Intevac(IVAC)2021-11-02 00:12Financial Data and Key Metrics Changes - The company reported consolidated third quarter revenues of $14.8 million, exceeding guidance of $12 million to $13 million [36] - Q3 gross margin was 37%, above the guidance of 35%, due to favorable mix and higher revenue volume [37] - The net loss for Q3 was $4.2 million or $0.17 per share, better than the guidance of $0.25 per diluted share [11][37] - Cash and investments at the end of the quarter totaled $51.4 million, approximately $2.09 per share [39] Business Line Data and Key Metrics Changes - Thin-Film Equipment (TFE) revenues totaled $8 million, including upgrades, spares, and service [36] - Photonics revenue was $6.8 million, comprising $3.7 million of product revenues and $3.1 million of contract R&D revenues [36] - The backlog at the end of Q3 was $44.9 million, with TFE backlog at $16.9 million and Photonics backlog at $27.9 million [38] Market Data and Key Metrics Changes - The HDD industry demand was in line to slightly better than earlier expectations, with flat to higher nearline drive unit shipments [26] - The company expects the order cycle for HDD capacity expansion to initiate towards the end of the current quarter [27] - HDD revenues are forecasted to increase at least 40% over the next three years [28] Company Strategy and Development Direction - The company is actively engaged in a strategic process with Greenhill to improve shareholder value [16] - Intevac is focused on enhancing the night vision performance of the IVAS program, with expectations for significant revenue growth in Photonics [24][32] - The company anticipates strong growth in HDD business in 2022, driven by resumed media capacity expansion plans [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a return to revenue growth in 2022, despite challenges faced in 2021 [12] - The company highlighted ongoing challenges in the supply chain, particularly with extended lead times for components [68] - Management indicated that 2022 is expected to be a build year, with growth accelerating in subsequent years [48][55] Other Important Information - A $300,000 restructuring charge was included in Q3 numbers, which reduced expenses during a period of limited new system sales [11] - The company has maintained a strong balance sheet, achieving a net increase in total cash and investments since year-end 2020 [12] Q&A Session Summary Question: Clarification on 40% revenue growth guidance - Management confirmed that the 40% guidance applies to total sales across all business segments, not just product sales [44] Question: Linear growth expectations over the next three years - Management indicated that growth in 2022 will be slower, with the majority of growth expected after 2022, but still greater than 40% year-over-year [48][55] Question: HDD unit shipments and cycle comparisons - Management stated that they cannot provide specific unit numbers but expect the bulk of installations to occur late in 2022 or early 2023 [50] Question: Updates on IVAS program and technology upgrades - Management noted that the need for improved night vision performance aligns with Intevac's technology, positioning them favorably for future business wins [54] Question: Supply chain impacts - Management acknowledged supply chain issues, particularly with extended lead times for components and microcontrollers [68] Question: Future upgrade cycles for HDD - Management confirmed ongoing programs aimed at enhancing media density and technology roadmaps [72]