Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the fiscal fourth quarter and year ended January 2, 2021.

Fiscal 2020 Highlights

- Record Photonics revenues of $45.7 million, up 30% year-over-year
- Record sales of system upgrades to our hard disk drive (HDD) customers
- Profitable results, with GAAP EPS of $0.04 and non-GAAP EPS of $0.05 for the year
- Significant cash flow generation, ending fiscal 2020 with $50.4 million in total cash, cash equivalents, restricted cash and investments, an increase of $7.5 million over year-end 2019

“Given the immense challenges faced in 2020, we are pleased to report profitable results and strong cash flow generation for the year,” commented Wendell Blonigan, president and chief executive officer of Intevac. “Our profitable results were driven primarily by our Photonics business, which reported strong growth and a record year as a result of significant development revenues for the IVAS program, the first all-digital solution for the ground soldier. In our Thin-film Equipment (TFE) business, we achieved strong gross margin performance, primarily as a result of record sales of HDD upgrades for both the fourth quarter and full year. While total sales declined year-over-year as a result of COVID-related impacts to our TFE growth initiatives, our combined Photonics and HDD businesses actually grew 5% for the year, exceeding our expectations entering 2020.

“As we look forward, the IVAS program continues to be the primary revenue growth opportunity for Photonics. We expect to transition from the development stage into production over the course of this year, setting the stage for significant growth potential in our Photonics business for 2022 and beyond. In TFE, we expect the investment cycle for HDD media capacity expansions to begin by mid-2021, and accelerate into next year, in support of strong demand for mass-capacity data center storage and growth in high-performance computing. Finally, we believe the multiple evaluation and demo programs in our TFE growth initiatives will contribute to our overall growth story, and continue to support the long-term revenue growth and profitability objectives for Intevac,” concluded Mr. Blonigan.

($ Millions, except per share amounts)

Q4 2020

Q4 2019

GAAP Results

Non-GAAP Results

GAAP Results

Non-GAAP Results

Net Revenues

$

28.6

$

28.6

$

35.4

$

35.4

Operating Income

$

1.7

$

1.7

$

7.3

$

7.3

Net Income

$

1.1

$

1.1

$

5.2

$

5.2

Net Income per Diluted Share

$

0.05

$

0.05

$

0.22

$

0.22

 

Year Ended

Year Ended

January 2, 2021

December 28, 2019

GAAP Results

Non-GAAP Results

GAAP Results

Non-GAAP Results

Net Revenues

$

97.8

$

97.8

$

108.9

$

108.9

Operating Income

$

2.6

$

2.7

$

3.9

$

3.9

Net Income

$

1.1

$

1.2

$

1.1

$

1.2

Net Income per Diluted Share

$

0.04

$

0.05

$

0.05

$

0.05

Intevac’s non-GAAP adjusted results exclude the impact of the following, where applicable: (1) restructuring charges; and (2) changes in fair value of contingent consideration liabilities associated with business combinations. A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial table included in this release. See also “Use of Non-GAAP Financial Measures” section.

Fourth Quarter Fiscal 2020 Summary

Net income for the quarter was $1.1 million, or $0.05 per diluted share, compared to net income of $5.2 million, or $0.22 per diluted share, in the fourth quarter of 2019. Non-GAAP net income for the fourth quarter of 2020 was $1.1 million, or $0.05 per diluted share, compared to non-GAAP net income of $5.2 million, or $0.22 per diluted share, in the fourth quarter of 2019.

Revenues were $28.6 million, including $18.2 million of TFE revenues and $10.4 million of Photonics revenues. TFE revenues consisted of upgrades, spares and service. Photonics revenues included $5.3 million of research and development contracts and $5.1 million of product sales. In the fourth quarter of 2019, revenues were $35.4 million, including $24.4 million of TFE revenues which consisted of two 200 Lean® HDD systems, upgrades, spares and service, and Photonics revenues of $11.1 million, which included $6.2 million of research and development contracts and $4.9 million of product sales.

