Group 1 - SkyWater Technology (NASDAQ: SKYT) is viewed as a strong investment opportunity, with the current market pricing it similarly to a typical chip foundry, indicating a potential mispricing [1] - The analysis emphasizes a focus on identifying asymmetric risk-reward opportunities through quantitative analysis and market intuition, particularly in technology disruptors and undervalued small-cap companies [1] - The investment philosophy includes exploiting market anomalies and long-term structural trends, with a preference for companies that have strong competitive advantages and innovative technologies [1]

Group 1: SkyWater Technology - SkyWater Technology has a 12-month stock price forecast of $13.00, indicating a 13.50% upside from the current price of $11.45, based on three analyst ratings [2] - The company reported a significant revenue drop of 37% year-over-year in Q2 2025, leading to widened losses per share, although gross margin improved by 20 basis points to 18.5% [2][3] - The acquisition of Fab 25 from Infineon Technologies is expected to generate at least $300 million in annual revenue and enhance EBITDA, with positive impacts anticipated as early as the current quarter [3][4] - SkyWater's acquisition supports a multi-year supply agreement exceeding $1 billion and positions the company favorably amid U.S. regulations favoring onshore semiconductor manufacturing [4] Group 2: Emergent BioSolutions - Emergent BioSolutions has a 12-month stock price forecast of $14.33, representing a 56.61% upside from the current price of $9.15, based on three analyst ratings [5] - The company experienced mixed results in Q2 but improved EPS significantly, beating expectations by 42 cents per share, driven by strong NARCAN sales and cost optimization strategies [6][7] - Emergent secured a $65 million contract with the Ontario Ministry of Health for NARCAN, contributing to the rapid growth of its international medical countermeasures business [8] Group 3: Backblaze - Backblaze has a 12-month stock price forecast of $10.07, indicating a 32.05% upside from the current price of $7.63, based on seven analyst ratings [9] - The company reported a 16% year-over-year revenue increase and a 29% surge in storage revenue due to rising demand from AI, despite wider-than-expected GAAP losses per share [9][10] - Backblaze's adjusted EBITDA margin is improving, and the successful launch of its B2 OverDrive platform is a positive indicator for future growth [10][11] - The stock has gained over 48% in the past month, with unanimous Buy ratings from all seven analysts and a consensus price target suggesting an additional 31% upside [11]

Core Viewpoint - SkyWater Technology's acquisition of Infineon's 200mm wafer fab in Austin, Texas, will quadruple its production capacity, expanding traditional node production from 130nm to 65nm, and is expected to meet the needs of various clients including the U.S. Department of Defense and quantum computing manufacturers [2][4]. Group 1: Acquisition and Capacity Expansion - The acquisition will increase SkyWater's annual wafer production capacity to approximately 400,000 wafers, which is four times its previous capacity [2]. - The deal provides critical processing capabilities, including back-end-of-line (BEOL) technology, essential for connecting various devices on a chip [2]. - SkyWater has signed multiple supply agreements with Infineon, valued at over $1 billion, to produce chips for the next four years [4]. Group 2: Market Dynamics and Strategic Positioning - A significant portion of semiconductor manufacturing capacity has shifted overseas, with 80% to 90% of microcontrollers and embedded electronics produced outside the U.S., primarily in China and Taiwan, creating challenges for U.S. defense and industrial sectors [3]. - The U.S. government is increasingly aware of the need for secure domestic supply chains, as highlighted by ongoing investigations by the Department of Commerce [3]. - SkyWater aims to differentiate itself from larger foundries like TSMC by focusing on technology-as-a-service products, which is gaining attention in the industry [4]. Group 3: Collaboration and Innovation - SkyWater has a long-standing partnership with Google, having developed the first open-source process design kit (PDK) for mixed-signal technology [5]. - The company is positioning itself as a leading foundry for quantum hardware innovation, collaborating with companies like D-Wave and PsiQuantum [5]. - SkyWater's research focuses on superconductors and photonics, working closely with clients to develop custom manufacturing processes that differ from traditional foundry operations [5].

Key Takeaways SkyWater posted a Q2 loss of $0.11 per share, beating estimates by over 35%.Fab 25 acquisition is set to double annual revenue and adjusted EBITDA.Q3 revenue forecast of $130M to $141M signals strong year-over-year growth potential.SkyWater (SKYT) shares have jumped 58.7% since it reported second-quarter 2025 results on Aug. 6. The momentum can be attributed to better-than-expected results as well as robust third-quarter guidance driven by strong contribution from Infineon’s flagship Fab 25 in ...

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on SkyWater Technology, Inc. (SKYT), and emphasizes the importance of validating these recommendations with other indicators like the Zacks Rank [1][5]. Group 1: Brokerage Recommendations - SkyWater Technology has an average brokerage recommendation (ABR) of 1.60, indicating a position between Strong Buy and Buy, with 60% of recommendations being Strong Buy and 20% being Buy [2]. - The article suggests that while the ABR indicates a buying opportunity, investors should not rely solely on this information due to the limited success of brokerage recommendations in predicting stock price increases [5][10]. Group 2: Zacks Rank vs. ABR - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, driven by earnings estimate revisions, and is classified into five groups from Strong Buy to Strong Sell [8][11]. - The Zacks Rank is updated more frequently than the ABR, making it a timely tool for predicting future stock prices, as it reflects changes in earnings estimates quickly [13]. Group 3: SkyWater Technology's Performance - The Zacks Consensus Estimate for SkyWater Technology has remained unchanged at -$0.01 over the past month, suggesting steady analyst views on the company's earnings prospects [14]. - Due to the unchanged consensus estimate and other factors, SkyWater Technology holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [15].

