SKYT - Earnings call transcript Q4 2024 | SkyWater Technology, Inc.

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Operator

Good morning. My name is Aaron, and I will be your conference operator for today. At this time, I would like to welcome everyone to the SkyWater Technology Fourth Quarter 2024 Financial Results Conference Call. [Operator Instructions]. With that, I am pleased to turn the call over to Claire McAdams.

Claire McAdams

operator. you, Thank welcome and Fourth XXXX Quarter Good to Call. Conference morning, SkyWater's from the Steve Thomas Officer. on me SkyWater Manko, call Financial and With Officer; today are Executive Sonderman, Chief Chief webcast that ir.skywatertechnology.com. at call you Relations remind to SkyWater's Investor like is I'd being live on website our be webcast concludes. will after call for available The shortly replay the

and directly for our supplement, Also gross call. posted as margins. last our financial On sales of we tool including adjustments posted today's IR the all Events on results a impact the our and accompanies have summarizes annual our X years, comparisons quarterly which our of website, well the GAAP page slide financial presentation that non-GAAP as results is to

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

our with Form For our and Form Exchange a and fiscal our refer please XX-K. including discussion release these XXXX of filings Securities the today uncertainties, and earnings filed to risks Commission, X-K on

no are All assume and we such to update of any today, statements made statements. as forward-looking obligation

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

a non-GAAP And Riley turn inaugural to financial for our to place see directly are free IR Computing that follow-up contact Events on posted financial in feel we I'll website. Please the on Tom. B. a investor of Quantum X. can IR GAAP Also to virtual any that, over earnings plan release, reconciliation page, the in event requests. March in our financial participate website Day, our call X measures investor taking to with me earnings our and of which You measures supplement you'll QX find all these presentation, on our

Thomas Sonderman

acquisition that is Slide Thank Along of planned domestic our you, expanding to strategy we share manufacturing domestic in of capabilities incredibly the the with part one the wafer release over manufacturing X. high-volume to the supply of acquisition to provider Turn essential has SkyWater pure-play end through become announced and this our foundational XXX-millimeter XXX-millimeter Infineon's Austin. on to for I'm our of Fab excited starts the leading morning, Claire, earnings everyone XX call. XX morning largest good its per an providing the Fab U.S. service been fab, long decade. long-term XX,XXX month of sites, of foundational semiconductors this devices. of by semiconductor foundry domestic

in in way. our will This one company's future powerful our marks shape a milestone a significant that journey,

our towards guidance. upper business provide million recap Before generated quarter, expectations tools stronger announce and to I million, results modestly of the walk for of which first a through Slide topped X. combined QX well our the $XX for our was Total exceeded of financial revenue gross end strong as fiscal Turn I'll and $XX XXXX which our results of the year the than $XX million pleased acquisition, profitability. and as margin I'm revenue expected. ATS for With Fab XX ahead. to Wafer fourth Services outlook revenue,

Services the our the weakness business to due Slide record XXXX, strong fiscal revenues up Turn segments. significantly year for our tailwinds expectations QX while range, automotive gross positive and XX% exceeded totaled revenue ATS XXXX. QX XX% quarter in for was high full both EPS $X.XX and several The contributing largely of the declined earnings, compared $XXX reported of upside to industrial our throughout the from Full year, fiscal XXXX. X. in growth year our end driven nearly the $X.XX in to prolonged occurring Reported delivered business in Consistent with year. by million, margin of to margin today per guidance earnings for XX% positive share and year gross a the late driving Wafer full

critical The strength domestically. essential trusted where we to XXXX most the have and provide sector, in was defense position established an significant capabilities end semiconductor market in aerospace

the our ATS witnessed growth During year, critical revenue the for programs, drove year. of we majority the multiple which the altogether expansion of

largest compute, customers where customers multiple to in computing of in advanced we XX% market were others. computing. and XXXX our computing well-funded XXXX SiQuantum D-Wave, technologies second are Our was with advanced in end revenues Over next-generation advancements engaged among quantum driving with related like

highly but platforms also It capacity partnership, align to long-term This BioHealth in capital CapEx customers' grew. own for and an expand With in business. allows only tools our not level significantly Turn our programs, and CapEx our co-investment the the us to commitment strategically and resulting X. future for requirements. beneficial the drive automotive investments, is we growth. to down saw revenue year, the our market revenue Services, from and the unprecedented This expect that funding In of a will $XX capabilities Wafer recognized support decline customer-funded we was reduces reflects for year. Slide products million XXXX, in of record while level

