SkyWater Technology Reports Fourth Quarter and Full Year 2022 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 1,
2023

 

January 2,
2022

 

October 2,
2022

 

January 1,
2023

 

January 2,
2022

 

(in thousands)

GAAP revenue

$

65,087

 

 

$

38,533

 

 

$

52,326

 

 

$

212,941

 

 

$

162,848

 

Tool revenue (10)

 

(30

)

 

 

(1,127

)

 

 

(219

)

 

 

(1,546

)

 

 

(19,160

)

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenue

$

48,536

 

 

$

55,156

 

 

$

44,049

 

 

$

186,974

 

 

$

170,320

 

Inventory write-down (1)

 

 

 

 

(13,442

)

 

 

 

 

 

 

 

 

(13,442

)

Equity-based compensation (2)

 

(452

)

 

 

(1,130

)

 

 

(456

)

 

 

(2,578

)

 

 

(3,042

)

SkyWater Florida start-up costs (3)

 

(14

)

 

 

(187

)

 

 

(114

)

 

 

(582

)

 

 

(879

)

Cost of tool revenue (10)

$

(46

)

 

$

(701

)

 

$

(152

)

 

$

(1,382

)

 

$

(12,078

)

Non-GAAP cost of revenue

$

48,024

 

 

$

39,696

 

 

$

43,327

 

 

$

182,432

 

 

$

140,879

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit (loss)

$

16,551

 

 

$

(16,623

)

 

$

8,277

 

 

$

25,967

 

 

$

(7,472

)

GAAP gross margin

 

25.4

%

 

 

(43.1

)%

 

 

15.8

%

 

 

12.2

%

 

 

(4.6

)%

Inventory write-down (1)

 

 

 

 

13,442

 

 

 

 

 

 

 

 

 

13,442

 

Equity-based compensation (2)

 

452

 

 

 

1,130

 

 

 

456

 

 

 

2,578

 

 

 

3,042

 

SkyWater Florida start-up costs (3)

 

14

 

 

 

187

 

 

 

114

 

 

 

582

 

 

 

879

 

Tool Revenue (10)

$

(30

)

 

$

(1,127

)

 

$

(219

)

 

$

(1,546

)

 

$

(19,160

)

Cost of Tool Revenue (10)

 

46

 

 

 

701

 

 

 

152

 

 

 

1,382

 

 

 

12,078

 

Non-GAAP gross profit (loss)

$

17,033

 

 

$

(2,290

)

 

$

8,780

 

 

$

28,963

 

 

$

2,809

 

Non-GAAP gross margin

 

26.2

%

 

 

(6.1

)%

 

 

16.8

%

 

 

13.7

%

 

 

2.0

%

 

 

 

 

 

 

 

 

 

 

GAAP research and development

$

2,208

 

 

$

1,228

 

 

$

2,580

 

 

$

9,431

 

 

$

8,747

 

Equity-based compensation (2)

 

(126

)

 

 

655

 

 

 

(115

)

 

 

(596

)

 

 

(1,182

)

Non-GAAP research and development

$

2,082

 

 

$

1,883

 

 

$

2,465

 

 

$

8,835

 

 

$

7,565

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

$

13,040

 

 

$

9,951

 

 

$

10,778

 

 

$

46,303

 

 

$

43,595

 

SkyWater Florida start-up costs (3)

 

2

 

 

 

(22

)

 

 

 

 

 

(104

)

 

 

(268

)

Management transition expense (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

(435

)

Equity-based compensation (2)

 

(995

)

 

 

(1,655

)

 

 

(1,128

)

 

 

(5,432

)

 

 

(8,303

)

Management fees (7)

 

 

 

 

 

 

 

 

 

 

 

 

 

(332

)

Non-GAAP selling, general and administrative expenses

$

12,047

 

 

$

8,274

 

 

$

9,650

 

 

$

40,767

 

 

$

34,257

 

 

Three Months Ended

 

Twelve Months Ended

 

January 1,
2023

 

January 2,
2022

 

October 2,
2022

 

January 1,
2023

 

January 2,
2022

 

(in thousands)

GAAP net loss to shareholders

$

(3,041

)

 

$

(27,036

)

 

$

(6,939

)

 

$

(39,593

)

 

$

(50,696

)

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 (3)

 

12

 

 

 

209

 

 

 

114

 

 

 