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section details the nature of forward-looking statements, their inherent risks, and the Company's policy on public updates - Forward-looking statements are subject to various **risks, uncertainties, and assumptions**, including business development, financial condition, operational capacity, technological changes, customer relationships, and economic conditions[10](index=10&type=chunk)[12](index=12&type=chunk) - The Company does not undertake to publicly update any forward-looking statements to conform to changes in expectations or actual results, except as legally required[11](index=11&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents SkyWater Technology's unaudited condensed consolidated financial statements and related notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $49,373 | $18,844 | $30,529 | 162.0% | | Total current assets | $155,938 | $132,077 | $23,861 | 18.1% | | Total assets | $334,693 | $313,775 | $20,918 | 6.7% | | Total current liabilities | $147,596 | $154,327 | $(6,731) | -4.4% | | Total liabilities | $282,727 | $250,285 | $32,442 | 13.0% | | Total shareholders' equity | $51,966 | $63,490 | $(11,524) | -18.1% | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (Three-Month Period, in thousands) | Metric (in thousands) | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Change | % Change | | :-------------------- | :------------------------------------- | :------------------------------------- | :----- | :------- | | Revenue | $59,063 | $93,329 | $(34,266) | -36.7% | | Gross profit | $10,899 | $17,114 | $(6,215) | -36.3% | | Operating (loss) income | $(6,478) | $1,400 | $(7,878) | -562.7% | | Net loss | $(8,857) | $(955) | $(7,902) | 827.4% | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(1,897) | $(8,081) | 426.0% | | Net loss per share, basic and diluted | $(0.21) | $(0.04) | $(0.17) | 425.0% | Condensed Consolidated Statements of Operations (Six-Month Period, in thousands) | Metric (in thousands) | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | Change | % Change | | :-------------------- | :----------------------------------- | :----------------------------------- | :----- | :------- | | Revenue | $120,359 | $172,965 | $(52,606) | -30.4% | | Gross profit | $25,156 | $30,094 | $(4,938) | -16.4% | | Operating (loss) income | $(10,499) | $(802) | $(9,697) | -1209.1% | | Net loss | $(15,075) | $(5,587) | $(9,488) | 170.0% | | Net loss attributable to SkyWater Technology, Inc. | $(17,323) | $(7,626) | $(9,697) | 127.1% | | Net loss per share, basic and diluted | $(0.36) | $(0.16) | $(0.20) | 125.0% | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Metric (in thousands) | Balance at June 29, 2025 | Balance at June 30, 2024 | Change | % Change | | :-------------------- | :----------------------- | :----------------------- | :----- | :------- | | Common Stock Amount | $485 | $474 | $11 | 2.3% | | Additional Paid-in Capital | $194,070 | $183,817 | $10,253 | 5.6% | | Accumulated Deficit | $(149,319) | $(132,829) | $(16,490) | 12.4% | | Total Shareholders' Equity, SkyWater Technology, Inc. | $45,236 | $51,462 | $(6,226) | -12.1% | | Noncontrolling Interests | $6,730 | $5,358 | $1,372 | 25.6% | | Total Shareholders' Equity | $51,966 | $56,820 | $(4,854) | -8.5% | - Equity-based compensation expense for the six-month period ended June 29, 2025, was **$4,220 thousand**, contributing to the increase in additional paid-in capital[21](index=21&type=chunk) - Net loss attributable to SkyWater Technology, Inc. for the six-month period ended June 29, 2025, was **$(17,323) thousand**, significantly increasing the accumulated deficit[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | Change | % Change | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :----- | :------- | | Net cash provided by operating activities | $54,300 | $5,423 | $48,877 | 901.3% | | Net cash used in investing activities | $(18,773) | $(3,218) | $(15,555) | 483.4% | | Net cash used in financing activities | $(4,998) | $(2,225) | $(2,773) | 124.6% | | Net change in cash and cash equivalents | $30,529 | $(20) | $30,549 | -152745.0% | | Cash and cash equivalents, end of period | $49,373 | $18,362 | $31,011 | 169.1% | - Significant increase in cash provided by operating activities in 2025 was primarily due to a **$45.1 million increase in contract liabilities**, including a **$52.0 million cash receipt** from a customer for tool installation[24](index=24&type=chunk)[160](index=160&type=chunk) - Increased cash used in investing activities in 2025 was driven by higher capital spending on property and equipment, with purchases totaling **$17,407 thousand**[24](index=24&type=chunk)[161](index=161&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1 Nature of Business](index=11&type=section&id=Note%201%20Nature%20of%20Business) SkyWater is a U.S.-based independent technology foundry, recently acquiring Infineon's 200 mm fab in Austin - SkyWater operates a **technology-as-a-service model**, co-developing process technology IP with customers through Advanced Technology Services (ATS) and supporting volume production via Wafer Services[29](index=29&type=chunk) - On June 30, 2025, the Company completed the **acquisition of Infineon Technologies AG's 200 mm fab in Austin, Texas**, financed through debt[31](index=31&type=chunk) [Note 2 Basis of Presentation and Principles of Consolidation](index=11&type=section&id=Note%202%20Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) This note details financial statement presentation, liquidity assessment, and net loss per share computation - The Company incurred net losses attributable to SkyWater Technology, Inc. of **$9,978 thousand** for the three-month period and **$17,323 thousand** for the six-month period ended June 29, 2025[36](index=36&type=chunk) - Management believes the Company has **sufficient liquidity** to fund operations for the next twelve months, supported by cash on hand and available borrowings from the Revolver, which was amended to increase capacity to **$350 million**[41](index=41&type=chunk) Net Loss Per Common Share (in thousands, except per share data) | Metric (in thousands, except per share data) | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :------------------------------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(1,897) | $(17,323) | $(7,626) | | Weighted average common shares outstanding, basic and diluted | 48,091 | 47,395 | 47,943 | 47,247 | | Net loss per common share, basic and diluted | $(0.21) | $(0.04) | $(0.36) | $(0.16) | [Note 3 Summary of Significant Accounting Policies](index=14&type=section&id=Note%203%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines new accounting standards and confirms no significant changes to existing policies during the period - The Company will adopt **ASU 2023-09 (Income Taxes)** for its fiscal year ending January 3, 2027, and **ASU 2024-03 (Expense Disaggregation Disclosures)** for its fiscal year ending January 2, 2028, as an emerging growth company[47](index=47&type=chunk)[48](index=48&type=chunk) - No significant