SkyWater Technology Reports Fourth Quarter and Full Year 2021 Results

Non-GAAP Financial Measures

We provide supplemental non-GAAP financial information that our management utilizes to evaluate our ongoing financial performance and provide additional insight to investors as supplemental information to our U.S. GAAP results. We provide non-GAAP gross profit, non-GAAP gross margin, non-GAAP net loss to shareholders, and non-GAAP net loss per share. We provide these non-GAAP financial measures because we believe this non-GAAP presentation provides a baseline for analyzing trends in our business and to exclude certain items that may not be indicative of our core operating results. The non-GAAP financial measures disclosed in this earnings press release should not be viewed as an alternative to, or more meaningful than, the reported results prepared in accordance with GAAP. In addition, because our non-GAAP measures are not determined in accordance with U.S. GAAP, these measures are susceptible to differing calculations, and not all comparable or peer companies may calculate their non-GAAP measures in the same manner. As a result, the non-GAAP financial measures presented in this earnings press release may not be directly comparable to similarly titled measures presented by other companies.

We also provide adjusted EBITDA and adjusted EBITDA margin as supplemental non-GAAP measurements. We define adjusted EBITDA as net income (loss) before interest expense, income tax provision (benefit), depreciation and amortization, equity-based compensation and certain other items that we do not view as indicative of our ongoing performance, including fair value changes in contingent considerations, fair value changes in warrants and management fees, inventory write-down, corporate conversion and IPO related costs, Paycheck Protection Program loan forgiveness, SkyWater Florida start-up costs, net income attributable to non-controlling interests, and management transition expense. We believe adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of our operating performance when compared to our peers, without regard to our financing methods or capital structure. We exclude the items listed above from net income or loss in arriving at adjusted EBITDA because these amounts can vary substantially within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income determined in accordance with U.S. GAAP. Certain items excluded from adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are reflected in adjusted EBITDA. Our presentation of adjusted EBITDA should not be construed as an indication that our results will be unaffected by the items excluded from adjusted EBITDA. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, the exclusion of these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual, unless otherwise expressly indicated.

The following tables present a reconciliation of the most directly comparable financial measures, calculated and presented in accordance with U.S. GAAP, to our non-GAAP financial measures.

SKYWATER TECHNOLOGY, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

January 2,
2022

 

January 3,
2021

 

October 3,
2021

 

January 2,
2022

 

January 3,
2021

 

(in thousands)

GAAP revenue

$

38,533

 

 

$

39,772

 

 

$

35,025

 

 

$

162,848

 

 

$

140,438

 

Estimated impact of additional operating week

 

 

 

 

(2,491

)

 

 

 

 

 

 

 

 

(2,491

)

Tool revenue

 

(1,127

)

 

 

(4,895

)

 

 

(281

)

 

 

(19,160

)

 

 

(8,428

)

Non-GAAP revenue

$

37,406

 

 

$

32,386

 

 

$

34,744

 

 

$

143,688

 

 

$

129,519

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenue

$

55,156

 

 

$

36,244

 

 

$

36,852

 

 

$

170,320

 

 

$

117,746

 

Inventory write-down (1)

 

(13,442

)

 

 

 

 

 

 

 

 

(13,442

)

 

 

 

Equity-based compensation (2)

 

(1,130

)

 

 

(1,308

)

 

 

(967

)

 

 

(3,042

)

 

 

(1,644

)

SkyWater Florida start-up costs (3)

 

(187

)

 

 

 

 

 

(374

)

 

 

(879

)

 

 

 

Non-GAAP cost of revenue

$

40,397

 

 

$

34,936

 

 

$

35,511

 

 

$

152,957

 

 

$

116,102

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit (loss)

$

(16,623

)

 

$

3,528

 

 

$

(1,827

)

 

$

(7,472

)

 

$

22,692

 

GAAP gross margin

 

(43.1

) %

 

 

8.9

%

 

 

(5.2

) %

 

 

(4.6

) %

 

 

16.2

%

Inventory write-down (1)

 

13,442

 

 

 

 

 

 

 

 

 

13,442

 

 

 

 

Equity-based compensation (2)

 

1,130

 

 

 

1,308

 

 

 

967

 

 

 

3,042

 

 

 

1,644

 

SkyWater Florida start-up costs (3)

 

187

 

 

 

 

 

 

374

 

 

 

879

 

 

 

 

Non-GAAP gross profit (loss)

