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, 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 |
||||||||||
|
July 3, 2022 |
|
July 4, 2021 |
|
April 3, 2022 |
||||||
|
(in thousands) |
||||||||||
GAAP revenue |
$ |
47,407 |
|
|
$ |
41,189 |
|
|
$ |
48,121 |
|
Tool revenue (1) |
|
(313 |
) |
|
|
(2,346 |
) |
|
|
(984 |
) |
Non-GAAP revenue |
$ |
47,094 |
|
|
$ |
38,843 |
|
|
$ |
47,137 |
|
|
|
|
|
|
|
||||||
GAAP cost of revenue |
$ |
45,327 |
|
|
$ |
39,377 |
|
|
$ |
49,061 |
|
Equity-based compensation (2) |
|
(546 |
) |
|
|
(827 |
) |
|
|
(1,125 |
) |
SkyWater Florida start-up costs (3) |
|
(113 |
) |
|
|
(318 |
) |
|
|
(341 |
) |
Cost of tool revenue (1) |
|
(200 |
) |
|
|
(1,223 |
) |
|
|
(984 |
) |
Non-GAAP cost of revenue |
$ |
44,468 |
|
|
$ |
37,009 |
|
|
$ |
46,611 |
|
|
|
|
|
|
|
||||||
GAAP gross profit |
$ |
2,080 |
|
|
$ |
1,812 |
|
|
$ |
(940 |
) |
GAAP gross margin |
|
4.4 |
% |
|
|
4.4 |
% |
|
|
(2.0 |
)% |
Equity-based compensation (2) |
|
546 |
|
|
|
827 |
|
|
|
1,125 |
|
SkyWater Florida start-up costs (3) |
|
113 |
|
|
|
318 |
|
|
|
341 |
|
Tool revenue (1) |
|
(313 |
) |
|
|
(2,346 |
) |
|
|
(984 |
) |
Cost of tool revenue (1) |
|
200 |
|
|
|
1,223 |
|
|
|
984 |
|
Non-GAAP gross profit |
$ |
2,626 |
|
|
$ |
1,834 |
|
|
$ |
526 |
|
Non-GAAP gross margin |
|
5.6 |
% |
|
|
4.7 |
% |
|
|
1.1 |
% |
|
|
|
|
|
|
||||||
GAAP research and development |
$ |
2,361 |
|
|
$ |
3,339 |
|
|
$ |
2,282 |
|
Equity-based compensation (2) |
|
(128 |
) |
|
|
(1,487 |
) |
|
|
(225 |
) |
Non-GAAP research and development |
$ |
2,233 |
|
|
$ |
1,852 |
|
|
$ |
2,057 |
|
|
|
|
|
|
|
||||||
GAAP selling, general and administrative expenses |
$ |
10,795 |
|
|
$ |
15,415 |
|
|
$ |
11,690 |
|
SkyWater Florida start-up costs (3) |
|
(45 |
) |
|
|
(186 |
) |
|
|
(61 |
) |
Management transition expense (4) |
|
— |
|
|
|
(435 |
) |
|
|
— |
|
Equity-based compensation (2) |
|
(1,444 |
) |
|
|
(4,454 |
) |
|
|
(1,866 |
) |
Management fees (6) |
|
— |
|
|
|
(56 |
) |
|
|
— |
|
Non-GAAP selling, general and administrative expenses |
$ |
9,306 |
|
|
$ |
10,284 |
|
|
$ |
9,763 |
|
|
Three Months Ended |
||||||||||
|
July 3, 2022 |
|
July 4, 2021 |
|
April 3, 2022 |
||||||
|
(in thousands) |
||||||||||
GAAP net loss to SkyWater Technology, Inc. |
$ |
(13,005 |
) |
|
$ |
(6,979 |
) |
|
$ |
(16,606 |
) |
Paycheck Protection Program loan forgiveness |
|
— |
|
|
|
(6,453 |
) |
|
|
— |
|
Corporate conversion and initial public offering related costs (5) |
|
— |
|
|
|
1,521 |
|
|
|
— |
|
SkyWater Florida start-up costs (3) |
|
158 |
|
|
|
504 |
|
|
|
402 |
|
Management transition expense (4) |
|
— |
|
|
|
435 |
|
|
|
— |
|
Fair value changes in contingent consideration (5) |
|
— |
|
|
|
(942 |
) |
|
|
— |
|
Equity-based compensation (2) |
|
2,118 |
|
|
|
6,768 |
|
|
|
3,216 |
|
Management fees (6) |
|
— |
|
|
|
56 |
|
|
|
— |
|
Non-GAAP net loss to shareholders |
$ |
(10,729 |
) |
|
$ |
(5,090 |
) |
|
$ |
(12,988 |
) |
|
|
|
|
|
|
||||||
Equity-based compensation allocation in the consolidated statements of operations: |
|
|
|
|
|
||||||
Cost of revenue |
$ |
546 |
|
|
$ |
827 |
|
|
$ |
1,125 |
|
Research and development |
|
128 |
|
|
|
1,487 |
|
|
|
225 |
|
Selling, general and administrative expenses |
|
1,444 |
|
|
|
4,454 |
|
|
|
1,866 |
|
|
$ |
2,118 |
|
|
$ |
6,768 |
|
|
$ |
3,216 |
|
|
|
|
|
|
|
||||||
SkyWater Florida start-up costs allocation in the consolidated statements of operations: |
|
|
|
|
|
||||||
Cost of revenue |
$ |
113 |
|
|
$ |
318 |
|
|
$ |
341 |
|
Selling, general and administrative expenses |
|
45 |
|
|
|
186 |
|
|
|
61 |
|
|
$ |
158 |
|
|
$ |
504 |
|
|
$ |
402 |
|
|
Three Months Ended
|
||||||
|
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. |
$ |
(13,005 |
) |
|
$ |
(10,729 |
) |
Denominator: |
|
|
|
||||
Weighted-average common shares outstanding, basic and diluted |
|
40,203 |
|
|
|
40,203 |
|
Net loss per common share, basic and diluted |
$ |
(0.32 |
) |
|
$ |
(0.27 |
) |
|
|
|
|
||||
|
Three Months Ended
|
||||||
|
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. |