changes were made to the Company's accounting policies and estimates during the three- and six-month periods ended June 29, 2025[49](index=49&type=chunk) [Note 4 Revenue](index=15&type=section&id=Note%204%20Revenue) This note disaggregates revenue by type, highlighting decreased Tools revenue, and details contract assets and liabilities Revenue by Type (Three-Month Period, in thousands) | Revenue Type (in thousands) | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Change | % Change | | :-------------------------- | :------------------------------------- | :------------------------------------- | :----- | :------- | | ATS development | $52,605 | $61,669 | $(9,064) | -14.7% | | Wafer Services | $5,411 | $5,780 | $(369) | -6.4% | | Tools | $1,047 | $25,880 | $(24,833) | -96.0% | | Total Revenue | $59,063 | $93,329 | $(34,266) | -36.7% | Revenue by Type (Six-Month Period, in thousands) | Revenue Type (in thousands) | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | Change | % Change | | :-------------------------- | :----------------------------------- | :----------------------------------- | :----- | :------- | | ATS development | $105,140 | $122,853 | $(17,713) | -14.4% | | Wafer Services | $12,938 | $15,773 | $(2,835) | -18.0% | | Tools | $2,281 | $34,339 | $(32,058) | -93.4% | | Total Revenue | $120,359 | $172,965 | $(52,606) | -30.4% | - Contract liabilities increased from **$107,067 thousand** at December 29, 2024, to **$152,137 thousand** at June 29, 2025, primarily due to increased payments received from customers[57](index=57&type=chunk)[58](index=58&type=chunk) - Remaining performance obligations for contracts with original expected durations of one year or more totaled **$133,821 thousand** as of June 29, 2025, primarily related to ATS development and tools revenue[59](index=59&type=chunk) [Note 5 Balance Sheet Information](index=20&type=section&id=Note%205%20Balance%20Sheet%20Information) This note provides detailed breakdowns and changes for key balance sheet accounts across reporting periods Balance Sheet Accounts (in thousands) | Account (in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :--------------------- | :------------ | :---------------- | :----- | :------- | | Total inventory | $18,286 | $19,282 | $(996) | -5.2% | | Total prepaid assets and other current assets | $41,914 | $23,476 | $18,438 | 78.5% | | Total property and equipment, net | $161,582 | $165,431 | $(3,849) | -2.3% | | Total intangible assets, net | $8,441 | $7,779 | $662 | 8.5% | | Total accrued expenses | $40,627 | $36,829 | $3,798 | 10.3% | - Prepaid expenses and other current assets significantly increased by **$18,438 thousand**, primarily due to an increase in tools purchased for customers, rising from **$16,923 thousand to $34,423 thousand**[67](index=67&type=chunk) - Depreciation expense for property and equipment was **$8,002 thousand** for the six-month period ended June 29, 2025, primarily classified as cost of revenue[69](index=69&type=chunk) [Note 6 Debt](index=24&type=section&id=Note%206%20Debt) This note details the Company's debt structure, including Revolver, VIE, and Tool Financing, and maturity schedule Debt Components (in thousands) | Debt Component (in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :---------------------------- | :------------ | :---------------- | :----- | :------- | | Revolver outstanding balance | $25,803 | $30,171 | $(4,368) | -14.5% | | Total short-term financing, net | $23,614 | $27,669 | $(4,055) | -14.7% | | VIE Financing | $34,106 | $34,671 | $(565) | -1.6% | | Tool financing loans | $9,935 | $7,253 | $2,682 | 37.0% | | Total long-term debt, excluding current portion | $35,316 | $34,704 | $612 | 1.8% | - As of June 29, 2025, the Revolver had an outstanding balance of **$25,803 thousand** at an **8.7% interest rate**, with **$104,196 thousand** remaining availability[80](index=80&type=chunk)[198](index=198&type=chunk) - The VIE Financing, fixed at **3.44% interest**, had a balance of **$34,106 thousand** and is repayable in monthly installments until October 2030[79](index=79&type=chunk)[81](index=81&type=chunk) Future Principal Payments of Long-Term Debt (in thousands) | Future Principal Payments of Long-Term Debt (in thousands) | | :------------------------------------------------------- | | Remainder of 2025 | $3,370 | | 2026 | $5,975 | | 2027 | $2,808 | | 2028 | $2,008 | | 2029 | $1,307 | | Thereafter | $28,573 | | Total | $44,041 | [Note 7 Income Taxes](index=26&type=section&id=Note%207%20Income%20Taxes) This note explains effective tax rates, influenced by state taxes and valuation allowances, and upcoming tax law changes Effective Tax Rate | Effective Tax Rate | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :----------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Effective Tax Rate | (8.04)% | 11.7% | (7.0)% | 1.5% | - The One Big Beautiful Bill Act, signed July 4, 2025, increases the Section 48D credit for semiconductor manufacturing facilities from **25% to 35%** for property placed in service after 2025. The Company will record the effect of these tax law changes in the third quarter of 2025, anticipating **no material impact** to overall tax expense[119](index=119&type=chunk) [Note 8 Equity-Based Compensation](index=26&type=section&id=Note%208%20Equity-Based%20Compensation) This note details equity-based compensation expense recognized across various categories for the reporting periods Equity-Based Compensation Expense (in thousands) | Expense Category (in thousands) | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :------------------------------ | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Cost of revenue | $626 | $504 | $1,193 | $959 | | Research and development expense | $113 | $90 | $196 | $197 | | Selling, general and administrative expense | $1,543 | $1,422 | $2,831 | $2,932 | | Total equity-based compensation expense | $2,282 | $2,016 | $4,220 | $4,088 | [Note 9 Commitments and Contingencies](index=27&type=section&id=Note%209%20Commitments%20and%20Contingencies) This note outlines the Company's commitments and contingencies, including capital expenditures, leases, and grants - The Company has **$5,470 thousand** in contractual capital expenditure commitments outstanding as of June 29, 2025, expected to be paid in the next twelve months[92](index=92&type=chunk) - Under the CfN Lease, SkyWater is obligated to bring the facility to full production capacity within **five years** and operate it for an additional **15 years**, with potential termination payment of up to **$15,000 thousand**[93](index=93&type=chunk) - SkyWater committed to a **20% matching share contribution** of approximately **$9,100 thousand** for the Build Back Better Grant, with **$1,000 thousand** obligated in the subsequent quarter[95](index=95&type=chunk) [Note 10 Related Party Transactions](index=28&type=section&id=Note%2010%20Related%20Party%20Transactions) This note describes related party transactions, including funding support, consulting, and a facility sale-leaseback - Oxbow Industries provides a support letter for up to **$12,500 thousand** in