last the Since in our preliminary of award conjunction quarter, state fab modernization for of the Minnesota. with our also we matching CHIPS Minnesota announced funding from

pull of date. industry this planned outside amount in believe funding greater that to communicated communicated Act consistently and for we over accelerate was spanning million, a growth $XXX $XXX a of in revenue XXXX recent our to we of here in and announced, total we we've accelerant for a period million total an the size XXXX, achieve see semiconductor growth relative previously enabling our development We funding outside plans, to as of since the planned Minnesota. witnessed us CHIPS As is which this can our to investments brings co-investment the business now our to

our year. X. and review I'll recent developments our for business other Slide the some of positive in now to the share outlook Turn

support key thermal with production readout to Raytheon imaging imaging category-specific First, with first engaged solutions to and from January develop the I'm very Systems, dedicated to announced next-generation launch in launch a of applications. technologies. microbiometer Solutions, for the us ThermaView introduce brand pleased IC Vision SkyWater's thermal We customer

defense, advanced demand increasing and industrial the positions rapidly supplier SkyWater With market, $X as sensing, medical key ThermaView a for spanning billion in applications. a growing infrared

customers defense U.S.-based of trusted focus applications. top-tier from conversions the for to Services. reinforces revenue strategic This Services Wafer growth opportunity our Wafer we expansion with engagement role initiative long-term in mission-critical markets SkyWater's In for delivering semiconductor multiple on announced while also solutions strengthens our Our driving business. XXXX, ATS

driven We expect the conversions products, XXXX additional growth, will ThermaView by service wafer and new production both revenue platform. to mark ATS a milestone as significant returns including primarily

we Wafer composed legacy the products products. expected XX% are In XXXX, revenue making was new roughly Wafer of XXXX, Services to Services new with legacy up In products for and approximately of XX% revenue products this We XX% XX%. new account Turn of trend time. growth to continue accelerate Slide over driver remaining in products to expect Wafer that Services here anticipate X. will primary be forward to Minnesota, and moving the

for our is become XXXX. another Additionally, vector growth SkyWater packaging in to expected business advanced

grow to half a We significant year the in expect revenue the second increase throughout with of XXXX.

$XXX deliveries level development develop platform to tool around As fan-out we an This initial tools ramp packaging Florida revenue. anticipate facility. begin our integration. tool purchases, installations million wafer contract to are a process at reminder, We a and funding midyear, will driving and a executing is in allocated

and ramping through late revenue qualified are to to continue climbing and in expect XXXX released begin tools these production, XXXX. As we ATS

Turn X. to Slide

closing today's stand-alone of addition SkyWater's independent midyear. anticipate year, discussing business of Fab for our the which the announcement, Before FabXX for we I XX, share around outlook will

ATS for year-over-year current Wafer our in and growth Services. We and growth reflects ATS our for combined both are driving business a Wafer our revenue in XXXX. year modest forecast for Services With year visibility, the

programs We platform. our expect ATS will revenues growth Wafer production quantum anticipated strategic growth ATS while to well as be as A&D come conversions year supported by this Services and packaging, advanced from is ThermaView new computing, from

budget are continuing of taking expected the program conservative and negotiations resolutions, a for we extended the timing year. ongoing With view allocations,

in Services Our expectation combined million compared and XXXX, $XXX Wafer ATS of today growth plus revenue minus to for of XXXX. revenue X% X% or is in approximately

estimate tools the the around and million $XX currently half weighted latest Florida approximately for second year, Our to centered XXXX year. revenue of mostly this indicates

of will be our gross Steve the expansion in the profile, expect margin important We performance for financial will of the moments. few year aspect most our a ahead describe as