TFE gross margin was 48.3%, compared to 46.9% in the fourth quarter of 2019 and 43.5% in the third quarter of 2020. The improvement from the fourth quarter of 2019 and the third quarter of 2020 was primarily due to favorable product mix. Photonics gross margin was 27.7%, compared to 45.7% in the fourth quarter of 2019 and 42.8% in the third quarter of 2020. The decline from the fourth quarter of 2019 and the third quarter of 2020 was primarily due to lower margins on research and development contracts. Consolidated gross margin was 40.8%, compared to 46.5% in the fourth quarter of 2019 and 43.1% in the third quarter of 2020.

R&D and SG&A expenses were $10.0 million, compared to $9.2 million in the fourth quarter of 2019 and $9.4 million in the third quarter of 2020.

Order backlog totaled $46.9 million on January 2, 2021, compared to $63.3 million on September 26, 2020 and $92.4 million on December 28, 2019. Backlog at January 2, 2021 and September 26, 2020 did not include any 200 Lean HDD systems. Backlog at December 28, 2019 included two 200 Lean HDD systems.

The Company ended the year with $50.4 million of total cash, cash equivalents, restricted cash and investments and $101.6 million in tangible book value.

Fiscal Year 2020 Summary

Net income was $1.1 million, or $0.04 per diluted share, compared to $1.1 million, or $0.05 per diluted share, for fiscal 2019. Non-GAAP net income was $1.2 million or $0.05 per diluted share, compared to non-GAAP net income of $1.2 million or $0.05 per diluted share for fiscal 2019.

Revenues were $97.8 million, including $52.1 million of TFE revenues and $45.7 million of Photonics revenues, of which $22.9 million was contract R&D revenues, compared to 2019 revenues of $108.9 million, which included $73.7 million of TFE revenues and $35.2 million of Photonics revenues, of which $19.7 million was contract R&D revenues.

TFE gross margin was 43.0%, compared to 37.2% in 2019, while Photonics gross margin was 39.7%, compared to 38.3% in 2019. Consolidated gross margin was 41.4%, compared to 37.5% in 2019. Total R&D and SG&A expenses were $38.0 million, compared to $36.9 million in 2019.

Use of Non-GAAP Financial Measures

Intevac's non-GAAP results exclude the impact of the following, where applicable: restructuring charges and changes in fair value of contingent consideration liabilities associated with business combinations. A reconciliation of the GAAP and non-GAAP results is provided in the financial tables included in this release.

Management uses non-GAAP results to evaluate the Company’s operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Intevac believes these measures enhance investors’ ability to review the Company’s business from the same perspective as the Company’s management and facilitate comparisons of this period’s results with prior periods. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP.

Conference Call Information

The Company will discuss its financial results and outlook in a conference call today at 1:30 p.m. PST (4:30 p.m. EST). To participate in the teleconference, please call toll-free (877) 407-0989 prior to the start time, and reference meeting number 13714463. For international callers, the dial-in number is +1 (201) 389-0921. You may also listen live via the Internet on the Company's investor relations website at ir.intevac.com. For those unable to attend live, an archived webcast of the call will be available at ir.intevac.com.

About Intevac

Intevac was founded in 1991 and has two businesses: Thin-film Equipment and Photonics.

In our Thin-film Equipment business, we are a leader in the design and development of high-productivity, thin-film processing systems. Our production-proven platforms are designed for high-volume manufacturing of substrates with precise thin film properties, such as the hard drive media, display cover panel, and solar photovoltaic markets we serve currently.

In our Photonics business, we are a recognized leading developer of advanced high-sensitivity digital sensors, cameras and systems that primarily serve the defense industry. We are the provider of integrated digital imaging systems for most U.S. military night vision programs.

For more information call 408-986-9888, or visit the Company's website at www.intevac.com.

200 Lean®, INTEVAC MATRIX®, INTEVAC VERTEX®, ENERGi®, DIAMOND DOG®, DiamondClad®, VERTEX Marathon®, and VERTEX Spectra® are registered trademarks of Intevac, Inc.