funding, if necessary, extended through March 18, 2026[97](index=97&type=chunk) - Consulting expenses with Oxbow Industries totaled **$212 thousand** for the three-month period and **$416 thousand** for the six-month period ended June 29, 2025[98](index=98&type=chunk) - The Company leases its Minnesota facility from Oxbow Realty with monthly payments of **$426 thousand**, subject to annual **2% increases**[99](index=99&type=chunk) [Note 11 Variable Interest Entity](index=29&type=section&id=Note%2011%20Variable%20Interest%20Entity) This note explains Oxbow Realty's consolidation as a VIE, detailing its assets, liabilities, revenue, and net income - Oxbow Realty is consolidated as a VIE because it lacks sufficient equity to finance its activities, and SkyWater is the **primary beneficiary**[102](index=102&type=chunk) Oxbow Realty Assets (in thousands) | Oxbow Realty Assets (in thousands) | June 29, 2025 | December 29, 2024 | | :--------------------------------- | :------------ | :---------------- | | Total assets | $43,150 | $42,885 | | Total liabilities | $36,420 | $37,009 | Oxbow Realty Financials (in thousands) | Oxbow Realty Financials (in thousands) | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :------------------------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Revenue | $1,438 | $1,423 | $2,872 | $2,842 | | Net income | $1,121 | $942 | $2,248 | $2,039 | [Note 12 Leases](index=29&type=section&id=Note%2012%20Leases) This note details SkyWater's lease arrangements, including its lessor role and a recent failed sale-leaseback - SkyWater acts as a lessor for a portion of its Minnesota facility, recognizing **$21,000 thousand** in operating lease revenue over **4.5 years**, prepaid by the customer[106](index=106&type=chunk)[107](index=107&type=chunk) - In June 2025, the Company entered into a failed sale-leaseback transaction for a furnace, receiving **$4,599 thousand cash** and recording a financial obligation with monthly lease payments of **$142 thousand** over **36 months**[108](index=108&type=chunk) [Note 13 Reportable Segment and Geographic Information](index=30&type=section&id=Note%2013%20Reportable%20Segment%20and%20Geographic%20Information) This note confirms SkyWater's single segment operation and details revenue by country and customer concentration - SkyWater operates and manages its business as **one reportable segment**[46](index=46&type=chunk) Revenue by Country (in thousands) | Revenue by Country (in thousands) | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | United States | $53,780 | $90,598 | $111,026 | $166,822 | | Canada | $3,030 | $1,647 | $560 | $637 | | Hong Kong | $293 | $32 | $5,342 | $3,880 | | United Kingdom | $560 | $352 | $767 | $79 | | All others | $1,400 | $700 | $2,663 | $1,547 | | Total | $59,063 | $93,329 | $120,359 | $172,965 | - One customer accounted for **43% of revenue** for the three-month period and **41%** for the six-month period ended June 29, 2025[111](index=111&type=chunk) [Note 14 Subsequent Events](index=31&type=section&id=Note%2014%20Subsequent%20Events) This note details significant post-period events, including the Fab 25 acquisition, loan amendment, and tax act - On June 30, 2025, SkyWater completed the acquisition of Spansion Fab 25, LLC for approximately **$93 million in cash**, expected to enhance foundational semiconductor manufacturing and strengthen its strategic position[112](index=112&type=chunk)[113](index=113&type=chunk) - In connection with the acquisition, the Loan and Security Agreement was amended to increase the revolving line of credit to **$350 million** (from $130 million) and extend the maturity date to **June 30, 2030**[116](index=116&type=chunk)[118](index=118&type=chunk) - The One Big Beautiful Bill Act, signed July 4, 2025, increases the Section 48D credit for semiconductor manufacturing facilities from **25% to 35%** for property placed in service after 2025, with effects to be recorded in Q3 2025[119](index=119&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses SkyWater's financial condition, operational results, key trends, and performance metrics for Q2 and H1 2025 [Overview](index=33&type=section&id=Overview) SkyWater is a U.S.-based independent technology foundry, offering ATS and Wafer Services for high-growth markets - SkyWater is a U.S.-based, independent, pure-play technology foundry with **Defense Microelectronics Activity Category 1A Trusted Accreditation**, offering enhanced IP security and secure U.S. domestic supply chain access[124](index=124&type=chunk) - The Company focuses on high-growth end markets including advanced compute, aerospace and defense, automotive, bio-health, and industrial, specializing in advanced solutions like infrared imaging and quantum computing ICs[125](index=125&type=chunk) [Factors and Trends Affecting our Business and Results of Operations](index=34&type=section&id=Factors%20and%20Trends%20Affecting%20our%20Business%20and%20Results%20of%20Operations) Key factors include the Fab 25 acquisition, macroeconomic conditions, CHIPS Act funding, and increased indebtedness - The acquisition of Spansion Fab 25, LLC on June 30, 2025, is expected to enhance SkyWater's capabilities in **foundational semiconductor manufacturing**[127](index=127&type=chunk) - The CHIPS Act provides significant incentives and funding for onshore semiconductor development and manufacturing; SkyWater received a preliminary memorandum of terms for up to **$16 million in federal funding** and **$19 million in state incentives**[129](index=129&type=chunk) - Customer-funded capital investment is a **significant driver**, enabling the development of technology platforms for future growth[129](index=129&type=chunk) [Financial Performance Metrics](index=34&type=section&id=Financial%20Performance%20Metrics) Management reviews key financial metrics like revenue, gross profit, net loss, and Adjusted EBITDA for operational decisions - Key financial performance metrics reviewed by management include **revenue, gross profit, net loss, and adjusted EBITDA**[130](index=130&type=chunk)[131](index=131&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section compares Q2 and H1 2025 operating results to 2024, showing decreased revenue and increased net loss [Second Quarter of 2025 Compared to the Second Quarter of 2024](index=35&type=section&id=Second%20Quarter%20of%202025%20Compared%20to%20the%20Second%20Quarter%20of%202024) Q2 2025 revenue decreased by 37% to $59.1 million, driven by declines in customer-funded tools and ATS Second Quarter Financial Performance (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change | % Change | | :-------------------- | :------ | :------ | :----- | :------- | | Revenue | $59,063 | $93,329 | $(34,266) | -36.7% | | Cost of revenue | $48,164 | $76,215 | $(28,051) | -36.8% | | Gross profit | $10,899 | $17,114 | $(6,215) | -36.3% | | Operating (loss) income | $(6,478) | $1,400 | $(7,878) | -562.7% | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(1,897) | $(8,081) | 426.0% | - ATS development revenue decreased by **$9.1 million**, primarily driven by a **$9.3 million