SkyWater Technology Reports Fourth Quarter and Full Fiscal Year 2023 Results

Q4 2023 Results:

  • Revenue: Revenue of $79.2 million increased 22% year-over-year. Total ATS revenue of $67.1 million increased 40% year-over-year. Total ATS revenue included $9.9 million of tool revenue in the fourth quarter of 2023 and $0.0 million in the fourth quarter of 2022. Wafer Services revenue of $12.0 million decreased 30% compared to the fourth quarter of 2022.
  • Gross Profit: GAAP gross profit was $12.0 million, or 15.2% of total revenue, compared to gross profit of $16.6 million, or 25.4% of total revenue, in the fourth quarter of 2022. Non-GAAP gross profit was $13.8 million, or 17.4% of total revenue, compared to non-GAAP gross profit of $17.0 million, or 26.1% of total revenue, in the fourth quarter of 2022.
  • Operating Expenses: GAAP operating expenses were $18.0 million, compared to $15.2 million in the fourth quarter of 2022, and included $5.3 million of project-based management consulting transformation fees related to long-term improvement in automation and operational efficiency that were not a component of operating expenses in the fourth quarter of 2022.
  • Net Loss: GAAP net loss to shareholders of $10.3 million, or $(0.22) per share, compared to a net loss to shareholders of $3.0 million, or $(0.07) per share, in the fourth quarter of 2022. Non-GAAP net loss to shareholders of $1.1 million, or $(0.02) per share, compared to a non-GAAP net loss to shareholders of $1.5 million, or $(0.03) per share, in the fourth quarter of 2022.
  • Adjusted EBITDA: Adjusted EBITDA was $10.6 million, or 13.4% of total revenue, compared to $10.3 million, or 15.9% of total revenue, in the fourth quarter of 2022.

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, February 26, 2024, at 3:30 p.m. CT to discuss its fourth quarter and fiscal year 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, read-out ICs, 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 fourth quarter and fiscal year ended December 31, 2023 are preliminary, unaudited and subject to the finalization of the Company’s fourth 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 fabrication facilities 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; 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)

 

 

December 31, 2023

 

January 1, 2023

 

(in thousands, except share data)

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

18,382

 

 

$

30,025

 

Accounts receivable (net of allowance for credit losses of $180 and $1,638, respectively)

 

65,961

 

 

 

28,045

 

Contract assets (net of allowance for credit losses of $99 and $0, respectively)

 

29,666

 

 

 

34,625

 

Inventory

 

15,341

 

 

 

13,397

 

Prepaid expenses and other current assets

 

16,853

 

 

 

10,290

 

Income tax receivable

 

172

 

 

 

169

 

Total current assets

 

146,375

 

 

 

116,551

 

Property and equipment, net

 

159,367

 

 

 

179,915

 

Intangible assets, net

 

5,672

 

 

 

5,608

 

Other assets

 

5,342

 

 

 

3,690

 

Total assets

$

316,756

 

 

$

305,764

 

Liabilities and shareholders’ equity

 

 

 

Current liabilities

 

 

 

Current portion of long-term debt

$

3,976

 

 

$

1,855

 

Accounts payable

 

19,614

 

 

 

21,102

 

Accrued expenses

 

48,291

 

 

 

25,212

 

Short-term financing, net of unamortized debt issuance costs

 

22,765

 

 

 

55,817

 

Contract liabilities

 

49,551

 

 

 

28,186

 

Total current liabilities

 

144,197

 

 

 

132,172

 

Long-term liabilities

 

 

 

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

 

36,098

 

 

 

35,181

 

Long-term incentive plan

 

 

 

 

1,643

 

Long-term contract liabilities

 

65,754

 

 

 

67,967

 

Deferred income tax liability, net

 

679

 

 

 

1,239

 

Other long-term liabilities

 

9,327

 

 

 

13,585

 

Total long-term liabilities

 

111,858

 

 

 

119,615

 

Total liabilities

 

256,055

 

 

 

251,787

 

Shareholders’ equity

 

 

 

Preferred stock, $0.01 par value per share (80,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2023 and January 1, 2023)

 

 

 

 

 

Common stock, $0.01 par value per share (200,000,000 shares authorized; 47,028,159 and 43,704,876 shares issued and outstanding as of December 31, 2023 and January 1, 2023, respectively)

 

470

 

 

 

437

 

Additional paid-in capital

 

178,473

 

 

 

147,304

 

Accumulated deficit

 

(125,203

)

 

 

(94,072

)

Total shareholders’ equity, SkyWater Technology, Inc.

 

53,740

 

 

 

53,669

 

Noncontrolling interests

 

6,961

 

 

 

308

 

Total shareholders’ equity

 

60,701

 

 

 

53,977

 

Total liabilities and shareholders’ equity

$

316,756

 

 

$

305,764

 

SKYWATER TECHNOLOGY, INC.