Safe Harbor Statement

This press release includes statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Intevac claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “expects,” or “anticipates,” and do not reflect historical facts. Specific forward-looking statements contained in this press release include, but are not limited to: impacts related to the COVID-19 global pandemic, customer adoption of our products, future revenue growth potential, and the future financial performance of Intevac. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from the Company’s expectations. These risks include, but are not limited to: global economic impacts of COVID-19 including delays in customer evaluations, supply chain constraints and disruptions related to COVID-19, technology risk, challenges achieving customer adoption and revenue growth in Thin-film Equipment markets, and delays in Photonics programs, each of which could have a material impact on our business, our financial results, and the Company's stock price. These risks and other factors are detailed in the Company’s periodic filings with the U.S. Securities and Exchange Commission.

INTEVAC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except percentages and per share amounts)

 

 

Three months ended

 

Year ended

January 2,

December 28,

January 2,

December 28,

 

2021

 

2019

 

2021

 

2019

Net revenues

 

 

 

 

 

TFE

$

18,204

 

$

24,352

 

 

$

52,128

 

$

73,678

 

Photonics

 

10,372

 

 

11,092

 

 

 

45,696

 

 

35,207

 

Total net revenues

 

28,576

 

 

35,444

 

 

 

97,824

 

 

108,885

 

 

 

 

 

 

 

Gross profit

 

11,669

 

 

16,493

 

 

 

40,545

 

 

40,868

 

Gross margin

 

 

 

 

 

TFE

 

48.3

%

 

46.9

%

 

 

43.0

%

 

37.2

%

Photonics

 

27.7

%

 

45.7

%

 

 

39.7

%

 

38.3

%

Consolidated

 

40.8

%

 

46.5

%

 

 

41.4

%

 

37.5

%

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Research and development

 

3,499

 

 

3,296

 

 

 

14,093

 

 

14,309

 

Selling, general and administrative

 

6,471

 

 

5,913

 

 

 

23,897

 

 

22,634

 

Total operating expenses

 

9,970

 

 

9,209

 

 

 

37,990

 

 

36,943

 

Total operating income

 

1,699

 

 

7,284

 

 

 

2,555

 

 

3,925

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

TFE

 

2,388

 

 

5,181

 

 

 

(1,978

)

 

1,747

 

Photonics

 

584

 

 

3,321

 

 

 

10,064

 

 

6,434

 

Corporate

 

(1,273

)

 

(1,218

)

 

 

(5,531

)

 

(4,256

)

Total operating income

 

1,699

 

 

7,284

 

 

 

2,555

 

 

3,925

 

 

 

 

 

 

 

Interest income and other income (expense), net

 

—

 

 

133

 

 

 

212

 

 

582

 

Income before provision for income taxes

 

1,699

 

 

7,417

 

 

 

2,767

 

 

4,507

 

Provision for income taxes

 

586

 

 

2,215

 

 

 

1,711

 

 

3,359

 

Net income

$

1,113

 

$

5,202

 

 

$

1,056

 

$

1,148

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

Basic

$

0.05

 

$

0.22

 

 

$

0.04

 

$

0.05

 

Diluted

$

0.05

 

$

0.22

 

 

$

0.04

 

$

0.05

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

Basic

 

23,862

 

 

23,275

 

 

 

23,669

 

 

23,063

 

Diluted

 

24,456

 

 

23,677

 

 

 

24,151

 

 

23,340

 

INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

January 2,

December 28,

 

2021

 

2019

 

(Unaudited)

 

(see Note)

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

Cash, cash equivalents and short-term investments

$

44,180

 

 

$

36,487

 

Accounts receivable, net

 

28,646

 

 

 

28,619

 

Inventories

 

21,689

 

 

 

24,907

 

Prepaid expenses and other current assets

 

1,893

 

 

 

1,504

 

Total current assets

 

96,408

 

