- Net Sales: Net sales of $41.2 million increased 34% year-over-year. Advanced Technology Services sales of $26.9 million increased 35% year-over-year. Tool sales of $2.3 million are included in Advanced Technology Services sales in the second quarter of 2021 compared to none in the prior year. Wafer Services sales of $14.3 million increased 31% compared to the second quarter of 2020.
- Gross Profit: GAAP gross profit was $1.8 million, or 4.4% of sales, compared to $5.5 million, or 17.8% of sales, in the second quarter of 2020. Non-GAAP gross profit was $3.0 million, or 7.2% of sales, compared to $5.6 million, or 18.1% of sales, in the second quarter of 2020.
- Other Income: Recorded a $6.5 million benefit for the Payroll Protection Program loan forgiveness in June 2020.
- Net Loss: GAAP net loss to shareholders of $7.0 million, or $(0.20) per share, compared to a net loss to shareholders of $5.3 million, or $(0.29), in the second quarter of 2020. Non-GAAP net loss to shareholders of $5.1 million, or $(0.15) per share, compared to a net loss to shareholders of $4.1 million, or $(0.23), in the second quarter of 2020.
- Adjusted EBITDA: Adjusted EBITDA was $(0.8) million, or (2.0)% of sales, compared to $2.5 million or 8.0% of sales in the second quarter of 2020.
- Balance Sheet: Cash and cash equivalents of $64.6 million compared to $7.4 million from January 3, 2021.
A reconciliation between historical GAAP and non-GAAP information is contained in the tables below in the section titled, “Non-GAAP Financial Measures.”
Recent Business Updates:
- Initiated the transition of multiple customers from Advanced Technology Services to Wafer Services validating the differentiating aspect of the company’s Technology as a Service business model.
- Finalized the necessary customer qualifications to enable the volume ramp of the company’s Power MOSFET platform in the second half of the year.
- Won several new designs in the bio-medical market, leveraging the company’s MEMS technology platform.
- Significantly expanded the company’s Advanced Technology Services and Wafer Services sales pipelines.
- Successfully started up the company’s Florida-based fab and entered into new advanced packaging engagements with two existing customers, including Rockley Photonics.
- Continued to successfully execute the technology qualification of the company’s radiation hardened (RH90) platform which will enable future rad-hard testing.
- Completed a broad agreement with CAES to leverage its extensive experience in space-based electronics as SkyWater establishes its RH90 design enablement ecosystem, allowing faster time to market for end customers requiring rad-hard solutions.
- Launched a collaboration with Efabless on its chipIgnite program to support commercial chip designs that require non-open sourced IP.
- Funding from existing U.S. Government programs is still anticipated, but the timing is difficult to forecast.
- Delayed recognition for the majority of the revenue for wafers produced and put in inventory for a temperature monitoring wearable application for early COVID-19 detection as announced in May 2020. Due to the rapid introduction of the COVID-19 vaccines, these wafers are now being repurposed for an alternative health-related wearable application for the original customer or other customers.
- Postponed an Advanced Technology Services program that generated significant revenue in 2020 and was forecasted to generate 2021 revenue. The program is now being restructured with the customer and is expected to resume in 2022.
- Achieved inclusion of SkyWater Technology shares (Nasdaq: SKYT) in the Russell® 3000 Index on June 28, 2021.
- Gained approval from SkyWater’s Board of Directors for $56 million of strategic capital investment to both expand the capacity of SkyWater Minnesota and fast-track the company’s entry into the high growth gallium nitride market.
SkyWater has not provided quarterly or full year outlook for net sales or earnings because these estimates are difficult to predict on a forward-looking basis due to certain factors that are materially significant to SkyWater’s ability to accurately forecast certain items that are out of its control and/or cannot be reasonably projected.
Investor Webcast
SkyWater will host a conference call on Wednesday, August 4, 2021, at 9:00 a.m. CT to discuss its second quarter financial results. A live webcast of the call will be available online at IR.SkyWaterTechnology.com.
