SkyWater Technology Reports First Quarter 2023 Results

Q1 2023 Results:

  • Revenue: Revenue of $66.1 million increased 37% year-over-year. Advanced Technology Services revenue of $48.3 million increased 82% year-over-year driven by continued momentum with key customers in the Aerospace & Defense sector. Advanced Technology Services revenue contained $0.5 million of tool revenue in the first quarter of 2023 and $1.0 million in the first quarter of 2022. Wafer Services revenue of $17.8 million decreased (17)% compared to the first quarter of 2022 driven by the GAAP accounting treatment of a revised large customer contract, which resulted in immediate revenue recognition of $8.2 million of work-in-process wafer inventory in the first quarter of 2022.
  • Gross Profit (Loss): GAAP gross profit was $16.5 million, or 24.9% of revenue, compared to gross loss of $0.9 million, or (2.0)% of revenue, in the first quarter of 2022. Non-GAAP gross profit was $16.9 million, or 25.8% of revenue, compared to non-GAAP gross profit of $0.5 million, or 1.1% of revenue, in the first quarter of 2022.
  • Net Loss: GAAP net loss to shareholders of $4.3 million, or $(0.10) per share, compared to a net loss to shareholders of $16.6 million, or $(0.42) per share, in the first quarter of 2022. Non-GAAP net loss to shareholders of $2.5 million, or $(0.06) per share, compared to a non-GAAP net loss to shareholders of $13.0 million, or $(0.33) per share, in the first quarter of 2022.
  • Adjusted EBITDA: Adjusted EBITDA was $8.1 million, or 12.3% of revenue, compared to $(4.8) million, or (10.0)% of revenue, in the first quarter of 2022.
  • Balance Sheet: Cash and cash equivalents of $13.8 million compared to $30.0 million on January 1, 2023.

A reconciliation between historical GAAP and non-GAAP information is contained in the tables below in the section titled, “Non-GAAP Financial Measures.”

Investor Webcast

SkyWater will host a conference call on Monday, May 8, 2023, at 3:30 p.m. CT to discuss its first quarter 2023 financial results. A live webcast of the call will be available online at IR.SkyWaterTechnology.com.

About SkyWater Technology

SkyWater (NASDAQ: SKYT) is a U.S.-based semiconductor manufacturer and a DMEA-accredited Category 1A Trusted Foundry. SkyWater’s Technology as a Service model streamlines the path to production for customers with development services, volume production and heterogeneous integration solutions in its world-class U.S. facilities. This pioneering model enables innovators to co-create the next wave of technology with diverse categories including mixed-signal CMOS, ROICs, rad-hard ICs, power management, MEMS, superconducting ICs, photonics, carbon nanotubes and interposers. SkyWater serves growing markets including aerospace & defense, automotive, biomedical, cloud & computing, consumer, industrial and IoT. For more information, visit: www.skywatertechnology.com.

Cautionary Statement Regarding Preliminary Results

The Company’s results for the fiscal quarter ended April 2, 2023 are preliminary, unaudited and subject to the finalization of the Company’s first quarter review and full-year audit and should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. The Company cautions that actual results may differ materially from those described in this press release.

SkyWater Technology Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements that are based on the Company’s current expectations or forecasts of future events, rather than past, events and outcomes, and such statements are not guarantees of future performance. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including information or predictions concerning the Company’s future business, results of operations, financial performance, plans and objectives, competitive position, market trends, and potential growth and market opportunities. In some cases, you can identify forward-looking statements by words such as “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will,” “targets,” “projects,” “seeks” or the negative of these terms or other comparable terminology.