$

(1,864

)

 

$

4,836

 

 

$

(486

)

 

$

9,891

 

 

$

24,336

 

Non-GAAP gross margin

 

(4.8

) %

 

 

12.2

%

 

 

(1.4

) %

 

 

6.1

%

 

 

17.3

%

 

 

 

 

 

 

 

 

 

 

GAAP research and development

$

1,228

 

 

$

1,672

 

 

$

2,253

 

 

$

8,747

 

 

$

4,208

 

Equity-based compensation (2)

 

655

 

 

 

(39

)

 

 

(341

)

 

 

(1,182

)

 

 

(56

)

Non-GAAP research and development

$

1,883

 

 

$

1,633

 

 

$

1,912

 

 

$

7,565

 

 

$

4,152

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

$

9,951

 

 

$

6,713

 

 

$

9,626

 

 

$

43,595

 

 

$

25,032

 

SkyWater Florida start-up costs (3)

 

(22

)

 

 

 

 

 

(60

)

 

 

(268

)

 

 

 

Management transition expense (5)

 

 

 

 

 

 

 

 

 

 

(435

)

 

 

 

Equity-based compensation (2)

 

(1,655

)

 

 

(242

)

 

 

(2,086

)

 

 

(8,303

)

 

 

(940

)

Management fees (8)

 

 

 

 

(235

)

 

 

 

 

 

(332

)

 

 

(879

)

Non-GAAP selling, general and administrative expenses

$

8,274

 

 

$

6,236

 

 

$

7,480

 

 

$

34,257

 

 

$

23,213

 

 

Three Months Ended

 

Twelve Months Ended

 

January 2,
2022

 

January 3,
2021

 

October 3,
2021

 

January 2,
2022

 

January 3,
2021

 

(in thousands)

GAAP net loss to shareholders

$

(27,036

)

 

$

(12,298

)

 

$

(13,870

)

 

$

(50,696

)

 

$

(20,617

)

Inventory write-down (1)

 

13,442

 

 

 

 

 

 

 

 

 

13,442

 

 

 

 

Paycheck Protection Program loan forgiveness

 

 

 

 

 

 

 

 

 

 

(6,453

)

 

 

 

Corporate conversion and initial public offering related costs (4)

 

205

 

 

 

 

 

 

208

 

 

 

1,934

 

 

 

 

SkyWater Florida start-up costs (3)

 

209

 

 

 

 

 

 

434

 

 

 

1,147

 

 

 

 

Management transition expense (5)

 

 

 

 

 

 

 

 

 

 

435

 

 

 

 

Fair value changes in contingent consideration (6)

 

(154

)

 

 

741

 

 

 

(1,670

)

 

 

(2,710

)

 

 

2,094

 

Equity-based compensation (2)

 

2,130

 

 

 

1,589

 

 

 

3,394

 

 

 

12,527

 

 

 

2,640

 

Fair value changes in warrants (7)

 

 

 

 

(1,680

)

 

 

 

 

 

 

 

 

(780

)

Management fees (8)

 

 

 

 

235

 

 

 

 

 

 

332

 

 

 

879

 

Non-GAAP net loss to shareholders

$

(11,204

)

 

$

(11,413

)

 

$

(11,504

)

 

$

(30,042

)

 

$

(15,784

)

 

 

 

 

 

 

 

 

 

 

Equity-based compensation allocation in the consolidated statements of operations:

 

 

 

 

 

 

 

 

 

Cost of revenue

$

1,130

 

 

$

1,308

 

 

$

967

 

 

$

3,042

 

 

$

1,644

 

Research and development

 

(655

)

 

 

39

 

 

 

341

 

 

 

1,182

 

 

 

56

 

Selling, general and administrative expenses

 

1,655

 

 

 

242

 

 

 

2,086

 

 

 

8,303

 

 

 

940

 

 

$

2,130

 

 

$

1,589

 

 

$

3,394

 

 

$

12,527

 

 

$

2,640

 

 

 

 

 

 

 

 

 

 

 

SkyWater Florida start-up costs allocation in the consolidated statements of operations:

 

 

 

 

 

 

 

 

 

Cost of revenue

$

187

 

 

$

 

 

$

374

 

 

$

879

 

 

$

 

Selling, general and administrative expenses

 

22

 

 

 

 

 

 

60

 

 

 

268

 

 

 

 

 

$

209

 

 

$

 

 

$

434

 

 

$

1,147

 

 

$

 

 

Three Months Ended
January 2, 2022

 

Twelve Months Ended
January 2, 2022

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

Computation of net loss per common share, basic and diluted:

(in thousands, except per share data)

Numerator:

 

 

 

 

 

 

 

Net loss attributable to SkyWater Technology, Inc.