About SkyWater Technology
SkyWater (NASDAQ: SKYT) is a U.S.-owned semiconductor manufacturer and a DOD-accredited Trusted supplier. SkyWater’s Technology as a ServiceSM model streamlines the path to production for customers with development services, volume production and advanced packaging solutions in its world-class U.S. facilities. This pioneering model enables innovators to co-create the next wave of technology with diverse categories including mixed-signal CMOS, read-out ICs, rad-hard, power discretes, MEMS, superconducting ICs, photonics, carbon nanotubes and interposers. SkyWater serves growing markets including aerospace & defense, automotive, biomedical, cloud & computing, consumer, industrial and IoT. For more information, visit: www.SkyWaterTechnology.com.
Forward-Looking Statements
This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements that are based on the Company’s current expectations or forecasts of future events, rather than past, events and outcomes, and such statements are not guarantees of future performance. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including information or predictions concerning the Company’s future business, results of operations, financial performance, plans and objectives, competitive position, market trends, and potential growth and market opportunities. In some cases, you can identify forward-looking statements by words such as “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will”, “targets,” “projects,” “seeks” or the negative of these terms or other comparable terminology.
Forward-looking statements are subject to risks, uncertainties and assumptions, which may cause the Company’s actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Key factors that could cause the Company’s actual results to be different than expected or anticipated include, but are not limited to: our goals and strategies; our future business development, financial condition and results of operations; our ability to continue operating our sole semiconductor foundry at full capacity; our ability to appropriately respond to changing technologies on a timely and cost-effective basis; our customer relationships and our ability to retain and expand our customer relationships; our ability to accurately predict our future revenues for the purpose of appropriately budgeting and adjusting our expenses; our ability to diversify our customer base and develop relationships in new markets; our expectations regarding dependence on our largest customer; the performance and reliability of our third-party suppliers and manufacturers; our ability to control costs, including our operating and capital expenses; the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets; the level of demand in our customers’ end markets; our ability to attract, train and retain key qualified personnel; adverse litigation judgments, settlements or other litigation-related costs; changes in trade policies, including the imposition of tariffs; our ability to raise additional capital or financing; our ability to accurately forecast demand; the impact of the COVID-19 pandemic on our business, results of operations and financial condition; the impact of the COVID-19 pandemic on the global economy; our ability to maintain compliance with certain U.S. Government contracting requirements; regulatory developments in the United States and foreign countries; our ability to protect our intellectual property rights; and other factors discussed in the “Risk Factors” section of the prospectus the Company filed with the SEC on April 22, 2021 and in other documents that the Company files with the SEC, which are available at http://www.sec.gov. The Company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
