We provide supplemental, non-GAAP financial information that our management regularly evaluates to provide additional insight to investors as supplemental information to our results reported using U.S. generally accepted accounting principles (GAAP). We provide non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP selling, general and administrative expense, non-GAAP net income (loss) to shareholders, non-GAAP net income (loss) to shareholders per basic share and non-GAAP net income (loss) per diluted share. Our management uses these non-GAAP financial measures to make informed operating decisions, complete strategic planning, prepare annual budgets, and evaluate Company and management performance. We believe these non-GAAP financial measures are useful performance measures to our investors because they provide a baseline for analyzing trends in our business and exclude certain items that may not be indicative of our core operating results. The non-GAAP financial measures disclosed in this earnings release should not be viewed as an alternative to, or more meaningful than, the reported results prepared in accordance with GAAP. In addition, because these non-GAAP financial measures are not determined in accordance with GAAP, other companies, including our peers, may calculate their non-GAAP financial measures differently than we do. As a result, the non-GAAP financial measures presented in this earnings release may not be directly comparable to similarly titled measures presented by other companies.
We also provide earnings before interest, income taxes, depreciation and amortization (EBITDA), adjusted EBITDA and adjusted EBITDA margin as supplemental non-GAAP measures. We define adjusted EBITDA as net income (loss) before interest expense, income tax (benefit) expense, depreciation and amortization, equity-based compensation and certain other items that we do not view as indicative of our ongoing performance, including net income attributable to noncontrolling interests; business transformation costs; management transition expense; the cost of severance, separation and other termination benefits; and the cost of CHIPS Act specialist fees. Our management uses EBITDA, adjusted EBITDA and adjusted EBITDA margin to make informed operating decisions, complete strategic planning, prepare annual budgets, and evaluate Company and management performance. We believe these non-GAAP financial measures are useful performance measures to our investors because they allow for an effective evaluation of our operating performance when compared to other companies, including our peers, without regard to financing methods or capital structures. We exclude the items listed above from net income (loss) in arriving at adjusted EBITDA and adjusted EBITDA margin because the amounts of these items can vary substantially within our industry depending on the accounting methods and policies used, book values of assets, capital structures, and the methods by which assets were acquired. These non-GAAP financial measures should not be considered as an alternative to, or more meaningful than, the reported results prepared in accordance with GAAP. Certain items excluded from these non-GAAP financial measures 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 cost bases of depreciable assets, none of which are reflected in these non-GAAP financial measures. Our presentation of these non-GAAP financial measures should not be construed as an indication that our results will be unaffected by the items excluded from adjusted EBITDA and adjusted EBITDA margin. 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 these non-GAAP financial measures 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 GAAP, to our non-GAAP financial measures.
SKYWATER TECHNOLOGY, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
|
|||||||||||||||||||
|
Three-Month Period Ended |
|
Nine-Month Period Ended |
||||||||||||||||
|
September 29,
|
|
June 30,
|
|
October 1,
|
|
September 29,
|
|
October 1,
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands) |
||||||||||||||||||
GAAP revenue |
$ |
93,817 |
|
|
$ |
93,329 |
|
|
$ |
71,624 |
|
|
$ |
266,782 |
|
|
$ |
207,529 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP cost of revenue |
$ |
73,582 |
|
|
$ |
76,215 |
|
|
$ |
57,477 |
|
|
$ |
216,453 |
|
|
$ |
160,247 |
|
Equity-based compensation expense (1) |
|
(565 |
) |
|
|
(504 |
) |
|
|
(438 |
) |
|
|
(1,524 |