Forward-looking statements are subject to risks, uncertainties and assumptions, which may cause the Company’s actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Key factors that could cause the Company’s actual results to be different than expected or anticipated include, but are not limited to: our goals and strategies; our future business development, financial condition and results of operations; our ability to continue operating our sole semiconductor foundry at full capacity; our ability to appropriately respond to changing technologies on a timely and cost-effective basis; our customer relationships and our ability to retain and expand our customer relationships; our ability to accurately predict our future revenues for the purpose of appropriately budgeting and adjusting our expenses; our expectations regarding dependence on our largest customers; our ability to diversify our customer base and develop relationships in new markets; the performance and reliability of our third-party suppliers and manufacturers; our ability to procure tools, materials, and chemicals amid industry-wide supply chain shortages; our ability to control costs, including our operating and capital expenses; the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets; the level of demand in our customers’ end markets; our ability to attract, train and retain key qualified personnel in a competitive labor market; adverse litigation judgments, settlements or other litigation-related costs; changes in trade policies, including the imposition of tariffs; our ability to raise additional capital or financing; our ability to accurately forecast demand; the level and timing of U.S. government program funding; our ability to maintain compliance with certain U.S. government contracting requirements; regulatory developments in the United States and foreign countries; our ability to protect our intellectual property rights; our ability to meet our long-term growth targets; and other factors discussed in the “Risk Factors” section of the annual report on Form 10-K the Company filed with the SEC on March 15, 2023 and in other documents that the Company files with the SEC, which are available at http://www.sec.gov. The Company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

SKYWATER TECHNOLOGY, INC.

Consolidated Balance Sheets

(Unaudited)

 

 

April 2, 2023

 

January 1, 2023

 

(in thousands, except share data)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

13,840

 

 

$

30,025

 

Accounts receivable, net

 

67,016

 

 

 

62,670

 

Inventories

 

14,366

 

 

 

13,397

 

Prepaid expenses and other current assets

 

12,457

 

 

 

10,290

 

Income tax receivable

 

169

 

 

 

169

 

Total current assets

 

107,848

 

 

 

116,551

 

Property and equipment, net

 

175,368

 

 

 

179,915

 

Intangible assets, net

 

5,324

 

 

 

5,608

 

Other assets

 

4,286

 

 

 

3,690

 

Total assets

$

292,826

 

 

$

305,764

 

Liabilities and shareholders' equity

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

2,021

 

 

$

1,855

 

Accounts payable

 

13,931

 

 

 

21,102

 

Accrued expenses

 

26,264

 

 

 

25,212

 

Short-term financing, less unamortized debt issuance costs

 

52,213

 

 

 

55,817

 

Deferred revenue - current

 

28,168

 

 

 

28,186

 

Total current liabilities

 

122,597

 

 

 

132,172

 

Long-term liabilities:

 

 

 

Long-term debt, less current portion and net of unamortized debt issuance costs

 

35,194

 

 

 

35,181

 

Long-term incentive plan

 

 

 

 

1,643

 

Deferred revenue - long-term

 

62,740

 

 

 

67,967

 

Deferred income tax liability, net

 

1,239

 

 

 

1,239

 

Other long-term liabilities

 

13,584

 

 

 

13,585

 

Total long-term liabilities

 

112,757

 

 

 

119,615

 

Total liabilities

 

235,354

 

 

 

251,787

 

Commitments and contingencies

 

 

 

Shareholders’ equity:

 

 

 

Preferred stock, $0.01 par value per share (80,000,000 shares authorized, zero shares issued and outstanding)

 

 

 

 

 

Common stock, $0.01 par value per share (200,000,000 shares authorized; 44,280,198 and 43,704,876 shares issued and outstanding)

 

443

 

 

 

437

 

Additional paid-in capital

 

154,764

 

 

 

147,304

 

Accumulated deficit

 

(98,720

)

 

 

(94,072

)

Total shareholders’ equity, SkyWater Technology, Inc.

 

56,487

 

 

 

53,669

 

Non-controlling interests

 

985

 

 

 

308

 

Total shareholders’ equity

 

57,472

 

 

 

53,977

 

Total liabilities and shareholders’ equity

$

292,826

 

 

$

305,764

 

SKYWATER TECHNOLOGY, INC.

Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended

 

April 2, 2023

 

January 1, 2023

 

April 3, 2022

 

(in thousands, except share data)

Revenue

$

66,094

 

 

$

65,087

 

 

$

48,121

 

Cost of revenue:

 

 

 

 

 

Cost of revenue

 

49,626

 

 

 

48,536

 

 

 

49,061

 

Total cost of revenue

 

49,626

 

 

 

48,536

 

 

 

49,061

 

Gross profit (loss)

 

16,468

 

 

 

16,551

 

 

 

(940

)

Research and development

 

2,668

 

 

 

2,208

 

 

 

2,282

 

Selling, general and administrative expenses

 

14,895

 

 

 

13,040

 

 

 

11,690

 

Operating income (loss)

 

(1,095

)

 

 

1,303

 

 

 

(14,912

)

Other income (expense):

 

 

 

 

 

Loss on debt extinguishment

 

 

 

 

(1,101

)

 

 

 

Interest expense

 

(2,471

)

 

 

(1,794

)

 

 

(1,029

)

Total other income (expense)

 

(2,471

)

 

 

(2,895

)

 

 

(1,029

)

Income (loss) before income taxes

 

(3,566

)

 

 

(1,592

)

 

 

(15,941

)

Income tax expense (benefit)

 

 

 

 

852

 

 

 

(194

)

Net income (loss)

 

(3,566

)

 

 

(2,444

)

 

 

(15,747

)

Less: net income attributable to non-controlling interests

 

707

 

 

 

597

 

 

 

859

 

Net income (loss) attributable to SkyWater Technology, Inc.

$

(4,273

)

 

$

(3,041

)

 

$

(16,606

)

Net income (loss) per share attributable to common shareholders, basic and diluted:

$

(0.10

)

 

$

(0.07

)

 

$

(0.42

)

Weighted average shares used in computing net income (loss) per common share, basic and diluted:

 

43,817,417

 

 

 

42,612,763

 

 

 

39,861,688

 

SKYWATER TECHNOLOGY, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Three Months Ended

 

April 2, 2023

 

April 3, 2022

 

 

 

 

 

(in thousands)

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(3,566

)

 

$

(15,747

)

Adjustments to reconcile net income (loss) to net cash flows used in operating activities:

 

 

 

Depreciation and amortization

 

7,352

 

 

 

6,458

 

Amortization of debt issuance costs included in interest expense

 

357

 

 

 

172

 

Long-term incentive and stock-based compensation

 

1,853

 

 

 

3,216

 

Deferred income taxes

 

 

 

 

(197

)

Cash paid for operating leases

 

(12

)

 

 

(12

)

Cash paid for finance leases

 

(212

)

 

 

(88

)

Provision for credit losses

 

2,154

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(6,875

)

 

 

(86

)

Inventories

 

(969

)

 

 

(3,843

)

Prepaid expenses and other assets

 

(2,653

)

 

 

(2,139

)

Accounts payable

 

(3,270

)

 

 

4,157

 

Deferred revenue

 

(5,245

)

 

 

(2,684

)

Income tax receivable and payable

 

 

 

 

1

 

Net cash used in operating activities

 

(11,086

)

 

 

(10,792

)

Cash flows from investing activities:

 

 

 

Purchase of software and licenses

 

(213

)

 

 

(400

)

Purchases of property and equipment

 

(2,851

)

 

 

(4,414

)

Net cash used in investing activities

 

(3,064

)

 

 

(4,814

)

Cash flows from financing activities:

 

 

 

Draws on revolving line of credit

 

59,350

 

 

 

 

Paydowns of revolving line of credit

 

(63,310

)

 

 

 

Net (repayment) proceeds on Revolver

 

 

 

 

9,392

 

Net proceeds from tool financing

 

494

 

 

 

 

Repayment of VIE financing

 

(317

)

 

 

(256

)

Cash paid for finance leases

 

(343

)

 

 

(334

)

Proceeds from the issuance of common stock pursuant to the employee stock purchase plan

 

1,275

 

 

 

659

 

Proceeds from the issuance of common stock, net of commissions

 

2,696

 

 

 

 

Cash paid on license technology obligations

 

(1,850

)

 

 

 

Net distributions to VIE member

 

(30

)

 

 

(337

)

Net cash (used in) provided by financing activities

 

(2,035

)

 

 

9,124

 

Net change in cash and cash equivalents

 

(16,185

)

 

 

(6,482

)

Cash and cash equivalents - beginning of period

 

30,025

 

 

 

12,917

 

Cash and cash equivalents - end of period

$

13,840

 

 

$

6,435

 


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