SkyWater(US:SKYT)2024-08-07 21:18Revenue Performance - Revenue for Q2 2024 was $93.3 million, a 34% increase from $69.8 million in Q2 2023[94] - Revenue for the first six months of 2024 was $173.0 million, up 27% from $135.9 million in the first six months of 2023[98] - ATS development revenue increased by $9.6 million, or 18%, from Q2 2023 to Q2 2024, driven by U.S. government programs[98] - Tools revenue rose by $24.9 million from Q2 2023 to Q2 2024, reflecting increased customer investment[98] - Wafer Services revenue decreased by $11.0 million, or 66%, from Q2 2023 to Q2 2024 due to reduced activity in industrial and bio-health sectors[98] Profitability and Expenses - Gross profit for Q2 2024 was $17.1 million, a 3% increase from $16.7 million in Q2 2023[94] - Operating income for Q2 2024 was $1.4 million, compared to an operating loss of $3.5 million in Q2 2023[94] - Net loss attributable to SkyWater Technology, Inc. for Q2 2024 was $1.9 million, an improvement of 78% from a net loss of $8.6 million in Q2 2023[94] - Research and development expenses for Q2 2024 were $3.4 million, a 41% increase from $2.4 million in Q2 2023[94] - Cost of revenue increased by $23.1 million to $76.2 million for Q2 2024, primarily due to a $24.6 million rise in tool procurement costs for customer ATS development programs[99] - Selling, general and administrative expense decreased by $5.5 million to $12.3 million for Q2 2024, and by $9.2 million to $23.5 million for the first six months of 2024 compared to the same period in 2023[101] - Interest expense decreased to $2.5 million for Q2 2024 from $3.0 million in Q2 2023, and to $4.9 million for the first six months of 2024 from $5.4 million in the same period of 2023[102] Cash Flow and Liquidity - Net cash provided by operating activities was $5.4 million during the first six months of 2024, an increase of $23.4 million from cash used in the same period of 2023[113] - As of June 30, 2024, the company had $17.7 million in cash and cash equivalents and $74.0 million available under the Revolver[106] - The outstanding balance of the Revolver was $26.0 million as of June 30, 2024, with compliance to applicable financial covenants expected to continue[110] - The company anticipates sufficient liquidity to fund operations for the next twelve months based on cash on hand, available borrowings, and potential cost reduction measures[106] Debt and Financial Covenants - The Loan Agreement requires a minimum EBITDA of $10.0 million calculated as of the last day of each calendar month starting April 30, 2023, for the preceding twelve months[120] - As of June 30, 2024, the company was in compliance with the Loan Agreement covenants and expects to maintain compliance over the next twelve months[120] - The outstanding balance of the Revolver was $26.0 million at June 30, 2024, with an interest rate of 10.7%, indicating that a 100 basis point increase would raise annual interest expense by $0.3 million[138] Adjusted EBITDA - Adjusted EBITDA for the second quarter ended June 30, 2024, was $8.1 million, compared to $10.3 million for the same period in the previous year, reflecting a decrease of approximately 21.2%[134] - The net loss attributable to SkyWater Technology, Inc. for the second quarter ended June 30, 2024, was $(1.9) million, compared to $(8.6) million for the same period in the previous year[134] - The company reported interest expense of $2.5 million for the second quarter ended June 30, 2024, compared to $3.0 million for the same period in the previous year[134] Internal Controls and Compliance - Material weaknesses in internal control over financial reporting were identified and not remediated as of June 30, 2024[142] - The company undertook actions in fiscal year 2023 to implement new controls and enhance existing controls to remediate material weaknesses in the Control Activities component of the COSO Framework and revenue accounting process[143] - Remediation of these material weaknesses will require further validation and testing of internal controls over a sustained period in fiscal year 2024[143] - Management concluded that disclosure controls and procedures were not effective as of June 30, 2024, due to material weaknesses in internal control over financial reporting[141] Legal and Risk Management - The company is not currently involved in any litigation that would materially affect its business, operating results, cash flows, or financial condition[146] - The company performs ongoing credit evaluations regarding the financial condition of customers with respect to trade receivables and contract assets[137]