) |
|
|
(1,242 |
) |
Management transition expense (2) |
|
(97 |
) |
|
|
— |
|
|
|
— |
|
|
|
(97 |
) |
|
|
(705 |
) |
Non-GAAP cost of revenue |
$ |
72,920 |
|
|
$ |
75,711 |
|
|
$ |
57,039 |
|
|
$ |
214,832 |
|
|
$ |
158,300 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP gross profit |
$ |
20,235 |
|
|
$ |
17,114 |
|
|
$ |
14,147 |
|
|
$ |
50,329 |
|
|
$ |
47,282 |
|
GAAP gross margin |
|
21.6 |
% |
|
|
18.3 |
% |
|
|
19.8 |
% |
|
|
18.9 |
% |
|
|
22.8 |
% |
Equity-based compensation expense (1) |
$ |
565 |
|
|
$ |
504 |
|
|
$ |
438 |
|
|
$ |
1,524 |
|
|
$ |
1,242 |
|
Management transition expense (2) |
|
97 |
|
|
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
705 |
|
Non-GAAP gross profit |
$ |
20,897 |
|
|
$ |
17,618 |
|
|
$ |
14,585 |
|
|
$ |
51,950 |
|
|
$ |
49,229 |
|
Non-GAAP gross margin |
|
22.3 |
% |
|
|
18.9 |
% |
|
|
20.4 |
% |
|
|
19.5 |
% |
|
|
23.7 |
% |
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP research and development expense |
$ |
3,431 |
|
|
$ |
3,382 |
|
|
$ |
2,233 |
|
|
$ |
10,825 |
|
|
$ |
7,296 |
|
Equity-based compensation expense (1) |
|
(69 |
) |
|
|
(90 |
) |
|
|
(218 |
) |
|
|
(266 |
) |
|
|
(597 |
) |
Non-GAAP research and development expense |
$ |
3,362 |
|
|
$ |
3,292 |
|
|
$ |
2,015 |
|
|
$ |
10,559 |
|
|
$ |
6,699 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP selling, general, and administrative expense |
$ |
12,095 |
|
|
$ |
12,332 |
|
|
$ |
16,105 |
|
|
$ |
35,598 |
|
|
$ |
48,821 |
|
Equity-based compensation expense (1) |
|
(1,384 |
) |
|
|
(1,422 |
) |
|
|
(1,197 |
) |
|
|
(4,315 |
) |
|
|
(3,834 |
) |
Management transition expense (2) |
|
— |
|
|
|
(664 |
) |
|
|
— |
|
|
|
(664 |
) |
|
|
(130 |
) |
Business transformation costs (3) |
|
— |
|
|
|
— |
|
|
|
(3,522 |
) |
|
|
— |
|
|
|
(6,022 |
) |
CHIPS Act specialist fees (4) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,320 |
) |
Non-GAAP selling, general, and administrative expense |
$ |
10,711 |
|
|
$ |
10,246 |
|
|
$ |
11,386 |
|
|
$ |
30,619 |
|
|
$ |
37,515 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP net income (loss) to shareholders |
$ |
1,512 |
|
|
$ |
(1,897 |
) |
|
$ |
(7,568 |
) |
|
$ |
(6,114 |
) |
|
$ |
(20,431 |
) |
Equity-based compensation expense (1) |
|
2,018 |
|
|
|
2,016 |
|
|
|
1,853 |
|
|
|
6,105 |
|
|
|
5,673 |
|
Management transition expense (2) |
|
97 |
|
|
|
664 |
|
|
|
— |
|
|
|
761 |
|
|
|
835 |
|
Business transformation costs (3) |
|
— |
|
|
|
— |
|
|
|
3,522 |
|
|
|
— |
|
|
|
6,022 |
|
CHIPS Act specialist fees (4) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,320 |
|
Non-GAAP net income (loss) to shareholders |
$ |
3,627 |
|
|
$ |
783 |
|
|
$ |
(2,193 |
) |
|
$ |
752 |
|
|
$ |
(6,581 |
) |
|
Three-Month Period Ended |
|
Nine-Month Period Ended |
||||||||||||||||
|
September 29,
|
|
June 30,
|
|
October 1,
|
|
September 29,
|
|
October 1,
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands) |
||||||||||||||||||
Equity-based compensation expense allocation in the consolidated statements of operations (1): |
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue |
$ |
565 |
|
$ |
504 |
|
$ |
438 |
|
$ |
1,524 |
|
$ |
1,242 |
|||||
Research and development expense |
|
69 |
|
|
|
90 |
|
|
|
218 |
|
|
|
266 |
|
|
|
597 |
|
Selling, general, and administrative expense |
|
1,384 |
|
|
|
1,422 |
|
|
|
1,197 |
|
|
|
4,315 |
|
|
|
3,834 |
|
|
$ |
2,018 |
|
|
$ |
2,016 |
|
|
$ |
1,853 |
|
|
$ |
6,105 |
|
|
$ |
5,673 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Management transition expense allocation in the consolidated statements of operations (2): |
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue |
$ |
97 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
97 |
|
|
$ |
705 |
|
Selling, general, and administrative expense |
|
— |
|
|
|
664 |
|
|
|
— |
|
|
|
664 |
|
|
|
130 |
|
|
$ |
97 |
|
|
$ |
664 |
|
|
$ |
— |
|
|
$ |
761 |
|
|
$ |
835 |
|
|
Three-Month Period Ended September 29, 2024 |
|
Nine-Month Period Ended September 29, 2024 |
||||||||||||
|
GAAP |
|
Non-GAAP |
|
GAAP |
|
Non-GAAP |
||||||||
|
|
|
|
|
|
|
|
||||||||
Computation of net income (loss) per common share, basic and diluted: |
(in thousands, except per share data) |
||||||||||||||
Numerator: |
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to SkyWater Technology, Inc. |
$ |
1,512 |
|
|
$ |
3,627 |
|
|
$ |
(6,114 |
) |
|
$ |
752 |
|
Denominator: |
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding, basic |