XXXX. continuing $X government XX% to in a of to nearly improve ramp, revenues under in ATS taking quarter the of advance QX. with For million first we a followed stronger likewise are the half QX first quarter. we U.S. growth significantly With a sequential view rebound the to rebound least The expected in in QX, at expected by ATS specifically, federal an Wafer to forecast resolution, Services conservative QX budget second indicates new from operating beginning products in

objective to report late the We year. advanced supports contribute packaging to expect in year, results to slightly profitable all our our EPS which and for QX. and And growth positive to sequential will second to begin full business the of results half growth QX in the continued ATS in return importantly,

news exciting acquisition high-value a acquisition milestone today's Turn high-margin assets foundry and strategy. wafer enabling planned to IDM foundational turning Austin. regarding SkyWater, XX in successfully semiconductor Fab XX. infrastructure, we technology This of the to transformational into Since Now have formation that custom Slide in development services. of represents our transformed Infineon's a

to a contribute is profile. annual fab our expected million to XXX-millimeter Wafer capable Services XX revenue Fab highly approximately XX. Slide $XXX to Turning revenue of

pay million plus to assumption Infineon. of strategic our intend is the total believe deferred $XX closing price cash revenue remaining funded consisting a with senior capital. million X. $XX million acquisition of efficient, a X-year structure we at Our by the secured supply We with million, capital of $XX the year agreement financing by $XX working secured debt is an Of purchase in new to

generate to and is incremental to reinforcing long-term Turn and EBITDA, expect to portfolio XX. path meaningful strengthen production, free immediate with capabilities We a expected XX-nanometer to strong Slide XX. free providing technology to cash products. flow combination process further copper Turn foundation, This incremental Slide transaction our SkyWater's and adjusted while interconnect this to our financial support profitability. cash high-voltage expanding high-volume stable a flow

workforce We acquisition revenue Florida expected the will more market SkyWater's ATS in than than while our towards Strategically, our by double business U.S. X Texas. $X strategic located with balanced Wafer to total expanding Services in more this centers: Minnesota, moving evenly a more balance addressable billion. and and is mix manufacturing fabs

of that Turn XX. by major tailwinds additional for defense seeking for midst customers supply secure manufacturing remains transformative and Slide effort a question U.S. are reshoring combination. U.S.-based industrial, to is in no supported Slide XX. this strong, demand semiconductor domestic automotive There chains. to the providing production, business Turn The for we XXX-millimeter

a transition As to XX fab's to customer-driven from to the Infineon leveraging SkyWater's service seamless ensure highly Fab work workforce while foundry handoff IDM we skilled we will expand model, an offerings. with a closely

to advanced scaling both the new capitalize while long-term trends model industry introduce will up cycle. and We expect platforms on allow XXX-millimeter industry to this us with align that packaging next

to make for Slide largest domestic time. services continued expected is wafer optimizing to foundational transitioning Turn XXX-millimeter combination devices. of SkyWater one foundry as-a-service we over Importantly, our capacity utilization high-value to foundry By of Fab business XX this profitability improvements drive capacity Technology and the integrating providers to model, expect a approach, XX.

multitude addition positions solidly XXX-millimeter strategic foundational acquisition devices. a this performance path of gross foundry a on domestic In exceeding benefits, to we margin for XX% believe a as long-term to leading SkyWater

IDM we XX this days foundational foundry closing. time, feel lead Furthermore, anticipate this for to SkyWater we other U.S. in fabs. to transition semiconductor the is positioned At uniquely XXX until to

the In details will and and to to Steve. longer-term coming Capital to the now financial our map I over investors provide acquisition on the call a detail benefits our of subsequent provide in analysts for turn XX. regarding quarters, expansion will Fab We integration more well plans. road order Markets more customer our strategic the as are and Day months as planning to continue vision for closing we

Steve Manko

million. up end our $XX.X to Wafer revenue came the I'll Tom. total to review ATS acquisition. guidance XX. Services range. guidance revenue $XX.X from discussing was of you, million the midpoint Fab and of million, the highlights of Slide Combined Turn financial XX. at expectations results above $XX.X first the revenue was Fourth Thank slightly our XX upper and Tools before Slide QX. of and Turn quarter in

record year, A&D in strong full driven ATS multiple growth primarily computing revenue the and year by was business customers. quantum for growing business XX% another For our serving our demand

weakness CapEx of unprecedented continued Slide while decline automotive The to industrial and marks customer-funded tools the revenue markets, Services in due an broader Wafer revenue primarily XX. co-investment. period was record in

Our QX XX.X%. at expectations gross exceeded margin our

ATS we that. of guidance and equated to business XX% midpoint margin at gross did a and expected than QX the effective in our Our quite combined an margin Services XX% bit Wafer for better QX,

for primarily of points deferrals was the only as points expectations, to First, in QX tailwinds, combined repeat therefore X quarter. our The in gross Services profit gross as $X savings well will about cost tools business than and roughly basis not effective into and added XX.X% more than usual which margin additional cost impacted cost million margin Wafer ATS due XXXX. percentage gross by XXX and higher