SKYT-IR
SKYWATER TECHNOLOGY, INC. |
|||||||||
Consolidated Balance Sheets |
|||||||||
(Unaudited) |
|||||||||
|
|
July 4, 2021 |
|
January 3, 2021 |
||||||
|
|
(in thousands, except share and unit data) |
||||||||
| Assets |
|
|
|
||||||
| Current assets: |
|
|
|
||||||
| Cash and cash equivalents |
$ |
64,603 |
|
|
|
$ |
7,436 |
|
|
| Accounts receivable, net |
33,396 |
|
|
|
29,995 |
|
|
||
| Inventories |
29,167 |
|
|
|
27,169 |
|
|
||
| Prepaid expenses and other current assets |
3,597 |
|
|
|
11,972 |
|
|
||
| Total current assets |
130,763 |
|
|
|
76,572 |
|
|
||
| Property and equipment, net |
179,441 |
|
|
|
178,078 |
|
|
||
| Intangible assets, net |
4,029 |
|
|
|
4,561 |
|
|
||
| Other assets |
4,518 |
|
|
|
3,998 |
|
|
||
| Total assets |
$ |
318,751 |
|
|
|
$ |
263,209 |
|
|
| Liabilities and Members’ Equity (Deficit) |
|
|
|
||||||
| Current liabilities: |
|
|
|
||||||
| Current portion of long-term debt |
$ |
1,006 |
|
|
|
$ |
2,772 |
|
|
| Accounts payable |
15,880 |
|
|
|
16,792 |
|
|
||
| Accrued expenses |
20,733 |
|
|
|
25,496 |
|
|
||
| Income taxes payable |
539 |
|
|
|
1,710 |
|
|
||
| Current portion of contingent consideration |
3,900 |
|
|
|
8,904 |
|
|
||
| Deferred revenue - current |
24,919 |
|
|
|
30,653 |
|
|
||
| Total current liabilities |
66,977 |
|
|
|
86,327 |
|
|
||
| Long-term liabilities: |
|
|
|
||||||
| Long-term debt, less current portion and unamortized debt issuance costs |
65,348 |
|
|
|
69,828 |
|
|
||
| Contingent consideration, less current portion |
— |
|
|
|
1,996 |
|
|
||
| Long-term incentive plan |
3,648 |
|
|
|
3,185 |
|
|
||
| Deferred revenue - long-term |
84,438 |
|
|
|
95,399 |
|
|
||
| Deferred income tax liability, net |
2,866 |
|
|
|
8,058 |
|
|
||
| Total long-term liabilities |
156,300 |
|
|
|
178,466 |
|
|
||
| Total liabilities |
223,277 |
|
|
|
264,793 |
|
|
||
| Commitments and contingencies |
|
|
|
||||||
| Shareholders’ equity (deficit): |
|
|
|
||||||
| Preferred stock, $0.01 par value per share (80,000,000 and zero shares authorized; zero issued and outstanding) |
— |
|
|
|
— |
|
|
||
| Common stock, $0.01 par value per share (200,000,000 and zero shares authorized; 39,059,743 and zero shares issued and outstanding) |
391 |
|
|
|
— |
|
|
||
| Additional paid-in capital |
110,082 |
|
|
|
— |
|
|
||
| Class A preferred units (zero and 2,000,000 units authorized; zero issued and outstanding) |
— |
|
|
|
— |
|
|
||
| Class B preferred units (zero and 18,000,000 units authorized; zero and 18,000,000 units issued and outstanding) |
— |
|
|
|
— |
|
|
||
| Common units (zero and 5,000,000 units authorized; zero and 3,057,344 units issued; zero and 2,107,452 outstanding) |
— |
|
|
|
3,767 |
|
|
||
| Accumulated deficit |
(13,573 |
) |
|
|
(3,783 |
) |
|
||
| Total shareholders’ equity (deficit), SkyWater Technology, Inc. |
96,900 |
|
|
|
(16 |
) |
|
||
| Non-controlling interests |
(1,426 |
) |
|
|
(1,568 |
) |
|
||
| Total shareholders’ equity (deficit) |
95,474 |
|
|
|
(1,584 |
) |
|
||
| Total liabilities and shareholders’ equity |
$ |
318,751 |
|
|
|
$ |
263,209 |
|
|
| The accompanying notes are an integral part of these consolidated financial statements. |