|
47,523 |
|
|
|
47,523 |
|
|
|
47,339 |
|
|
|
47,339 |
|
Net income (loss) per common share, basic |
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
(0.13 |
) |
|
$ |
0.02 |
|
Weighted-average common shares outstanding, diluted |
|
47,640 |
|
|
|
47,640 |
|
|
|
47,339 |
|
|
|
47,481 |
|
Net income (loss) per common share, diluted |
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
(0.13 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
||||||||
|
Three-Month Period Ended June 30, 2024 |
|
|
||||||||||||
|
GAAP |
|
Non-GAAP |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Computation of net income (loss) per common share, basic and diluted: |
(in thousands, except per share data) |
|
|
|
|
||||||||||
Numerator: |
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to SkyWater Technology, Inc. |
$ |
(1,897 |
) |
|
$ |
783 |
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding, basic |
|
47,395 |
|
|
|
47,395 |
|
|
|
|
|
||||
Net income (loss) per common share, basic |
$ |
(0.04 |
) |
|
$ |
0.02 |
|
|
|
|
|
||||
Weighted-average common shares outstanding, diluted |
|
47,395 |
|
|
|
47,521 |
|
|
|
|
|
||||
Net income (loss) per common share, diluted |
$ |
(0.04 |
) |
|
$ |
0.02 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Three-Month Period Ended October 1, 2023 |
|
Nine-Month Period Ended October 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. |
$ |
(7,568 |
) |
|
$ |
(2,193 |
) |
|
$ |
(20,431 |
) |
|
$ |
(6,581 |
) |
Denominator: |
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding, basic and diluted |
|
46,445 |
|
|
|
46,445 |
|
|
|
45,002 |
|
|
|
45,002 |
|
Net loss per common share, basic and diluted |
$ |
(0.16 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.15 |
) |
|
Three-Month Period Ended |
|
Nine-Month Period Ended |
||||||||||||||||
|
September 29,
|
|
June 30,
|
|
October 1,
|
|
September 29,
|
|
October 1,
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands) |
||||||||||||||||||
Net income (loss) to shareholders (GAAP) |
$ |
1,512 |
|
|
$ |
(1,897 |
) |
|
$ |
(7,568 |
) |
|
$ |
(6,114 |
) |
|
$ |
(20,431 |
) |
Net income (loss) as a percentage of total revenue |
|
1.6 |
% |
|
|
(2.0 |
)% |
|
|
(10.6 |
)% |
|
|
(2.3 |
)% |
|
|
(9.8 |
)% |
Interest expense |
$ |
1,988 |
|
|
$ |
2,482 |
|
|
$ |
2,507 |
|
|
$ |
6,859 |
|
|
$ |
7,928 |
|
Income tax (benefit) expense |
|
93 |
|
|
|
(127 |
) |
|
|
(96 |
) |
|
|
7 |
|
|
|
(71 |
) |
Depreciation and amortization expense |
|
4,166 |
|
|
|
4,064 |
|
|
|
7,092 |
|
|
|
13,295 |
|
|
|
21,651 |
|
EBITDA |
|
7,759 |
|
|
|
4,522 |
|
|
|
1,935 |
|
|
|
14,047 |
|
|
|
9,077 |
|
Equity-based compensation expense (1) |
|
2,018 |
|
|
|
2,016 |
|
|
|
1,853 |
|
|
|
6,105 |
|
|
|
5,673 |
|
Management transition expense (2) |
|
97 |
|
|
|
664 |
|
|
|
— |
|
|
|
761 |
|
|
|
835 |
|
Business transformation costs (3) |
|
— |
|
|
|
— |
|
|
|
3,522 |
|
|
|
— |
|
|
|
6,022 |
|
CHIPS Act specialist fees (4) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,320 |
|
Net income attributable to noncontrolling interests (5) |
|
1,116 |
|
|
|
942 |
|
|
|
966 |
|
|
|
3,154 |
|
|
|
3,739 |
|
Adjusted EBITDA |
$ |
10,990 |
|
|
$ |
8,144 |
|
|
$ |
8,276 |
|
|
$ |
24,067 |
|
|
$ |
26,666 |
|
Adjusted EBITDA as a percentage of total revenue |
|
11.7 |
% |
|
|
8.7 |
% |
|
|
11.6 |
% |
|
|
9.0 |
% |
|
|
12.8 |
% |
__________________ |
|
(1) |
Represents non-cash equity-based compensation expense. |
(2) |
Represents the cost of severance, separation, and other termination benefits related to the reorganization of the manufacturing, sales, marketing, and operations leadership team. |
(3) |
Represents expenses related to long-term transformation activities focused on improvement in automation and operational efficiency and includes project-based management consulting fees. |
(4) |
Represents the costs of project-based specialist fees related to our CHIPS Act application process. |
(5) |
Represents net income attributable to noncontrolling interests arising from our variable interest entity (VIE), which was formed for the purpose of purchasing the land and building of our primary operating facility in Bloomington, Minnesota. Since interest expense is added back to net income (loss) to shareholders in our adjusted EBITDA financial measure, we also add back the net income attributable to noncontrolling interests as its net income is derived from interest the VIE charges SkyWater. |