Turn Slide XX. to

Turning to the full year summary.

the margin gross XX% increased was points Services tools record and impacted revenue from compared business Slide margin gross compared combined The XXXX. basis to XXX by XX XX.X% margin of in ATS gross Wafer XXX XXXX. Therefore, XXXX only to level in in XX% Our points in XXXX XXXX basis XXXX. for performance XX.X% XX. points over in to Turn basis negatively our to

aligned expectations forecast QX over in Turning tailwinds $XX to unique margin at QX EBITDA expenses with similarly QX. were adjusted were that EBITDA. The $XX.X in in at performance gross million million. resulted exceeding adjusted operating

lower $XX.X year revenue. million for in up Turn Slide $XX was QX reduce on which the We borrowing our total for EBITDA just helped from Adjusted closely operating XXXX. was XX. of than for purchases intra-quarter to expense or interest cash that Slide note tool customer year expected the full revolver. advances XX% million, XX. as expenses levels Also XXXX, X% for managed were

for to the the our year income. a EPS to upside slightly also the positive interest longer-term net QX range, due $X.XX EPS. for $X.XX lower-than-expected exceeding share, as were profitable primarily profit at well as positive with was trend Turning We expense. gross per full guidance

Turn to Slide XX.

adjusted in $XX positive The our ago. slightly our cash the year expense, XXXX over approximately capital about less in XXXX. second million a to at XXXX cash flow EBITDA million turning total strong investment and up XXXX of million. sheet. cash compared $XX interest million, Now positive was $XX ended to $XX year net to $XX from operations from P&L was generated roughly balance working million We with of flow, of equal

balance a year. the Our million increase at $XX was total of approximately year-end, debt over million net $X

from operations draws sources on revolver, total our investments. the generated CapEx we of million With used $XX cash and net for

line with XXXX. loan We accordion to the $XXX an our amended extending successfully agreement to term and the increasing feature year-end million November, in additional $XX million

Our working facility the Fab expenses. related fees partners anticipated maintenance and fund are working to credit Slide Fab commit they CapEx I'll been $XXX lenders and for financing well capital as cash also to will acquire XX, SkyWater, to new needs XX to the that have and ongoing payment XX. turn strong transaction upfront million any as the

approximately Turning earlier, tools combined Based profile Tom in margin our to significant year our XXXX. on full of Wafer gross outlook. expect expectations and revenue, revenue revenue ATS discussed in in million and reflecting modest we Services $XX expansion growth

XX% As combined discussed profit business generated margin gross Wafer our and nearly Services in XXXX. ATS earlier,

Wafer full high for portion into revenues. Services gross on in reflects the order Wafer margins forecast and for business XXs this half year. Again, second the our ATS the the expected current ATS expanding result core in to in Our range and combined the gross Services is margin XXs of

XXXX, to as is little second also tools half mentioned, profit on in weighted. Tom expect no revenue which, gross highly We

basis of our to tools We expect the to impact full full is expectation for XX% gross a the margin reported point our year. or revenue non-GAAP XXX gross on margin close the for negative year range. XX% Therefore, in mid-XXs the for

Fab margin of XX. our year for from This before contribution XXXX forecast any non-GAAP is the full gross fiscal for

result assume non-GAAP least range total We the we slightly in for of increase These in second year expect EBITDA profile non-GAAP revenue. operating XX%. the to for XXXX as and year, of the expansion expenses profitable of the the adjusted EPS move half XX% an total our in strong full gross expectations of XX% in and through margin at positive will results

combined level and XXXX We similar expect interest, as reported a for tax XXXX. for VIE of

QX to Turning guidance.

QX. million Given a the $XX and about quarter $X range to revenue of view in $XX million in of $X revenue, a in discussed revenue, of million dynamics the $XX conservative $XX expected taking Tom Services to in rebound million an to in tool million earlier, are total million Wafer of a in we revenues advance with range ATS consisting nearly

margin in from a for range QX XX% XX% tools. our impact of Given guidance these gross with is negligible to assumptions, the

minus to loss operating $X quarter million We $XX.X QX expected or improvement expect of million $X interest sequential in or and from share. the entities $X.X in QX. for QX approximately for $X.XX and range $XXX,XXX, the income of expense EPS per QX $X.XX our for the variable both strong in to interest million we expenses and financial an million, in results Based full outlook year, on in a plus rebound continued expect

