SkyWater(SKYT) - 2025 Q3 - Quarterly Report

Revenue Performance - Revenue for Q3 2024 was $93.8 million, a 31$71.6 million in Q3 2023[98] - Revenue for the first nine months of 2024 reached $266.8 million, up 29$207.5 million in the same period of 2023[102] - ATS development revenue increased by $2.5 million, or 5$27.5 million from Q3 2023 to Q3 2024, reflecting increased customer investment[102] - Wafer Services revenue decreased by $7.8 million, or 54$4.7 million, compared to a loss of $4.2 million in Q3 2023[98] - Net income attributable to SkyWater Technology, Inc. for Q3 2024 was$1.5 million, a significant recovery from a loss of $7.6 million in Q3 2023[98] - Research and development expenses decreased by 54$3.4 million[98] - Cost of revenue increased by $16.1 million to$73.6 million for Q3 2024, driven by a $27.6 million rise in tools revenue and a$3.7 million increase in facility expansion costs[104] - For the first nine months of 2024, cost of revenue rose by $56.2 million to$216.5 million, primarily due to a $60.0 million increase in tools revenue[105] - Selling, general and administrative expense decreased by$4.0 million to $12.1 million for Q3 2024, and by$13.2 million to $35.6 million for the first nine months of 2024, primarily due to reduced consulting services[108] - Interest expense decreased by$0.5 million to $2.0 million for Q3 2024, and by$1 million to $6.9 million for the first nine months of 2024, due to lower outstanding amounts under the Revolver[109] Cash Flow and Liquidity - Net cash provided by operating activities was$19.7 million for the first nine months of 2024, an increase of $41.4 million from the cash used in the same period of 2023[120] - Net cash used in investing activities was$15.8 million for the first nine months of 2024, compared to $4.5 million in the same period of 2023, driven by increased capital expenditures[121] - Cash flows from financing activities decreased by$15.1 million to $1.6 million of net cash used in financing activities for the first nine months of 2024, primarily due to a$20.4 million decrease in proceeds from the ATM program[122] - As of September 29, 2024, the company had $20.1 million in cash and cash equivalents and$75.6 million available under the Revolver[113] - The company anticipates sufficient liquidity to fund operations for the next twelve months based on current cash, available borrowings, and potential cost reduction measures[113] Debt and Financing - The company has a revolving line of credit of up to $100 million, with$21.3 million currently borrowed and $75.6 million remaining available as of September 29, 2024[125] - The borrowing base was$96.9 million, which is below the $100 million borrowing limit, indicating potential liquidity constraints[125] - The Loan Agreement requires a minimum EBITDA of$10 million and prohibits unfunded capital expenditures exceeding $15 million[126] - The company incurred$4.3 million in debt issuance costs related to the Loan Agreement, which will be amortized over the term of the facility[125] - The company is accounting for certain financing arrangements as failed sale and leasebacks, impacting the classification of assets and liabilities on the balance sheet[129] - As of September 29, 2024, the outstanding balance of the Revolver was $21.3 million, with an interest rate of 10.6$0.2 million[144] Internal Controls and Compliance - The company identified material weaknesses in internal control over financial reporting related to the Controls Activity component of the COSO Framework and revenue accounting process, which were not remediated as of September 29, 2024[148] - Management plans to sustain the execution of process-level and information technology controls throughout fiscal year 2024 to address the identified material weaknesses[149] - There were no changes in internal control over financial reporting that materially affected the company during the three- and nine-month periods ended September 29, 2024[151] - The effectiveness of disclosure controls and procedures was deemed not effective as of September 29, 2024, due to material weaknesses in internal control over financial reporting[147] - The company remains in compliance with all applicable covenants of the Loan Agreement and expects to maintain compliance over the next twelve months[126] Other Financial Information - The company has not experienced any losses in cash accounts maintained at financial institutions, which sometimes exceed federally insured limits[143] - The company does not engage in speculative, non-operating transactions, limiting its market risk exposure to normal business operations[142] - Management concluded that the interim condensed consolidated financial statements present fairly the financial position and results of operations, despite the identified material weaknesses[147] - The company is not currently involved in any litigation that could materially affect its business or financial condition[152]