$

(27,036

)

 

$

(11,204

)

 

$

(50,696

)

 

$

(30,042

)

Undistributed preferred return to Class B preferred unitholders

 

 

 

 

 

 

 

(398

)

 

 

(398

)

Net loss attributable to common shareholders

$

(27,036

)

 

$

(11,204

)

 

$

(51,094

)

 

$

(30,440

)

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

39,325

 

 

 

39,325

 

 

 

29,038

 

 

 

29,038

 

Net loss per common share, basic and diluted

$

(0.69

)

 

$

(0.28

)

 

$

(1.76

)

 

$

(1.05

)

 

 

 

 

 

 

 

 

 

Three Months Ended
January 3, 2021

 

Twelve Months Ended
January 3, 2021

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

Computation of net loss per Class B preferred unit, basic and diluted:

(in thousands, except per unit data)

Numerator:

 

 

 

 

 

 

 

Net loss attributable to SkyWater Technology, Inc.

$

(12,298

)

 

$

(11,413

)

 

$

(20,617

)

 

$

(15,784

)

Denominator:

 

 

 

 

 

 

 

Weighted-average Class B preferred units outstanding, basic and diluted

 

18,000

 

 

 

18,000

 

 

 

18,000

 

 

 

18,000

 

Net loss per Class B preferred unit, basic and diluted

$

(0.68

)

 

$

(0.63

)

 

$

(1.15

)

 

$

(0.88

)

 

 

 

 

 

 

 

 

 

Three Months Ended
October 3, 2021

 

 

 

 

 

GAAP

 

Non-GAAP

 

 

 

 

Computation of net loss per common share, basic and diluted:

(in thousands, except per share data)

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Net loss attributable to SkyWater Technology, Inc.

$

(13,870

)

 

$

(11,504

)

 

 

 

 

Undistributed preferred return to Class B preferred unitholders

 

 

 

 

 

 

 

 

 

Net loss attributable to common shareholders

$

(13,870

)

 

$

(11,504

)

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

39,060

 

 

 

39,060

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.36

)

 

$

(0.29

)

 

 

 

 

 

Three Months Ended

Twelve Months Ended Quarter
Ended

 

January 2,
2022

 

January 3,
2021

 

January 2,
2022

 

January 3,
2021

 

(in thousands)

Net loss to shareholders

$

(27,036

)

 

$

(12,298

)

 

$

(50,696

)

 

$

(20,617

)

Interest expense

 

839

 

 

 

1,412

 

 

 

3,542

 

 

 

5,499

 

Income tax expense (benefit)

 

(2,322

)

 

 

4,631

 

 

 

(6,790

)

 

 

4,919

 

Depreciation and amortization

 

6,957

 

 

 

5,753

 

 

 

27,368

 

 

 

18,866

 

EBITDA

 

(21,562

)

 

 

(502

)

 

 

(26,576

)

 

 

8,667

 

Inventory write-down (1)

 

13,442

 

 

 

 

 

 

13,442

 

 

 

 

Paycheck Protection Program loan forgiveness

 

 

 

 

 

 

 

(6,453

)

 

 

 

Corporate conversion and initial public offering related costs (4)

 

205

 

 

 

 

 

 

1,934

 

 

 

 

SkyWater Florida start-up costs (2)

 

209

 

 

 

 

 

 

1,147

 

 

 

 

Management transition expense (4)

 

 

 

 

 

 

 

435

 

 

 

 

Fair value changes in contingent consideration (5)

 

(154

)

 

 

741

 

 

 

(2,710

)

 

 

2,094

 

Equity-based compensation (1)

 

2,130

 

 

 

1,589

 

 

 

12,527

 

 

 

2,640

 

Fair value changes in warrants (6)

 

 

 

 

(1,680

)

 

 

 

 

 

(780

)

Management fees (7)

 

 

 

 

235

 

 

 

332

 

 

 

879

 

Net income attributable to non-controlling interests (9)

 

871

 

 

 

903

 

 

 

3,293

 

 

 

903

 

Adjusted EBITDA

$

(4,859

)

 

$

1,286

 

 

$

(2,629

)

 

$

14,403

 


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