Intevac(US:IVAC)2022-08-07 00:28Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $9.3 million, exceeding guidance of $8 million to $8.5 million, driven by HDD upgrades, spares, and service [19] - Gross margin for Q2 was 48.2%, above the expected 45% due to a favorable mix of high-margin upgrades [19] - The net loss from continuing operations was $2.6 million, or $0.10 per share, better than the forecasted loss of $0.13 to $0.15 per share [19] - Cash and investments at the end of Q2 totaled $110.2 million, equivalent to $4.36 per share [19] Business Line Data and Key Metrics Changes - The HDD business saw strong bookings with an additional $22 million in new orders, increasing backlog to over $100 million [8] - Operating expenses were managed to under $7 million, resulting in a smaller operating loss [7] - The company expects HDD revenues to reach at least $200 million through 2025, with a forecast of $65 million to $70 million for 2023 [10][12] Market Data and Key Metrics Changes - Utilization rates in the field have decreased to about 75% to 80% from high 90s, indicating a moderation in customer demand [25] - The consumer-driven market has softened, impacting both PCs and HDD units, leading to a more even spread of media capacity expansion plans over the next three years [10] Company Strategy and Development Direction - The company is focusing on the TRIO platform to expand served markets and overall customer footprint, emphasizing cost-effective ultra-hard protected antireflective coatings [13][14] - A commitment to drive the TRIO initiative aggressively in 2022, with expectations for strategic partnerships to validate growth opportunities [16] - The company is streamlining its cost structure while investing in new management and capabilities to support the TRIO business [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term industry trends for HDD and the upcoming technology transitions, particularly with heat and energy-assisted media technologies [11][12] - The company anticipates modest growth for the HDD business in 2023, with low double-digit percentage growth expected, followed by higher revenue ramps in 2024 and 2025 [12] - Management acknowledged challenges in achieving near-term profitability while focusing on long-term growth strategies [12] Other Important Information - The company ended Q2 with a record backlog of $100.2 million, a 12-year high, and expects to maintain a strong cash position of at least $115 million by year-end 2022 [19][21] - Capital expenditures for Q2 were $270,000, with depreciation and amortization at $331,000 [20] Q&A Session Summary Question: Can you provide insights on HDD utilization rates and future upgrades? - Management noted that utilization rates have decreased to 75% to 80%, with expectations for more upgrades in 2023 as customers optimize their facilities [25][26] Question: What is the business model for the TRIO platform? - The company is exploring multiple business models for TRIO, including equipment sales, licensing, and partnerships for sustainable revenue streams [29][30] Question: What are the expectations for revenue in Q4 and 2023? - A slight decrease in upgrades is expected in Q4, with total revenues projected around $11.5 million to $12 million, and low double-digit growth anticipated for 2023 [32][33]