686

 

 

 

1,147

 

Management transition expense (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

435

 

Fair value changes in contingent consideration (6)

 

 

 

 

(154

)

 

 

 

 

 

 

 

 

(2,710

)

Equity-based compensation (2)

 

1,573

 

 

 

2,130

 

 

 

1,699

 

 

 

8,606

 

 

 

12,527

 

Management fees (7)

 

 

 

 

 

 

 

 

 

 

 

 

 

332

 

Non-GAAP net loss to shareholders

$

(1,456

)

 

$

(11,204

)

 

$

(5,126

)

 

$

(30,301

)

 

$

(30,042

)

 

 

 

 

 

 

 

 

 

 

Equity-based compensation allocation in the consolidated statements of operations (2):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

452

 

 

$

1,130

 

 

$

456

 

 

$

2,578

 

$

3,042

 

Research and development

 

126

 

 

 

(655

)

 

 

115

 

 

 

596

 

 

 

1,182

 

Selling, general and administrative expenses

 

995

 

 

 

1,655

 

 

 

1,128

 

 

 

5,432

 

 

 

8,303

 

 

$

1,573

 

 

$

2,130

 

 

$

1,699

 

 

$

8,606

 

 

$

12,527

 

 

 

 

 

 

 

 

 

 

 

SkyWater Florida start-up costs allocation in the consolidated statements of operations (3):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

14

 

 

$

187

 

 

$

114

 

 

$

582

 

 

$

879

 

Selling, general and administrative expenses

 

(2

)

 

 

22

 

 

 

 

 

 

104

 

 

 

268

 

 

$

12

 

 

$

209

 

 

$

114

 

 

$

686

 

 

$

1,147

 

 

Three Months Ended
January 1, 2023

 

Twelve Months Ended
January 1, 2023

 

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.

$

(3,041

)

 

$

(1,456

)

 

$

(39,593

)

 

$

(30,301

)

Undistributed preferred return to Class B preferred unitholders

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common shareholders

$

(3,041

)

 

$

(1,456

)

 

$

(39,593

)

 

$

(30,301

)

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

42,613

 

 

 

42,613

 

 

 

40,835

 

 

 

40,835

 

Net loss per common share, basic and diluted

$

(0.07

)

 

$

(0.03

)

 

$

(0.97

)

 

$

(0.74

)

 

 

 

 

 

 

 

 

 

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 unit 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
October 2, 2022

 

 

 

 

 

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.

$

(6,939

)

 

$

(5,126

)

 

 

 

 

Undistributed preferred return to Class B preferred unitholders

 

 

 

 

 

 

 

 

 

Net loss attributable to common shareholders

$

(6,939

)

 

$

(5,126

)

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

40,669

 

 

 

40,669

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.17

)

 

$

(0.13

)

 

 

 

 

 

Three Months Ended

Twelve Months Ended

 

January 1,
2023

 

January 2,
2022

 

January 1,
2023

 

January 2,
2022

 

(in thousands)

Net loss to shareholders

$

(3,041

)

 

$

(27,036

)

 

$

(39,593

)

 

$

(50,696

)

Interest expense (9)

 

2,895

 

 

 

839

 

 

 

6,295

 

 

 

3,542

 

Income tax (benefit) expense

 

852

 

 

 

(2,322

)

 

 

809

 

 

 

(6,790

)

Depreciation and amortization

 

7,451

 

 

 

7,068

 

 

 

28,192

 

 

 

27,368

 

EBITDA

 

8,157

 

 

 

(21,451

)

 

 

(4,297

)

 

 

(26,576

)

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 (3)

 

12

 

 

 

209

 

 

 

686

 

 

 

1,147

 

Management transition expense (5)

 

 

 

 

 

 

 

 

 

 

435

 

Fair value changes in contingent consideration (6)

 

 

 

 

(154

)

 

 

 

 

 

(2,710

)

Equity-based compensation (2)

 

1,573

 

 

 

2,130

 

 

 

8,606

 

 

 

12,527

 

Management fees (7)

 

 

 

 

 

 

 

 

 

 

332

 

Net income attributable to non-controlling interests (8)

 

597

 

 

 

871

 

 

 

2,722

 

 

 

3,293

 

Adjusted EBITDA

$

10,339

 

 

$

(4,748

)

 

$

7,717

 

 

$

(2,629

)


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