Slide to turn Now XX.

acquisition. implications expected We've year next the of our the Fab here to expectations the XX. preliminary financial and Fab turning outlined annual for the XX from full to that, Now in contribution

our reminder, the to to transaction includes a X-year X-year outlined the what contribution As is duration the expected supply agreement, the therefore, annual remain and fairly we've a similar supply throughout agreement. here million generate of is positive The cash strongly EBITDA flow agreement expected adjusted of supply near-term free and The $XX dollars. implications annually generation. profit cash gross approximately are to revenue, for

amount and OpEx generate this the EBITDA expect CapEx maintenance and the to cover than This and to expense interest free be well flow means from the the expect sufficient accretive adjusted to positive fab. cash the immediately additional to that We be annual cash combination associated we acquisition flow for will outset. as as with operations from more

accounting the depreciation rules fabs. of that value dictate for fair purchase record we market must expense However, the

before did equates will market to purchase over value financials this QX reported depreciation, XXXX. our way it impact as in same million in fair a which continue accounting approximately annually our much to $XXX the of rolled of in off $XX estimate our depreciation million, accounting own Given purchase

Slide Turning XX. to

ramp having is a essential and mentioned, growth long-term everything as leveraging strategy. and significantly to ability now to technology scale built our foundry the As Tom we've

diversification look through a will forward well our the you much call at mix As as balanced as line ATS this for more XX Wafer integrate the revenue the into and Services to our with combination, a both open I'll mix you questions. balanced more please Q&A. going Fab implied revenue over end market see of results. financial mix that, as turn And we Operator, of

Operator

with of from line Our TD Sankar is question Krish first the Cowen.

Sreekrishnan Sankarnarayanan

of X have them. I

clarify one, Steve, just to I something. First wanted

all XX from be of like is it You going it gross based is SkyWater, in output profit the on Is to XX through would stand-alone assume come fair Fab be dollars that supply percentage $XX Fab said to to to the going agreement? wafer million from in looks gross Because is the Slide mid-XXs. margin which supply XX, wafer mid-teens the agreement. the

Thomas Sonderman

bringing and Yes. of course, getting that provide the that products with full customers offer. based upcoming other to repositioning diversify to transfers business, new on running tied the what course, as dual as multiyear The agreement, over capacity which today, goal, agreement they're Infineon initial to agreement. going is bring would course, they're The and here the new But new getting in in is Infineon we're technologies today. U.S. the time of is the to business for of in with strategies they essentially sourcing ATS supply the define provide output designs is unique at of to through we the terms

Sreekrishnan Sankarnarayanan

you. Got

or again? assume to largest customer fair from post the it combined fabs is a customer revenue the become profile, acquisition, your So will Infineon for the company

Thomas Sonderman

believe agreement strategic And a what Minnesota, partner. diversification, our U.S. a Infineon partner is devices ability here with been with to now over a to only tailwind not to reposition much supply a our secure Wafer allows bigger And strong quickly and time fab us very we but rebalance to drive our strategic the absolutely. capture foundational will business in Services they Yes, in become ATS has

Sreekrishnan Sankarnarayanan

X And then you. quick Got questions. other

it Florida back your where For think end being done an with fab? opportunity that's Is is the Fab you XX, done? OSAT? Or the for

Thomas Sonderman

Yes. back-end uses to the and Infineon traditional do OSATs internal Today, tests. maybe capabilities assembly

us advanced of say this could integration up fan-out-based evolve, technology a Of as I AP products to in bringing there's time, using we direct by they for opportunities in in here over chiplet packaging. have connect and the fabricate certainly that ASICs aren't grow, because go that course, and Florida, Texas. heterogeneous make AP wouldn't really here into solutions But capabilities fab

Sreekrishnan Sankarnarayanan

Steve. And you. a housekeeping for then quick Got

the with revenues? calendar either You run 'XX market mentioned How over end Quantum. compute is QX is as by advanced in of much of of #X Quantum a all XX% percentage

Steve Manko

fit it mix. that Yes, would

about So it was there. XX%

chart we only for a can in see give pie that presentation and we about that give the you We strong of the growing. pretty where slide business That that good X customers technology. are. been talk So indication a to has that customization the again, space. that in we work of lot computing good develop we listed there's But is And why a that quantum been there. have offer, place your because that's us development SkyWater of

Operator

Kumar of Piper next from Our Instructions] [Operator line question Harsh is the with Sandler.