decrease** in aerospace and defense industry revenue due to shifts in U.S. government policy and delayed contract awards[134](index=134&type=chunk) - Selling, general and administrative expense increased by **$1.7 million**, primarily due to **$2.2 million** in expenses related to the acquisition of Fab 25[137](index=137&type=chunk) [First Six Months of 2025 Compared to the First Six Months of 2024](index=36&type=section&id=First%20Six%20Months%20of%202025%20Compared%20to%20the%20First%20Six%20Months%20of%202024) H1 2025 revenue decreased by 30.4% to $120.4 million, with net loss increasing by 127% to $17.3 million First Six Months Financial Performance (in thousands) | Metric (in thousands) | H1 2025 | H1 2024 | Change | % Change | | :-------------------- | :------ | :------ | :----- | :------- | | Revenue | $120,359 | $172,965 | $(52,606) | -30.4% | | Cost of revenue | $95,203 | $142,871 | $(47,668) | -33.4% | | Gross profit | $25,156 | $30,094 | $(4,938) | -16.4% | | Operating loss | $(10,499) | $(802) | $(9,697) | -1209.1% | | Net loss attributable to SkyWater Technology, Inc. | $(17,323) | $(7,626) | $(9,697) | 127.1% | - Tools revenue decreased by **$31.9 million**, and ATS revenue decreased by **$17.7 million**, primarily due to an **$18.1 million decrease** in aerospace and defense industry revenue[141](index=141&type=chunk)[142](index=142&type=chunk) - Cost of revenue decreased by **$47.7 million**, driven by a **$31.2 million decrease** from completion of tool procurement and the absence of an **$8.0 million charge** for estimated future losses on a customer program recorded in the prior year[144](index=144&type=chunk) - Selling, general and administrative expense increased by **$5.5 million**, mainly due to **$2.2 million** in acquisition-related consulting fees for the Fab 25 transaction[146](index=146&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by cash and an expanded Revolver, despite increased indebtedness from the Fab 25 acquisition - As of June 29, 2025, SkyWater had **$49.4 million in cash and cash equivalents** and **$104.2 million available** under its Revolver. Post-Fab 25 acquisition, Revolver availability increased to **$213.0 million**[153](index=153&type=chunk)[158](index=158&type=chunk) - Net cash provided by operating activities significantly increased to **$54.3 million** for the first six months of 2025, up from **$5.4 million** in 2024, primarily due to increased contract liabilities and improved cash collection[158](index=158&type=chunk)[160](index=160&type=chunk) - Capital expenditures for the first six months of 2025 were **$18.8 million**, up from **$5.2 million** in 2024, reflecting increased investment in development and manufacturing capabilities[155](index=155&type=chunk)[158](index=158&type=chunk)[161](index=161&type=chunk) - Total debt on a consolidated basis was **$179.1 million** as of June 29, 2025 (pro forma for the Fab 25 acquisition), including **$137.1 million** under the Loan Agreement[209](index=209&type=chunk)[215](index=215&type=chunk) [Non-GAAP Financial Measure](index=45&type=section&id=Non-GAAP%20Financial%20Measure) This section defines and reconciles Adjusted EBITDA, a non-GAAP measure for evaluating operating performance - Adjusted EBITDA is defined as net (loss) income before interest expense, income tax (benefit) expense, depreciation and amortization, net income attributable to noncontrolling interests, equity-based compensation expense, and transaction costs[189](index=189&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(1,897) | $(17,323) | $(7,626) | | EBITDA | $(3,298) | $4,522 | $(4,088) | $6,288 | | Adjusted EBITDA | $2,276 | $8,144 | $6,361 | $13,079 | - Adjusted EBITDA decreased by **72% to $2.3 million** in Q2 2025 and by **51% to $6.4 million** in H1 2025, primarily due to headwinds in the ATS business from U.S. government policy impacts on defense spending[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses SkyWater's market risks, focusing on credit risk and interest rate risk from its Revolver - The Company's market risks are limited to potential changes in the fair value of debt due to fluctuations in market interest rates[196](index=196&type=chunk) - Credit risk is managed by monitoring financial institutions for cash balances and performing ongoing credit evaluations for accounts receivable and contract assets[197](index=197&type=chunk) - A **100 basis point increase** in the interest rate on the Revolver (outstanding balance of **$25.8 million** at June 29, 2025) would increase annual interest expense by **$0.3 million**[198](index=198&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective due to a revenue accounting material weakness, though financial statements are fairly presented - Disclosure controls and procedures were deemed **ineffective** as of June 29, 2025, due to a **material weakness** in the revenue accounting process[200](index=200&type=chunk) - Despite the material weakness, management concluded that the condensed consolidated financial statements for the periods presented are **fairly presented** in conformity with GAAP[201](index=201&type=chunk) - Remediation plans involve designing and implementing system improvements to monitor and evaluate changes processed via privileged access to the manufacturing application and its databases[203](index=203&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) SkyWater is not involved in any legal proceedings expected to materially adversely affect its business or financial condition - The Company is not a party to any litigation that is believed to have a **material adverse effect** on its business, operating results, cash flows, or financial condition[206](index=206&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, emphasizing Fab 25 acquisition uncertainties, increased leverage, and capital needs - The Company may not realize the anticipated benefits of the Fab 25 acquisition, and integration delays or difficulties could **adversely affect business and financial results**[208](index=208&type=chunk) - Increased leverage, totaling **$179.1 million** pro forma for the Fab 25 acquisition, could harm financial condition by increasing interest payments, vulnerability to economic changes, and limiting flexibility for future financing and acquisitions[209](index=209&type=chunk)[211](index=211&type=chunk)[215](index=215&type=chunk)[218](index=218&type=chunk) - The Company may need to raise **additional capital** through equity or debt financings, which could result in **significant dilution**, increased fixed payment obligations, or relinquishing valuable rights to technologies[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the reporting period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[219](index=219&type=chunk) [Item 3. Defaults Upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred during the reporting period[220](index=220&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[221](index=221&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) This item discloses a director's adoption of a Rule 10b5-1 trading arrangement for common stock sales - On June 13, 2025, director Loren A. Unterseher adopted a **Rule 10b5-1 trading arrangement** for the sale of up to **480,370 shares of common stock**, expiring by September 10, 2026[222](index=222&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This item lists all filed exhibits, including acquisition and loan agreements, and officer certifications - Key exhibits include the **Membership Interest Purchase Agreement** for the Fab 25 acquisition and the **Amended and Restated Loan and Security Agreement**[224](index=224&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are furnished pursuant to Exchange Act Rules and 18 U.S.C. Section 1350[224](index=224&type=chunk)

