Intevac(US:IVAC)2022-02-10 01:20Financial Data and Key Metrics Changes - Q4 2021 revenues were $15.9 million, with total revenues for the year at $38.5 million, slightly above forecasts due to HDD upgrades pulled into Q4 [26] - Q4 gross margin was 4%, significantly below forecasts due to additional inventory reserves of $8.4 million; without these reserves, gross margin would have been 57% [27] - Full year gross margin was 18.3%, and excluding Q4 inventory reserves, it would have been 40% [27] - Q4 net loss from continuing operations was $7.3 million, or a loss of $0.30 per share; excluding inventory reserves and litigation settlement, net income would have been $0.07 per share [29] - GAAP net income for Q4 was $43.5 million, or $1.77 per share, due to the gain from the sale of the Photonics business [30] - Cash and investments at year-end totaled $121.1 million, approximately $4.93 per share [31] Business Line Data and Key Metrics Changes - The HDD business is expected to remain flat in 2022 compared to 2021, with a focus on streamlining operations and returning to profitability [19][45] - The company anticipates that the equipment business could reach a baseline of around $60 million annualized sales, with a potential for growth in 2023 [46][47] Market Data and Key Metrics Changes - The HDD market is projected to require capacity additions over the next three to five years, indicating long-term growth potential [68] - Initial feedback suggests that the previous forecast of $200 million over three years may extend to four years [67] Company Strategy and Development Direction - The company is focused on streamlining operations, aligning resources with revenue growth prospects, and preserving cash reserves [15][18] - A strategic review is ongoing to assess growth opportunities and right-size the business following the sale of the Photonics division [44][49] - The company aims to build a customer-centric culture and strengthen relationships with key customers to drive future growth [16][56] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook for 2022, expecting flat performance compared to 2021, with a focus on operational efficiency [19][45] - The new CEO emphasized the importance of understanding customer needs and aligning the business strategy accordingly [56][68] Other Important Information - The company incurred approximately $3 million in transaction costs related to the Photonics sale, which will be reflected in the balance sheet [32] - Q1 2022 revenue guidance is projected at around $4 million, with expectations of a net loss of approximately $0.24 per share [34][36] Q&A Session Summary Question: Thoughts on normalized sales for the equipment business - Management indicated that a baseline of $60 million annualized sales is reasonable, with a focus on streamlining operations and preparing for growth in 2023 [42][46] Question: Status of strategic review post-Photonics sale - The strategic review is ongoing, with a focus on understanding the core business and identifying growth opportunities [44][49] Question: Future market broadening opportunities - Management is in the early stages of reviewing market opportunities, particularly in coatings for mobile devices, and will engage with customers to assess potential [56][58] Question: Expectations for HDD market growth - Management acknowledged that while the HDD market has long-term growth potential, the immediate outlook for 2022 is flat, with a clearer vision expected after customer discussions [67][68]