|||||||||
| SKYWATER TECHNOLOGY, INC. |
|||||||||||||||||||
| Consolidated Statements of Operations |
|||||||||||||||||||
| (Unaudited) |
|||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
|
|
July 4, 2021 |
|
June 28, 2020 |
|
July 4, 2021 |
|
June 28, 2020 |
||||||||||||
|
|
(in thousands, except share, unit and per share and unit data) |
||||||||||||||||||
| Net sales |
$ |
41,189 |
|
|
|
$ |
30,759 |
|
|
|
$ |
89,290 |
|
|
|
$ |
67,663 |
|
|
| Cost of sales |
39,377 |
|
|
|
25,297 |
|
|
|
78,312 |
|
|
|
55,777 |
|
|
||||
| Gross profit |
1,812 |
|
|
|
5,462 |
|
|
|
10,978 |
|
|
|
11,886 |
|
|
||||
| Research and development |
3,339 |
|
|
|
786 |
|
|
|
5,266 |
|
|
|
1,448 |
|
|
||||
| Selling, general and administrative expenses |
15,415 |
|
|
|
6,921 |
|
|
|
24,018 |
|
|
|
12,554 |
|
|
||||
| Change in fair value of contingent consideration |
(942 |
) |
|
|
712 |
|
|
|
(886 |
) |
|
|
1,553 |
|
|
||||
| Operating loss |
(16,000 |
) |
|
|
(2,957 |
) |
|
|
(17,420 |
) |
|
|
(3,669 |
) |
|
||||
| Other income (expense): |
|
|
|
|
|
|
|
||||||||||||
| Paycheck Protection Program loan forgiveness |
6,453 |
|
|
|
— |
|
|
|
6,453 |
|
|
|
— |
|
|
||||
| Change in fair value of warrant liability |
— |
|
|
|
(99 |
) |
|
|
— |
|
|
|
(240 |
) |
|
||||
| Interest expense |
(912 |
) |
|
|
(1,322 |
) |
|
|
(1,970 |
) |
|
|
(2,784 |
) |
|
||||
| Total other expense |
5,541 |
|
|
|
(1,421 |
) |
|
|
4,483 |
|
|
|
(3,024 |
) |
|
||||
| Loss before income taxes |
(10,459 |
) |
|
|
(4,378 |
) |
|
|
(12,937 |
) |
|
|
(6,693 |
) |
|
||||
| Income tax (benefit) expense |
(4,237 |
) |
|
|
915 |
|
|
|
(4,662 |
) |
|
|
(28 |
) |
|
||||
| Net loss |
(6,222 |
) |
|
|
(5,293 |
) |
|
|
(8,275 |
) |
|
|
(6,665 |
) |
|
||||
| Less: net income attributable to non-controlling interests |
757 |
|
|
|
— |
|
|
|
1,515 |
|
|
|
— |
|
|
||||
| Net loss attributable to SkyWater Technology, Inc. |
$ |
(6,979 |
) |
|
|
$ |
(5,293 |
) |
|
|
$ |
(9,790 |
) |
|
|
$ |
(6,665 |
) |
|
| Net loss per share attributable to common shareholders, basic and diluted: |
$ |
(0.20 |
) |
|
|
|
|
$ |
(0.54 |
) |
|
|
|
||||||
| Net loss per unit attributable to Class B preferred unitholders, basic and diluted: |
|
|
$ |
(0.29 |
) |
|
|
|
|
$ |
(0.37 |
) |
|
||||||
| Weighted average shares used in computing net loss per common share, basic and diluted: |
34,707,758 |
|
|
|
|
|
18,884,051 |
|
|
|
|
||||||||
| Weighted average units used in computing net loss per Class B preferred unit, basic and diluted: |
|
|
18,000,000 |
|
|
|
|
|
18,000,000 |
|
|
||||||||
| The accompanying notes are an integral part of these consolidated financial statements. |
|||||||||||||||||||
| SKYWATER TECHNOLOGY, INC. |
|||||||||
| Consolidated Statements of Cash Flows |
|||||||||
| (Unaudited) |
|||||||||
|
|
Six Months Ended |
||||||||
|
|
July 4, 2021 |
|
June 28, 2020 |
||||||
|
|
(in thousands) |
||||||||
| Cash flows from operating activities: |
|
|
|
||||||
| Net loss |
$ |
(8,275 |
) |
|
|
$ |
(6,665 |
) |
|
| Adjustments to reconcile net loss to net cash flows (used in) provided by operating activities: |
|
|
|
||||||
| Depreciation and amortization |
13,336 |
|
|
|
8,639 |
|
|
||
| Gain on Paycheck Protection Program loan forgiveness |
(6,453 |
) |
|
|
— |
|
|
||
| Foundry services obligation |
— |
|
|
|
(3,732 |
) |
|
||
| Gain on sale of property and equipment |
— |
|
|
|
(1,117 |
) |
|
||