Company Performance - SkyWater Technology, Inc. reported a quarterly loss of $0.11 per share, which was better than the Zacks Consensus Estimate of a loss of $0.17, representing an earnings surprise of +35.29% [1] - The company posted revenues of $59.06 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.08%, but down from $93.33 million in the same quarter a year ago [2] - Over the last four quarters, SkyWater Technology has exceeded consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - SkyWater Technology shares have declined approximately 34.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.09 on revenues of $87.75 million, and for the current fiscal year, it is -$0.01 on revenues of $307.15 million [7] Industry Outlook - The Electronics - Semiconductors industry, to which SkyWater Technology belongs, is currently ranked in the bottom 39% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact SkyWater Technology's stock performance [5]

Financial Data and Key Metrics Changes - Revenues for Q2 2025 were reported at just over $59 million, at the upper end of the outlook provided in May [7] - Q2 gross margin exceeded expectations at 19.5%, with adjusted EBITDA of $2.3 million also stronger than forecast [27] - The company ended Q2 with $49.4 million in cash and total debt outstanding of $65.7 million, with a net increase in borrowings of $5.5 million during the quarter [28] Business Line Data and Key Metrics Changes - The acquisition of Fab 25 is expected to double revenue scale and adjusted EBITDA immediately, with strong free cash flow generation from the outset [10] - Wafer Services revenue from Fab 25 is expected to be in the range of $75 million to $80 million for Q3 [30] - ATS revenue for Q3 is projected at approximately $50 million, with Wafer Services revenue of $5 million to $6 million [31] Market Data and Key Metrics Changes - The company anticipates revenue growth exceeding 30% in the quantum computing segment for 2025, with continued growth expected into 2026 [18] - The advanced packaging operation in Florida is expected to contribute to sequential growth in ATS business in Q4 [13] Company Strategy and Development Direction - The acquisition of Fab 25 establishes the company as the largest U.S.-based pure play foundry service provider, enhancing its capacity and strategic positioning [9] - The company aims to leverage cost optimization across its Minnesota and Texas fabs to drive synergies in engineering and operations [10] - The strategy focuses on enabling the semiconductor industry's evolution through scaled open access 200mm manufacturing paired with high-value IP and specialized process capabilities [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth potential in the semiconductor industry, particularly in light of national security concerns and the need for domestic production [21] - The company expects to see continued momentum in quantum computing applications and advanced packaging, which are key growth areas moving into 2026 [18][20] - Management acknowledged challenges in the aerospace and defense sectors due to government funding delays but remains optimistic about future funding increases [15] Other Important Information - The company has revised its financial supplement to reflect expected revenue and gross margin disclosures starting in Q3 [4] - The acquisition of Fab 25 was finalized with an upfront payment of $93 million, fully funded through a new debt facility [7] Q&A Session Summary Question: Future milestones for Fab 25 margin expansion - Management indicated that activities are underway to expand margins, including bringing in ATS engineering revenue and new product introductions [38][39] Question: Revenue guidance and fab loadings for Infineon business - The fab is currently running at target utilization, and management expects to maintain output while bringing in new customers and capabilities [46][47] Question: Customer targeting for Fab 25 - The company is targeting hybrid semiconductor manufacturers and those valuing U.S.-based sourcing, particularly in industrial and automotive sectors [62][63]

Q2 Earnings AUGUST 6, 2025 SkyWater Technology Forward-Looking Statements This presentation 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 ...

[Executive Summary & Business Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Business%20Highlights) The company highlights the transformative Fab 25 acquisition and strong momentum in emerging technologies despite potential DOD funding delays [CEO Commentary](index=1&type=section&id=1.1%20CEO%20Commentary) The CEO highlights strong Q2 results, the transformative Fab 25 acquisition, and future growth drivers despite potential DOD program delays - The Fab 25 acquisition is expected to contribute at least **$300 million in annual revenue** and generate strong adjusted EBITDA and free cash flow starting in Q3[2](index=2&type=chunk) - The timing of federal funding for certain DOD programs is likely to impact the expected return to ATS revenue growth in 2025[3](index=3&type=chunk) - Strong momentum in quantum computing and advanced packaging, combined with Fab 25's contribution, positions SkyWater for **strong growth in 2026**[3](index=3&type=chunk) [Recent Business Highlights](index=1&type=section&id=1.2%20Recent%20Business%20Highlights) Key developments include the fully funded Fab 25 acquisition, which is expected to double revenue, and progress in quantum computing and advanced packaging - The Fab 25 acquisition was completed on June 30, funded by a new senior secured revolving credit facility with up to **$350 million** in borrowing capacity[4](index=4&type=chunk) - The acquisition is backed by a projected greater-than **$1 billion multi-year supply agreement** and is expected to approximately double annual revenue and adjusted EBITDA[4](index=4&type=chunk) - The company is expanding its quantum computing capabilities and preparing for an expected **revenue ramp in advanced packaging in the second half of 2025**[4](index=4&type=chunk) [Financial Performance & Outlook](index=2&type=section&id=2.