Intevac(US:IVAC)2023-02-02 03:36Financial Data and Key Metrics Changes - Intevac reported Q4 2022 revenues of $11.3 million, exceeding guidance of $10 million, primarily due to a favorable mix of revenue from HDD upgrades, spares, and service [21] - Q4 gross margins were 44.3%, significantly above the guidance of 32% to 34%, with expectations to maintain quarterly gross margins of 40% or more for 2023 [21][9] - The net loss for Q4 was $3.2 million, or $0.13 per diluted share, better than the guidance of $0.17 to $0.21 per diluted share [21] Business Line Data and Key Metrics Changes - The HDD business is expected to generate approximately $40 million in revenue for 2023, with a balanced contribution from the first and second halves of the year [9] - The TRIO platform is anticipated to provide significant long-term growth opportunities, with a minimum revenue commitment of $100 million over five years from a strategic partnership [39] Market Data and Key Metrics Changes - There are encouraging signs for a return to growth in datacenter investments and mass-capacity drives, with increased customer investments in new technology during a period of reduced factory utilization [7] - The company is well-positioned to benefit from the transition to HAMR technology, which is expected to drive significant revenue growth in the HDD market [40] Company Strategy and Development Direction - Intevac aims to transform into a consistently growing and profitable cash-generating company, focusing on innovation and collaboration with key partners [6][20] - The company has streamlined its business structure and strengthened its leadership team to align with genuine revenue growth prospects [5][16] - The TRIO platform is seen as a game-changing development, offering flexibility and cost competitiveness, which is critical for entering new markets [19][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting a commitment to returning to profitability by 2024 and maintaining a strong balance sheet [38][20] - The focus for 2023 will be on qualifying the initial TRIO system and ramping up production to meet customer demand [39][81] Other Important Information - The company ended 2022 with a record backlog of $122 million and a cash balance of $113 million, which is critical for supporting its business strategy [21][9] - Intevac has submitted nine patent applications related to the TRIO platform, indicating a strong commitment to enhancing its intellectual property portfolio [17] Q&A Session Summary Question: What is the expected revenue profile for the TRIO system? - Management indicated that it is too early to determine the exact revenue profile, emphasizing the focus on completing the first tool and its qualification [43] Question: How will the exclusivity agreement affect sales to other customers? - The exclusivity is limited to consumer electronic devices for glass and glass ceramic substrates, allowing the company to explore other market opportunities outside this scope [27][60] Question: What is the expected cash consumption in 2023? - The company plans to manage cash strategically while building inventory for TRIO systems, with expectations of maintaining a healthy cash balance [28] Question: What is the market share of the TRIO partner in the cellphone market? - Management refrained from commenting on the partner's market share but noted that they are a market leader in their sector [63] Question: Will the new 200 systems be shipped with HAMR updates? - The new systems will include some level of HAMR readiness, but not the latest upgrades developed in 2022 [58]