, high they of your do uninteresting Are that you you money. more

Thomas Sonderman

being obviously, We, maybe to still others, an CHIPS act the No. differently we accelerant see growth. think as than SkyWater's

for in We state state have a budget supplemental the get soon. at strategy. three-stage that very Minnesota. Minnesota, of to excited into They modernization, automation, looking happening law Obviously, hopefully what's the chips going funds $XXX about matching signed very in put million into is

feel really happening what's we good about So state Minnesota. the in of

in Osceola BRIDG our leveraging entities Florida, come partnership with that existing there's County. Obviously, have multiple together,

a of company As the regional for to recipient challenge. I've before, the mentioned only build we award were back better and semiconductor

of And for well in the of how continues continue to industry Department we're do example with to future. really what a how but that course, of not the execute then, workforce in doing -- set Commerce. come manufacturing, with build partnership Indiana how Purdue We state the you with in Purdue the only universities do how and secure governments state to together transform innovation, of you can you program

couple said, require see the as been do we've three model. that But get chips on doing we of to feel believe preparing that the things concerned So strong all years we we it we've hit our do not really as about, issue all us are those frankly, for constraints long-term elements. But we to the of this in others some at not fruition. an for of coming And last all. funding

Richard Shannon

appreciate Okay. That that for detail, is I all all Tom. me.

Operator

question-and-answer call. today's attending. well as This concludes our as you conference for session Thank

disconnect. You may now

SkyWater Technology (SKYT) 8 May 232023 Q1 Earnings call transcript