Harsh Kumar

well from Fab Tom, Congratulations quick had my I as question. a end on XX.

had tell You a could automotive? the gave few industrial Fab be XX, what Is down XXX-millimeter wafers. XX-nanometer, applications little could you for people? Fab kind you us it us from mostly about line? Or about run are specs that other other XX you for there Could of products

Thomas Sonderman

question. And Great strategy. just reiterated you Yes. our

If internally at the interconnect, a has fab, today SX. we you mixed-signal technology with it XXX-nanometer ASIC call copper what look

ASICs, is really years. types Minnesota be we into the of suited other and but our Minnesota What take We capabilities able fab ASIC have been will out have with microcontroller is various designs, one we're to apply to has back that foundation with also technology PMICs many created only to a the do move end. be the the BCD similar for manufactured technology applications that opportunities aluminum going design with not for and this there. facility very in much That capabilities enablement in in and

flash. NOR makes today fab The

certainly what's on exciting not if the But most the there's all, believe Today, we done in now at is space. capabilities. real bring dimension foundry space is to and those that the can a XXX-millimeter really XX-nanometer foundry XX. have we XXX-millimeter, we market So XX-nanometer,

Steve Manko

to I coming you information today. XX. out and detail quick to our refer Slide I also, more billion. technologies this end-user detail on actually applications the bit SRAM $X more the little want through highlight, on we pretty And we there's was there want a technologies. acquisition, sure XX, But make there's know think on Slide by the And fast and to expands

So company. the the long-term for exciting growth pretty of

Harsh Kumar

then there. quick And absolutely. a follow-up No,

Tom from Fab it's Services as be let's between would bottoming it on and then now, how you Wafer Infineon. you'll put Your and would that what I Steve, you this a to you anticipate, XX If say, from had this back look Do you a mix go say get like transitioning. Wafer boost or the you Services? big -- and spot like in color think maybe that year us ATS be some XX-XX? Or do give see just to

Thomas Sonderman

Yes.

in we again, that, prepared which question. anticipate communicated growth of was QX We'll the Minnesota, we we see in So growth The think again, bottom. great that our off remarks.

new mix, be see You're again, to similar going But revenue where levels is ended higher new the more continue that with ASPs. we we up. to to perspective to to last year believe from occur platforms, much what going customers total compared a towards

which So that Infineon generate growing. obviously predictable number here, that revenue. a taking of revenue, volume year million the And will assumes course, down the fairly $XXX just be the we'll on will be

for minus overall or Wafer plus this time, coming at plus ATS $XXX integrate now, growth X%. just other expanding. start Fab that Services million basically right we and projected XX similar and And also the growth X% it of out expect year. last of we without we then as to over As But capabilities to fab then think

Steve Manko

Yes.

want to that. Just summarize reiterate,

would We lose expectation. showed amount coming want don't as the to a new of will be services technologies wafer talked again, XXXX. with wafer presentation, XX. planned slide SkyWater, into be a that loaded We Minnesota what I like moving qualified lot more that's with year the in XXXX about. was focus through given being and services for on my critical was in well we Fab

it's transformative as Minnesota with very So year Wafer Services. into fab moving well transitional a and the technologies new the for

but Fab a Wafer with in So the Services for in like XXXX. mix XX, biggest you with won't our we see in would splash see you Minnesota are will numbers Wafer the be better Services expectation

Harsh Kumar

Congratulations again. It guys. deal for a you like looks great

Operator

with next line of Our is Quinn the question Bolton from Needham.

Nicolas Doyle

expansion. how filling expected? of the This is built wafer the or Congrats ATS start on Nick for What if their fab kind years? contracts with fungible And Are is weaker can take-or-pay at scale Are the there agreement? point in you potential you demand is give X us able any on than Quinn. services that supply capacity those in? on to details

Thomas Sonderman

Yes. diving Again, the secure this idea important aspects have not doing of great really like why transaction of appreciate very this question. whole important I as The said, but only that supply take-or-pay. a to is into a SkyWater. for is agreement, parameters, you

through is the to run period. at Infineon fab full goal Our utilization multiyear for the

do that. that to if Infineon that for certainly at, in we going to as and running plan there is are the be anticipate we but But of some to course, would they're for believe not don't Of be opportunity current run was capacity terms drive ability, to we to backfill the levels opportunities efficiencies, that, We reason, wanting us at there leverage additional within doable, fab. the happening.

we're bringing do then when we'll technologies for significant all we'll of the differentiated well And have because new also ASP see Infineon what well execute a not to expand or of expansion that's doing to can that foundational as the Infineon while fact but the the we pricing for unique adapting the for as as move expires, and agreement We other market businesses. those really we'll eventually And customers. expire, to only extremely backfill for begins believe domestic that expect customers sourcing today, certainly multiyear to be scale deliver we we agreement where semiconductors.