%20Financial%20Performance%20%26%20Outlook) The company reports a significant year-over-year revenue decline in Q2 2025 but projects a strong revenue rebound in Q3 driven by the Fab 25 acquisition [Q2 2025 Financial Summary](index=2&type=section&id=2.1%20Q2%202025%20Financial%20Summary) Q2 2025 saw a significant year-over-year decline in revenue and net income, primarily driven by a sharp decrease in Tools revenue Q2 2025 GAAP Financial Summary | In millions, except per share data | Q2 2025 | Q2 2024 | Y/Y * | Q1 2025 | Q/Q * | | :--- | :--- | :--- | :--- | :--- | :--- | | ATS development revenue | $52.6 | $61.7 | (15)% | $52.5 | —% | | Wafer Services revenue | $5.4 | $5.8 | (7)% | $7.5 | (28)% | | Combined ATS development and Wafer Services revenue | $58.0 | $67.4 | (14)% | $60.1 | (3)% | | Tools revenue | $1.1 | $25.9 | (96)% | $1.2 | (8)% | | Total revenue | $59.1 | $93.3 | (37)% | $61.3 | (4)% | | Gross profit | $10.9 | $17.1 | (36)% | $14.3 | (24)% | | Gross margin | 18.5% | 18.3% | 20 bps | 23.3% | (480) bps | | Net loss to shareholders | $(10.0) | $(1.9) | (426)% | $(7.3) | (37)% | | Basic and diluted loss per share | $(0.21) | $(0.04) | (425)% | $(0.15) | (40)% | | Net income (loss) margin to shareholders | (16.9)% | (2.0)% | (1,490) bps | (12.0)% | (490) bps | Q2 2025 Non-GAAP Financial Summary | In millions, except per share data | Q2 2025 | Q2 2024 | Y/Y * | Q1 2025 | Q/Q * | | :--- | :--- | :--- | :--- | :--- | :--- | | Non-GAAP gross profit | $11.5 | $17.6 | (35)% | $14.8 | (22)% | | Non-GAAP gross margin | 19.5% | 18.9% | 60 bps | 24.2% | (470) bps | | Non-GAAP net income (loss) to shareholders | $(5.5) | $0.8 | (675)% | $(3.7) | 49% | | Non-GAAP basic income (loss) per share | $(0.11) | $0.02 | (600)% | $(0.08) | 38% | | Non-GAAP diluted income (loss) per share | $(0.11) | $0.02 | (600)% | $(0.08) | 38% | | Adjusted EBITDA | $2.3 | $8.1 | (72)% | $4.0 | (43)% | | Adjusted EBITDA margin | 3.9% | 8.7% | (480) bps | 6.6% | (270) bps | [Q2 2025 Results Analysis](index=2&type=section&id=2.2%20Q2%202025%20Results%20Analysis) Q2 revenue fell 37% year-over-year to $59.1 million due to a drop in Tools revenue, leading to a wider net loss and lower Adjusted EBITDA - Total revenue was **$59.1 million**, a decrease of **(37)%** year-over-year, primarily due to a **(96)%** decline in Tools revenue[7](index=7&type=chunk) - GAAP gross profit decreased **(36)%** to **$10.9 million**, representing a gross margin of **18.5%**[7](index=7&type=chunk) - GAAP net loss to shareholders widened to **$10.0 million**, and Adjusted EBITDA decreased **(72)%** to **$2.3 million**[7](index=7&type=chunk)[8](index=8&type=chunk) [Q3 2025 Financial Outlook](index=3&type=section&id=2.3%20Q3%202025%20Financial%20Outlook) The company projects a significant Q3 revenue increase to $130-$141 million, driven by the Fab 25 acquisition's contribution to Wafer Services Q3 2025 Financial Outlook (in thousands) | Metric | Low-End | High-End | | :--- | :--- | :--- | | Wafer Services revenue (MN) | $5,000 | $6,000 | | Wafer Services revenue (TX) | $75,000 | $80,000 | | Total Wafer Services revenue | $80,000 | $86,000 | | ATS development revenue | $48,000 | $52,000 | | Combined ATS development and Wafer Services revenue | $128,000 | $138,000 | | Tools revenue | $2,000 | $3,000 | | Total revenue | $130,000 | $141,000 | | GAAP Gross Margin % | 10.5% | 13.5% | | Non-GAAP Gross Margin % | 11.0% | 14.0% | | GAAP Operating Expenses | $21,500 | $23,500 | | Non-GAAP Operating Expenses | $18,000 | $20,000 | | GAAP diluted loss per share | $(0.28) | $(0.22) | | Non-GAAP diluted loss per share | $(0.20) | $(0.14) | - The non-GAAP outlook excludes approximately **$2.3 million** in equity-based compensation and **$2.0 million** in transaction costs[8](index=8&type=chunk) [Company Information & Disclosures](index=3&type=section&id=3.%20Company%20Information%20%26%20Disclosures) This section provides an overview of the company's business, cautionary statements regarding forward-looking information, and contact details [About SkyWater Technology](index=3&type=section&id=3.1%20About%20SkyWater%20Technology) SkyWater is a U.S.-based, trusted semiconductor supplier operating a Technology as a Service model for critical domestic markets - The company is a U.S.-based semiconductor manufacturer and **DMEA-accredited Category 1A Trusted Supplier**[10](index=10&type=chunk) - It operates on a **Technology as a Service (TaaS)** model, offering development, high-volume production, and integration solutions[10](index=10&type=chunk) - Key markets served include aerospace & defense, automotive, biomedical, industrial, and quantum computing[10](index=10&type=chunk) [Cautionary & Forward-Looking Statements](index=3&type=section&id=3.2%20Cautionary%20%26%20Forward-Looking%20Statements) The report contains preliminary, unaudited results and forward-looking statements subject to risks and uncertainties detailed in SEC filings - The Company's Q2 2025 results are **preliminary, unaudited**, and subject to finalization[11](index=11&type=chunk) - This press release contains **forward-looking statements** about future business and financial performance, which are not guarantees[12](index=12&type=chunk) - These statements are subject to various **risks and uncertainties**, including Fab 25 integration, supply chain, and market demand, as discussed in SEC filings[13](index=13&type=chunk) [Investor & Media Contacts](index=4&type=section&id=3.3%20Investor%20%26%20Media%20Contacts) Contact information for investor relations and media inquiries for SkyWater Technology is provided - Investor Contact: Claire McAdams | Claire@HeadgatePartners.com[14](index=14&type=chunk) - Media Contact: Tammy Swanson | Tammy.Swanson@SkyWaterTechnology.com[14](index=14&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=4.%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated balance sheets, statements of operations, and statements of cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=4.1%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 29, 2025, shows increased total assets and liabilities compared to the end of fiscal year 2024 Condensed Consolidated Balance Sheets (Unaudited, in thousands) | | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $49,373 | $18,844 | | Accounts receivable (net) | $32,016 | $54,332 | | Total current assets | $155,938 | $132,077 | | Property and equipment, net | $161,582 | $165,431 | | Total assets | $334,693 | $313,775 | | **Liabilities and shareholders' equity** | | | | Current portion of long-term debt | $6,752 | $5,073 | | Accounts payable | $15,353 | $29,590 | | Total current liabilities | $147,596 | $154,327 | | Long-term debt, less current portion | $35,316 | $34,704 | | Total liabilities | $282,727 | $250,285 | | Total shareholders' equity | $51,966 | $63,490 | | Total liabilities and shareholders' equity | $334,693 | $313,775 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=4.2%20Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations for Q2 2025 reflects lower revenue and gross profit, resulting in a significantly wider net loss year-over-year Condensed Consolidated Statements of Operations (Unaudited, in thousands) | | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $59,063 | $93,329 | $120,359 | $172,965 | | Cost of revenue | $48,164 | $76,215 | $95,203 | $142,871 | | Gross profit | $10,899 | $17,114 | $25,156 | $30,094 | | Operating income (loss) | $(6,478) | $1,400 | $(10,499) | $(802) | | Net income (loss) | $(8,857) | $(955) | $(15,075) | $(5,587) | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(1,897) | $(17,323) | $(7,626) | | Net loss per share, basic and diluted | $(0.21) | $(0.04) | $(0.36) | $(0.16) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=4.3%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash from operating activities increased significantly, boosting the company's cash position Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $54,300 | $5,423 | | Net cash used in investing activities | $(18,773) | $(3,218) | | Net cash used in financing activities | $(4,998) | $(2,225) | | Net change in cash and cash equivalents | $30,529 | $(20) | | Cash and cash equivalents, end of period | $49,373 | $18,362 | [Supplemental Financial Information](index=8&type=section&id=5.