| Amortization of debt issuance costs included in interest expense |
320 |
|
|
|
781 |
|
|
||
| Long-term incentive and stock-based compensation |
7,008 |
|
|
|
865 |
|
|
||
| Change in fair value of warrant liability |
— |
|
|
|
240 |
|
|
||
| Change in fair value of contingent consideration |
(886 |
) |
|
|
1,553 |
|
|
||
| Cash paid for contingent consideration in excess of initial valuation |
(6,114 |
) |
|
|
— |
|
|
||
| Deferred income taxes |
(5,191 |
) |
|
|
(1,190 |
) |
|
||
| Non-cash revenue related to customer equipment |
(2,481 |
) |
|
|
— |
|
|
||
| Changes in operating assets and liabilities: |
|
|
|
||||||
| Accounts receivable |
(3,401 |
) |
|
|
43,854 |
|
|
||
| Inventories |
(1,998 |
) |
|
|
(1,778 |
) |
|
||
| Prepaid expenses and other assets |
5,672 |
|
|
|
(5,390 |
) |
|
||
| Accounts payable |
(610 |
) |
|
|
(529 |
) |
|
||
| Accrued expenses |
(3,872 |
) |
|
|
9,841 |
|
|
||
| Deferred revenue |
(16,695 |
) |
|
|
56,777 |
|
|
||
| Income tax payable and receivable |
(1,171 |
) |
|
|
886 |
|
|
||
| Net cash (used in) provided by operating activities |
(30,811 |
) |
|
|
103,035 |
|
|
||
| Cash flows from investing activities: |
|
|
|
||||||
| Purchase of software and licenses |
(357 |
) |
|
|
— |
|
|
||
| Proceeds from sale of property and equipment |
— |
|
|
|
1,650 |
|
|
||
| Purchases of property and equipment |
(12,898 |
) |
|
|
(38,409 |
) |
|
||
| Net cash used in investing activities |
(13,255 |
) |
|
|
(36,759 |
) |
|
||
| Cash flows from financing activities: |
|
|
|
||||||
| Proceeds from issuance of common stock pursuant to the initial public offering, net of underwriting discounts and commissions |
104,212 |
|
|
|
— |
|
|
||
| Cash paid for offering costs |
(1,205 |
) |
|
|
— |
|
|
||
| Proceeds from Paycheck Protection Program loan |
— |
|
|
|
6,453 |
|
|
||
| Repayment of term loan |
— |
|
|
|
(2,574 |
) |
|
||
| Net repayment on line of credit |
— |
|
|
|
(9,759 |
) |
|
||
| Net proceeds from Revolver |
382 |
|
|
|
— |
|
|
||
| Repayment of Financing |
(495 |
) |
|
|
— |
|
|
||
| Cash paid for capital leases |
(288 |
) |
|
|
— |
|
|
||
| Cash paid for debt issuance costs |
— |
|
|
|
(100 |
) |
|
||
| Cash paid for contingent consideration |
— |
|
|
|
(5,253 |
) |
|
||
| Distributions to VIE member |
(1,373 |
) |
|
|
— |
|
|
||
| Net cash provided by (used in) financing activities |
101,233 |
|
|
|
(11,233 |
) |
|
||
| Net change in cash and cash equivalents |
57,167 |
|
|
|
55,043 |
|
|
||
| Cash and cash equivalents - beginning of period |
7,436 |
|
|
|
4,605 |
|
|
||
| Cash and cash equivalents - end of period |
$ |
64,603 |
|
|
|
$ |
59,648 |
|
|
| The accompanying notes are an integral part of these consolidated financial statements. |
|||||||||
| Supplemental Net Sales Information by Quarter |
|||||||||||||||||||||||
|
|
Q1 2020 |
|
Q2 2020 |
|
Q3 2020 |
|
Q4 2020 |
|
Q1 2021 |
|
Q2 2021 |
||||||||||||
|
|
(in thousands) |
||||||||||||||||||||||
| Wafer Services sales |
$ |
13,318 |
|
|
$ |
10,896 |
|
|
$ |
8,762 |
|
|
$ |
13,442 |
|
|
$ |
10,019 |
|
|
$ |
14,312 |
|
| Advanced Technology Services sales |
23,586 |
|
|
19,863 |
|
|
24,241 |
|
|
26,330 |
|
|
38,082 |
|
|
26,877 |
|
||||||
| Net Sales |
$ |
36,904 |
|
|
$ |
30,759 |
|
|
$ |
33,003 |
|
|
$ |
39,772 |
|
|
$ |
48,101 |
|
|
$ |
41,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
| Tool revenue (included in ATS sales) |
$ |
3,173 |
|
|
$ |
— |
|
|
$ |
360 |
|
|
$ |
4,895 |
|
|
$ |
15,405 |
|
|
$ |
2,346 |
|