Consolidated Statements of Operations

(Unaudited)

 

 

Three-Month Period Ended

 

Fiscal Year Ended

 

December 31, 2023

 

October 1, 2023

 

January 1, 2023

 

December 31, 2023

 

January 1, 2023

 

(in thousands, except share data)

Revenue

$

79,154

 

 

$

71,624

 

 

$

65,087

 

 

$

286,682

 

 

$

212,941

 

Cost of revenue

 

67,143

 

 

 

57,477

 

 

 

48,536

 

 

 

227,390

 

 

 

186,974

 

Gross profit

 

12,011

 

 

 

14,147

 

 

 

16,551

 

 

 

59,292

 

 

 

25,967

 

Research and development expense

 

2,872

 

 

 

2,233

 

 

 

2,208

 

 

 

10,169

 

 

 

9,431

 

Selling, general, and administrative expense

 

15,092

 

 

 

16,105

 

 

 

13,040

 

 

 

63,911

 

 

 

46,303

 

Operating (loss) income

 

(5,953

)

 

 

(4,191

)

 

 

1,303

 

 

 

(14,788

)

 

 

(29,767

)

Other expense

 

 

 

 

 

 

 

 

 

Loss on debt extinguishment

 

 

 

 

 

 

 

(1,101

)

 

 

 

 

 

(1,101

)

Interest expense

 

(2,898

)

 

 

(2,507

)

 

 

(1,794

)

 

 

(10,826

)

 

 

(5,194

)

Total other expense

 

(2,898

)

 

 

(2,507

)

 

 

(2,895

)

 

 

(10,826

)

 

 

(6,295

)

Loss before income taxes

 

(8,851

)

 

 

(6,698

)

 

 

(1,592

)

 

 

(25,614

)

 

 

(36,062

)

Income tax (benefit) expense

 

(450

)

 

 

(96

)

 

 

852

 

 

 

(521

)

 

 

809

 

Net loss

 

(8,401

)

 

 

(6,602

)

 

 

(2,444

)

 

 

(25,093

)

 

 

(36,871

)

Less: net income attributable to noncontrolling interests

 

1,924

 

 

 

966

 

 

 

597

 

 

 

5,663

 

 

 

2,722

 

Net loss attributable to SkyWater Technology, Inc.

$

(10,325

)

 

$

(7,568

)

 

$

(3,041

)

 

$

(30,756

)

 

$

(39,593

)

Net loss per share attributable to common shareholders, basic and diluted

$

(0.22

)

 

$

(0.16

)

 

$

(0.07

)

 

$

(0.68

)

 

$

(0.97

)

Weighted average shares used in computing net loss per common share, basic and diluted

 

47,020,395

 

 

 

46,445,309

 

 

 

42,612,763

 

 

 

45,506,598

 

 

 

40,835,186

 

SKYWATER TECHNOLOGY, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Fiscal Year Ended

 

December 31, 2023

 

January 1, 2023

 

(in thousands)

Cash flows from operating activities

 

 

 

Net loss

$

(25,093

)

 

$

(36,871

)

Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities

 

 

 

Depreciation and amortization

 

28,930

 

 

 

28,192

 

Gain on sale of property and equipment

 

 

 

 

(3

)

Write-off of capital projects in process

 

1,262

 

 

 

 

Amortization of debt issuance costs included in interest expense

 

1,755

 

 

 

909

 

Long-term incentive and equity-based compensation

 

6,860

 

 

 

8,610

 

Cash paid for contingent consideration in excess of initial valuation

 

 

 

 

(816

)

Deferred income taxes

 

(560

)

 

 

244

 

Cash paid for operating leases

 

(49

)

 

 

(49

)

Cash paid for interest on finance leases

 

(848

)

 

 

(757

)

Provision for credit losses

 

38

 

 

 

1,638

 

Loss on debt extinguishment

 

 

 

 

1,101

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable and contract assets

 

(33,371

)

 

 

(11,596

)

Inventories

 

(1,944

)

 

 

(9,225

)

Prepaid expenses and other assets

 

(8,218

)

 

 

(5,288

)

Accounts payable and accrued expenses

 

22,296

 

 

 

21,787

 

Contract liabilities, current and long-term

 

19,152

 

 

 

(12,749

)

Income tax receivable and payable

 

(3

)

 

 

576

 

Net cash provided by (used in) operating activities

 

10,207

 

 

 

(14,297

)

Cash flows from investing activities

 

 

 

Purchase of software and licenses

 

(1,871

)

 

 

(400

)

Purchases of property and equipment

 

(8,618

)

 

 

(17,053

)

Net cash used in investing activities

 

(10,489

)

 

 

(17,453

)

Cash flows from financing activities

 

 

 

Draws on revolving line of credit

 

259,350

 

 

 

63,006

 

Paydowns of revolving line of credit

 

(297,649

)

 

 

 

Net repayment on Revolver

 

 

 

 

(26,220

)

Proceeds from tool financings

 

9,012

 

 

 

 

Principal payments on long-term debt

 

(2,482

)

 

 

(1,224

)

Cash paid for debt issuance costs

 

 

 

 

(4,168

)

Proceeds from the issuance of common stock in secondary offering

 

 

 

 

16,168

 

Cash paid for offering costs

 

 

 

 

(456

)

Cash paid for principal on finance leases

 

(935

)

 

 

(1,603

)

Proceeds from the issuance of common stock pursuant to equity compensation plans

 

2,305

 

 

 

1,800

 

Proceeds from the issuance of common stock under the ATM

 

20,398

 

 

 

3,919

 

Cash paid on licensed technology obligations

 

(2,350

)

 

 

(1,150

)

Net contributions (distributions) from (to) noncontrolling interest

 

990

 

 

 

(1,214

)

Net cash (used in) provided by financing activities

 

(11,361

)

 

 

48,858

 

Net change in cash and cash equivalents

 

(11,643

)

 

 

17,108

 

Cash and cash equivalents - beginning of period

 

30,025

 

 

 

12,917

 

Cash and cash equivalents - end of period

$

18,382

 

 

$

30,025

 


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