Intevac(US:IVAC)2023-05-06 14:50Financial Data and Key Metrics Changes - First quarter revenues totaled $11.5 million, at the high end of guidance of $10.5 million to $11.5 million, driven by HDD upgrades, spares, and service [5] - Q1 gross margin was 40.9%, roughly at the midpoint of guidance of 40% to 42% [6] - Q1 net loss was $3.9 million or $0.15 per diluted share, with a non-GAAP net loss of $4.2 million or $0.16 per diluted share [7] - Cash and investments at quarter-end were $85 million, equivalent to $3.27 per share, with a net use of cash of $28 million in Q1 [8] - Total cash flow used by operations was $24 million during the quarter [13] Business Line Data and Key Metrics Changes - The backlog was $120.7 million at quarter-end, reflecting $10.5 million of new orders booked in the quarter [8] - R&D and SG&A expenses were $9.2 million, just below the midpoint of guidance of $9 million to $9.5 million [6] - The company expects Q2 2023 revenue to be in the range of $8 million to $9 million, bringing first half revenues to $19 million to $20 million, about 40% higher than the first half of 2022 [15] Market Data and Key Metrics Changes - The hard drive industry is experiencing a period of softening demand, with significant moderation in growth expectations for 2023 [76] - The company maintains its HDD revenue forecast for 2023 at around $40 million, but up to 10% of that forecast is at risk of pushing out to next year [18] Company Strategy and Development Direction - The company is focused on transforming into a consistently growing and profitable cash-generating entity with a leading position in key markets [3] - The development of the TRIO platform is seen as a game-changing opportunity, broadening the product line and increasing the total addressable market [84] - The company is prioritizing resources towards TRIO opportunities and has made strategic investments in TRIO-related inventory [9][88] Management's Comments on Operating Environment and Future Outlook - The management acknowledges the challenging business environment in the hard drive industry and is managing costs prudently [82] - There is optimism regarding the long-term opportunities presented by the growth of data and the relevance of mass capacity storage [80] - The company expects initial TRIO orders to be placed around year-end 2023, with first revenues anticipated in 2024 [91] Other Important Information - The company has been making targeted strategic investments in TRIO-related inventory to support future growth [9] - The increase in inventory during Q1 was primarily driven by TRIO system preparations [10] Q&A Session Summary Question: Potential sales to the hard disk drive market being pushed to 2024 - Management has good visibility into customer demand and is working closely with HDD customers to confirm plans for the quarter and the rest of the year [25][26] Question: Insight into expected inventory increases - The increase in inventory will depend on shipments from backlog and continued investment in TRIO inventory [29][30] Question: Update on HAMR adoption timing - Management is confident that HAMR drives are on track for evaluation this year, with ramp-up expected in 2024 [31][37] Question: Capacity utilization at hard drive customers - Current utilization in the market is estimated to be around 40% to 50% [47] Question: Stability of pricing and component supply chain - Pricing is relatively stable, with some spikes from last year remaining high [49] Question: Tax situation and potential changes in 2024 - The majority of current tax is from the hard drive business, which could change with TRIO revenue in 2024 [50] Question: TRIO build expectations for 2023 - The company expects to build multiple TRIO systems in 2023, with significant investment in R&D and inventory [100][103]