SkyWater(SKYT)2025-02-26 19:35Financial Data and Key Metrics Changes - Total revenue for Q4 2024 reached $75 million, exceeding guidance, with tools revenue of $12 million and combined ATS and Wafer Services revenue of $64 million [11][38] - Full year revenues totaled a record $342 million, up 19% from fiscal 2023 [12] - Reported gross margin for Q4 was nearly 27%, contributing to a positive EPS of $0.04 for the quarter and $0.06 for the full year [12][45] - Full year gross margin was 21%, down from 22% in 2023, primarily due to tools revenue impacting margins [42] Business Line Data and Key Metrics Changes - ATS business experienced a strong 13% revenue growth compared to 2023, while Wafer Services revenue declined significantly due to weakness in automotive and industrial segments [13] - Advanced compute was the second largest end market in 2024, with over 90% of revenues related to quantum computing technologies [14] - Tools revenue reached a record $77 million in 2024, reflecting unprecedented customer-funded CapEx investments [15] Market Data and Key Metrics Changes - The aerospace and defense sector showed significant strength in 2024, driving the majority of ATS revenue growth [13] - The automotive market saw a decline in revenue, while the BioHealth sector experienced growth [14] Company Strategy and Development Direction - The company announced the acquisition of Infineon's Fab 25 in Austin, aiming to expand domestic manufacturing capabilities and become a leading pure-play domestic foundry service provider by the end of the decade [8][9] - The acquisition is expected to contribute approximately $300 million in annual Wafer Services revenue and strengthen the company's financial foundation [29][32] - The transition of Fab 25 to a customer-driven foundry model is anticipated to enhance service offerings and align with long-term industry trends [34] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook for 2025 due to ongoing budget negotiations and expected timing of program allocations, forecasting combined ATS and Wafer Services revenue growth of approximately 5% [25][101] - The company expects a significant rebound in ATS revenues in Q2 2025, with continued sequential growth anticipated in Q3 and Q4 [27][49] - Management highlighted the importance of the CHIPS Act funding as an accelerant for growth plans [16] Other Important Information - The company plans to hold a Capital Markets Day post-acquisition to provide more details on the financial benefits and long-term strategic vision for Fab 25 [37] - The acquisition is expected to double the workforce in the U.S. across three strategic manufacturing centers: Minnesota, Florida, and Texas [32] Q&A Session Summary Question: Clarification on Fab 25's gross profit contribution - Management confirmed that the initial supply agreement with Infineon will provide the output they currently receive, with plans to diversify over time [62][63] Question: Customer revenue profile post-acquisition - Infineon is expected to become the largest customer, with a secured supply agreement allowing for diversification and growth [64][65] Question: Back-end processing for Fab 25 - Currently, Infineon uses traditional OSATs for back-end assembly, but there are opportunities for the Florida fab to contribute in the future [66][68] Question: Quantum computing revenue percentage - Quantum computing accounted for about 10% of revenues in Q4 2024 [70] Question: Product applications for Fab 25 - The fab will support various applications, including ASICs, PMICs, and NOR flash, with a focus on 65-nanometer technology [75][76] Question: Wafer services revenue outlook - Management anticipates wafer services revenue will return to growth, with a mix shifting towards new products [20][80] Question: Supply agreement details - The supply agreement includes parameters like take-or-pay, with plans to run the fab at full utilization for Infineon [89][90] Question: Gross margin sustainability - The strong gross margin in Q4 was driven by a combination of ATS business mix and cost deferrals, but similar levels are not expected to repeat [92][93]