 

 

91,517

 

 

 

 

 

Long-term investments

 

5,388

 

 

 

5,537

 

Restricted cash

 

787

 

 

 

787

 

Property, plant and equipment, net

 

11,004

 

 

 

11,598

 

Operating lease right-of-use assets

 

8,165

 

 

 

10,279

 

Intangible assets, net

 

—

 

 

 

274

 

Other long-term assets

 

5,486

 

 

 

6,330

 

Total assets

$

127,238

 

 

$

126,322

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

Current operating lease liabilities

$

2,853

 

 

$

2,524

 

Accounts payable

 

4,259

 

 

4,199

 

Accrued payroll and related liabilities

 

7,679

 

 

6,488

 

Other accrued liabilities

 

3,598

 

 

 

3,593

 

Customer advances

 

33

 

 

 

4,007

 

Total current liabilities

 

18,422

 

 

 

20,811

 

 

 

 

 

Non-current liabilities

 

 

 

Non-current operating lease liabilities

 

6,803

 

 

 

9,532

 

Other long-term liabilities

 

457

 

 

 

186

 

Total non-current liabilities

 

7,260

 

 

 

9,718

 

 

 

 

 

Stockholders’ equity

 

 

 

Common stock ($0.001 par value)

 

24

 

 

 

23

 

Additional paid-in capital

 

193,173

 

 

 

188,290

 

Treasury stock, at cost

 

(29,551

)

 

 

(29,158

)

Accumulated other comprehensive income

 

640

 

 

 

424

 

Accumulated deficit

 

(62,730

)

 

 

(63,786

)

Total stockholders’ equity

 

101,556

 

 

 

95,793

 

Total liabilities and stockholders’ equity

$

127,238

 

 

$

126,322

 

Note: Amounts as of December 28, 2019 are derived from the December 28, 2019 audited consolidated financial statements.

INTEVAC, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited, in thousands, except per share amounts)

 

Three months ended

Year ended

 

January 2,
2021

December 28,
2019

January 2,
2021

December 28,
2019

Non-GAAP Income from Operations

 

 

 

 

Reported operating income (GAAP basis)

$

1,699

$

7,284

$

2,555

$

3,925

Restructuring charges1

 

—

 

—

 

103

 

—

Change in fair value of contingent consideration obligations2

 

—

 

—

 

—

 

7

Non-GAAP Operating Income

$

1,699

$

7,284

$

2,658

$

3,932

 

 

 

 

 

Non-GAAP Net Income

 

 

 

 

Reported net income (GAAP basis)

$

1,113

$

5,202

$

1,056

$

1,148

Restructuring charges1

 

—

 

—

 

103

 

—

Change in fair value of contingent consideration obligations2

 

—

 

—

 

—

 

7

Income tax effect of non-GAAP adjustments3

 

—

 

—

 

—

 

—

Non-GAAP Net Income

$

1,113

$

5,202

$

1,159

$

1,155

 

 

 

 

 

Non-GAAP Net Income Per Diluted Share

 

 

 

 

Reported net income per diluted share (GAAP basis)

$

0.05

$

0.22

$

0.04

$

0.05

Restructuring charges1

$

—

$

—

$

0.00

$

—

Change in fair value of contingent consideration obligations2

$

—

$

—

$

—

$

0.00

Non-GAAP Net Income Per Diluted Share

$

0.05

$

0.22

$

0.05

$

0.05

Weighted average number of diluted shares

 

24,456

 

23,677

 

24,151

 

23,340

1

Results for the year ended January 2, 2021 include severance and other employee-related costs related to a restructuring program.

2

Results for the year ended December 28, 2019 include changes in fair value of contingent consideration obligations associated with the Solar Implant Technology (SIT) acquisition in 2010.

3

The amount represents the estimated income tax effect of the non-GAAP adjustments. The Company calculated the tax effect of non-GAAP adjustments by applying an applicable estimated jurisdictional tax rate to each specific non-GAAP item.