%20Supplemental%20Financial%20Information) This section provides preliminary balance sheet adjustments for the Fab 25 acquisition and a quarterly breakdown of revenue trends [Preliminary Supplemental Balance Sheet Information](index=8&type=section&id=5.1%20Preliminary%20Supplemental%20Balance%20Sheet%20Information) Preliminary adjustments for the Fab 25 acquisition show significant increases in property, equipment, and total debt Preliminary Supplemental Balance Sheet Information (Fab 25 Transaction Adjustments, in thousands) | | June 29, 2025 | Preliminary Transaction Adjustments | June 30, 2025 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $49,373 | $7,000 | $56,373 | | Property and equipment, net | $161,582 | $364,000 | $525,582 | | Short term financing, net of unamortized debt issuance costs | $23,614 | $113,400 | $137,014 | | Total debt | $65,730 | $113,400 | $179,130 | - Note: The preliminary transaction adjustment for property and equipment is based on an initial draft valuation and is subject to change[21](index=21&type=chunk) [Supplemental Financial Information by Quarter](index=8&type=section&id=5.2%20Supplemental%20Financial%20Information%20by%20Quarter) Quarterly data reveals a significant decline in Tools revenue over the past year, impacting overall financial performance Total Revenue by Quarter (in thousands) | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | ATS development revenue | $52,605 | $52,535 | $59,401 | $56,390 | $61,669 | $61,185 | | Wafer Services revenue | $5,411 | $7,527 | $4,371 | $6,718 | $5,780 | $9,992 | | Combined ATS development and Wafer Services revenue | $58,016 | $60,062 | $63,772 | $63,108 | $67,449 | $71,177 | | Tools revenue | $1,047 | $1,234 | $11,715 | $30,709 | $25,880 | $8,459 | | Total revenue | $59,063 | $61,296 | $75,487 | $93,817 | $93,329 | $79,636 | - **Tools revenue significantly decreased** from $30.7 million in Q3 2024 to $1.0 million in Q2 2025[25](index=25&type=chunk) - In Q3 2024, a **$5.6 million loss accrual was released**, which reduced cost of revenue and favorably impacted gross profit[24](index=24&type=chunk)[25](index=25&type=chunk) [Non-GAAP Financial Measures & Reconciliation](index=9&type=section&id=6.%20Non-GAAP%20Financial%20Measures%20%26%20Reconciliation) This section explains the company's use of non-GAAP measures and provides detailed reconciliations to their nearest GAAP equivalents [Non-GAAP Financial Measures Explanation](index=9&type=section&id=6.1%20Non-GAAP%20Financial%20Measures%20Explanation) The company uses non-GAAP measures to provide additional insight into core operating results, though they are not substitutes for GAAP - Non-GAAP measures are intended to **provide additional insight** to investors and are used by management for strategic planning and performance evaluation[26](index=26&type=chunk)[27](index=27&type=chunk) - These measures **should not be viewed as an alternative to GAAP results** and may not be comparable to those of other companies[26](index=26&type=chunk)[27](index=27&type=chunk) - **Adjusted EBITDA** is defined as net income (loss) before interest, taxes, depreciation, amortization, and other specified adjustments[27](index=27&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=6.2%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) Reconciliation tables detail adjustments for items like equity-based compensation and transaction costs from GAAP to non-GAAP figures GAAP to Non-GAAP Reconciliation (Three-Month Periods, in thousands) | | June 29, 2025 (GAAP) | June 29, 2025 (Non-GAAP) | March 30, 2025 (GAAP) | March 30, 2025 (Non-GAAP) | June 30, 2024 (GAAP) | June 30, 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cost of revenue | $48,164 | $47,538 | $47,039 | $46,472 | $76,215 | $75,711 | | Gross profit | $10,899 | $11,525 | $14,257 | $14,824 | $17,114 | $17,618 | | Gross margin | 18.5% | 19.5% | 23.3% | 24.2% | 18.3% | 18.9% | | Research and development expense | $3,368 | $3,255 | $3,249 | $3,166 | $3,382 | $3,292 | | Selling, general, and administrative expense | $14,009 | $10,295 | $15,030 | $11,991 | $12,332 | $10,246 | | Net loss to shareholders | $(9,978) | $(5,525) | $(7,345) | $(3,656) | $(1,897) | $783 | - Key adjustments for Q2 2025 net loss include **$2,282 thousand in equity-based compensation** and **$2,171 thousand in transaction costs**[31](index=31&type=chunk)[32](index=32&type=chunk) Net Loss Per Common Share Reconciliation (Three-Month Periods, in thousands, except per share data) | | June 29, 2025 (GAAP) | June 29, 2025 (Non-GAAP) | March 30, 2025 (GAAP) | March 30, 2025 (Non-GAAP) | June 30, 2024 (GAAP) | June 30, 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(5,525) | $(7,345) | $(3,656) | $(1,897) | $783 | | Weighted-average common shares outstanding | 48,091 | 48,091 | 47,791 | 47,791 | 47,395 | 47,395 | | Net loss per common share, basic and diluted | $(0.21) | $(0.11) | $(0.15) | $(0.08) | $(0.04) | $0.02 | [Adjusted EBITDA Reconciliation](index=13&type=section&id=6.3%20Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 was $2.3 million, a significant decrease from Q2 2024, with reconciliations provided from GAAP net loss Adjusted EBITDA Reconciliation (Three-Month Periods, in thousands) | | June 29, 2025 | March 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Net loss to shareholders (GAAP) | $(9,978) | $(7,345) | $(1,897) | | Interest expense | $1,637 | $1,812 | $2,482 | | Income tax expense (benefit) | $742 | $384 | $(127) | | Depreciation and amortization, net | $4,301 | $4,358 | $4,064 | | EBITDA | $(3,298) | $(791) | $4,522 | | Equity-based compensation expense | $2,282 | $1,879 | $2,016 | | Management transition expense | — | — | $664 | | Transaction costs | $2,171 | $1,810 | — | | Net income attributable to noncontrolling interests | $1,121 | $1,127 | $942 | | Adjusted EBITDA | $2,276 | $4,025 | $8,144 | | Adjusted EBITDA margin | 3.9% | 6.6% | 8.7% | - Transaction costs of **$2,171 thousand in Q2 2025** are associated with the acquisition of Fab 25[35](index=35&type=chunk)[36](index=36&type=chunk) - Net income attributable to noncontrolling interests is added back to align with the add-back of interest expense in the Adjusted EBITDA calculation[35](index=35&type=chunk)[37](index=37&type=chunk)