Nicolas Doyle

combined it going strong the talked some this margin some about you ATS And XXXX. quarter. and had gross cost like sounded really were onetime, savings, And some Wafer you and Services into were

of piece? XXXX? gross Services can And from at momentum combined that XX% the Wafer continue margin in the upside So did come

Steve Manko

good Yes, question.

So it really cost as talked the reductions was and the some business of that a as the well combination we of of about. ATS deferrals mix

the fourth with and not levels a of be really will be that But Services was expect the to there by in driven same those bit again, quarter Wafer guidance fourth the business. we it don't at it little So quarter, repeats. we the it provided, that in

Operator

from of Richard is Shannon the question next Our line with Craig-Hallum.

Richard Shannon

guess based of question outlook program budget to love cycles judging prepared I'd I things. yearly sense get one and a of down Department my here. I first Defense guess about on your remarks your here of X is

any of see to conservatism degree way We inside First here? you then judged headlines. maybe or there to the some year obviously much can you've what characterize the is And down? all, any how baseball understanding

think the about Trump please. kind administration the what I with a there's back layer can questions budgets is bit, the you little here. Maybe some peel of doing defense

Thomas Sonderman

Yes. all Richard, the the in dynamics that new administration. we're move we playing with think out seeing are I as again that

The resolutions dynamics but is beyond involved when first to are move funded actually that in get only we as to we national with we and are are of and can security, and will related to thing continuing are the continue critical that we actual not programs I'll change timing the budgets. say just expect. There believe they administration a

kind is frozen of everything up. now, Right

looked going and to we the into that so just And were some the from approach take decided, we a conservative given year. as dynamics we lessons these past

business. year we're as ATS unfolds, Of our building more more back momentum seeing into and the course,

Wafer the approach have growth it's Services So that dynamics for really control, business. business don't making the and ATS things we control, we we the and we're taking sure that with overall currently the in just we a X% understand conservative the

Richard Shannon

enough. Fair Okay.

the purchase related and prior Second questions the on up of here following fab question Infineon here. to is one

efficiencies. expecting much provide fab I said fast the guess were And improve run how will you running you're you're think if that you full utilization in inefficiencies now, what how you describe to revenues to and some with excess new past, maybe those how going can you're this I some capacity that get them? from. but this could

Thomas Sonderman

course, the Again, But we provide business as a get road, Yes. many further mentioned we ATS we can built as have in idea, Day. we very in I there's Markets whole strong vectors. Capital those, our of down Minnesota. is And the think

ATS existing only unique in bring to not customers, that fab. customers, the And We an we our this leverage we that's have but to business ATS have AP capabilities future customers want the emerging. very have now scale, capability for

convert you been we So efficiencies because through multi-customer in multiple you and as to this an IDM I've in fabs, a foundry, times a something get from environment. is bring

to ATS having start point fact almost differentiation. where of and companies Fab great Fab through with how supply us that wanting way allows the a immediately. we leverage they consider in expanded lot there begin as these starting as to as believe foundry XX really at opposed we to for are we've gives And XX to now serves offering there that a Infineon, us can only them opportunity customers And a is chains assets out a believe, having today a that engaging U.S.-based us. relook they

the So it's We model created. the now really we've just have scale. building off

efficiency We synergies have the ability to U.S. foundry drive capacity the and devices. leading-edge for to bring CMOS-related

Operator

like Instructions] it it that be for is looks going to And [Operator today.

it turn I Q&A back like ladies and would to conclude over will today, So and gentlemen, to that for session our Mr.

closing comments. for Sonderman

Thomas Sonderman

operator. you, Thank

express up and unwavering today's want ability wrap SkyWater confidence long-term growth profitability. our to achieve at we and call, As to I our

today's We trust execution. earning you, concludes early to Thank this QX during and We are your our forward to sharing in updates look May. call through more call. our committed earnings

SkyWater Technology (SKYT) 26 Feb 252024 Q4 Earnings call transcript