$ |
(6,979 |
) |
|
$ |
(5,090 |
) |
Denominator: |
|
|
|
||||
Weighted-average Class B preferred units outstanding, basic and diluted |
|
34,708 |
|
|
|
34,708 |
|
Net loss per Class B preferred unit, basic and diluted |
$ |
(0.20 |
) |
|
$ |
(0.15 |
) |
|
|
|
|
||||
|
Three Months Ended
|
||||||
|
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. |
$ |
(16,606 |
) |
|
$ |
(12,988 |
) |
Denominator: |
|
|
|
||||
Weighted-average common shares outstanding, basic and diluted |
|
39,862 |
|
|
|
39,862 |
|
Net loss per common share, basic and diluted |
$ |
(0.42 |
) |
|
$ |
(0.33 |
) |
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
|
July 3, 2022 |
|
July 4, 2021 |
|
April 3,
|
|
July 3, 2022 |
|
July 4, 2021 |
||||||||||
|
(in thousands) |
||||||||||||||||||
Net loss to shareholders |
$ |
(13,005 |
) |
|
$ |
(6,979 |
) |
|
$ |
(16,606 |
) |
|
$ |
(29,611 |
) |
|
$ |
(9,790 |
) |
Interest expense |
|
1,040 |
|
|
|
912 |
|
|
|
1,029 |
|
|
|
2,069 |
|
|
|
1,970 |
|
Income tax expense (benefit) |
|
63 |
|
|
|
(4,237 |
) |
|
|
(194 |
) |
|
|
(131 |
) |
|
|
(4,662 |
) |
Depreciation and amortization |
|
7,198 |
|
|
|
6,854 |
|
|
|
6,458 |
|
|
|
13,657 |
|
|
|
13,336 |
|
EBITDA |
|
(4,704 |
) |
|
|
(3,450 |
) |
|
|
(9,313 |
) |
|
|
(14,016 |
) |
|
|
854 |
|
Paycheck Protection Program loan forgiveness |
|
— |
|
|
|
(6,453 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,453 |
) |
Corporate conversion and initial public offering related costs |
|
— |
|
|
|
1,521 |
|
|
|
— |
|
|
|
— |
|
|
|
1,521 |
|
SkyWater Florida start-up costs (3) |
|
158 |
|
|
|
504 |
|
|
|
402 |
|
|
|
560 |
|
|
|
504 |
|
Management transition expense (4) |
|
— |
|
|
|
435 |
|
|
|
— |
|
|
|
— |
|
|
|
435 |
|
Fair value changes in contingent consideration (5) |
|
— |
|
|
|
(942 |
) |
|
|
— |
|
|
|
— |
|
|
|
(886 |
) |
Equity-based compensation (2) |
|
2,118 |
|
|
|
6,768 |
|
|
|
3,216 |
|
|
|
5,334 |
|
|
|
7,003 |
|
Management fees (6) |
|
— |
|
|
|
56 |
|
|
|
— |
|
|
|
— |
|
|
|
332 |
|
Net income attributable to non-controlling interests (7) |
|
826 |
|
|
|
757 |
|
|
|
859 |
|
|
|
1,685 |
|
|
|
1,515 |
|
Adjusted EBITDA |
$ |
(1,602 |
) |
|
$ |
(804 |
) |
|
$ |
(4,836 |
) |
|
$ |
(6,437 |
) |
|
$ |
4,825 |
|
__________________ | ||
(1) | Tool revenue and cost of tool revenue represent the revenue and external costs related to the services we provide to qualify customer funded tool technologies as our customers invest in our capabilities to expand our technology platforms. |
|
(2) | Represents non-cash equity-based compensation expense. |
|
(3) | Represents start-up costs associated with our 200 mm heterogeneous integration facility in Kissimmee, Florida, which includes legal fees, recruiting expenses, retention awards and facility start-up expenses. These expenses are not indicative of our ongoing costs and will be discontinued following the start-up of SkyWater Florida. |
|
(4) | Represents expenses directly associated with the corporate conversion and IPO, such as professional, consulting, legal and accounting services. This also includes bonus awards granted to employees upon the completion of the IPO. These expenses are not indicative of our ongoing costs and were discontinued following the completion of our initial public offering. |
|
(5) | Represents non-cash valuation adjustment of contingent consideration to fair market value during the period. |
|
(6) | Represents a related party transaction with Oxbow Industries, our principal stockholder. As these fees are not part of the core business, did not continue after our IPO and are excluded from management’s assessment of the business, we believe it is useful to investors to view our results excluding these fees. |
|
(7) | Represents net income attributable to our VIE, which was formed for the purpose of purchasing our land, building with the proceeds of a bank loan. Since depreciation and interest expense are excluded from net loss in our adjusted EBITDA financial measure, we also exclude the net income attributable to the VIE. |