Intevac
Jan 31, 2012

Intevac Announces Fourth Quarter and Full Year 2011 Financial Results

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intevac, Inc. (Nasdaq:IVAC) today reported financial results for the fourth quarter and year ended December 31, 2011.

"2011 was a challenging year for our equipment business, driven first by reduced capital investments in the hard disk drive industry due to the announced consolidations, and compounded by the effects of the devastating flooding in Thailand," commented Kevin Fairbairn, president and chief executive officer of Intevac. "As we look ahead to 2012, we are projecting revenue growth in each of our businesses. We expect to see a recovery in our hard drive equipment business in the second half of the year as the consolidations are completed and as the industry recovers from the effects of the flooding. Additionally, we anticipate increasing sales of our solar manufacturing systems, and also expect a return to growth in our Photonics business, as the impacts of the military budget delays in 2011 are now behind us.

"During the fourth quarter, we achieved two key milestones in our equipment diversification strategy. First, we recognized revenue on our first LEAN SOLAR TM crystalline silicon deposition system, and second, we shipped our first LEAN SOLAR etch system to a leading Asian solar cell manufacturer. In our Photonics business, we have improved our gross margins by 500 basis points as compared to fiscal year 2010, as we continue to improve our sensor yields," concluded Mr. Fairbairn.

Fourth Quarter 2011 Summary

The net loss was $6.2 million, or $0.27 per diluted share, compared to net income of $1.1 million, or $0.05 per diluted share, in the fourth quarter of 2010.

Revenues were $18.6 million, including $12.5 million of Equipment revenues and Intevac Photonics revenues of $6.1 million. Equipment revenues consisted of one LEAN SOLAR system, upgrades, spares and service. Intevac Photonics revenues consisted of $1.8 million of research and development contracts and $4.3 million of product sales or 71% of Photonics revenues. In the fourth quarter of 2010, revenues were $36.2 million, including $26.8 million of Equipment revenues and Intevac Photonics revenues of $9.4 million, which included $5.1 million of product sales.

Equipment gross margin was 36.4%, compared to 47.7% in the fourth quarter of 2010, primarily as a result of decreased revenues and lower factory utilization. Intevac Photonics gross margin of 30.0% improved compared to 19.1% in the fourth quarter of 2010. The increase was primarily a result of improved manufacturing and warranty costs related to our night vision camera module for our NATO customer. Consolidated gross margin was 34.3%, compared to 40.3% in the fourth quarter of 2010. Operating expenses were $14.9 million, compared to $14.5 million in the fourth quarter of 2010 and increased primarily as a result of additional R&D investments in new equipment products.

Order backlog totaled $32.9 million on December 31, 2011, compared to $26.2 million on October 1, 2011 and $46.7 million on December 31, 2010. Backlog as of December 31, 2011 and of October 1, 2011 included one Solar system and no 200 Lean systems. Backlog as of December 31, 2010 included two 200 Lean systems.

Fiscal Year 2011 Summary

The net loss was $22.0 million, or $0.96 per diluted share, compared to net income of $28.0 million, or $1.22 per diluted share, for 2010.

Revenues were $83.0 million, including $54.9 million of Equipment revenues and Intevac Photonics revenues of $28.1 million, compared to revenues of $202.5 million, including $168.3 million of Equipment revenues and Intevac Photonics revenues of $34.3 million, for 2010.

Equipment gross margin was 40.7%, compared to 47.2% in 2010, primarily as a result of lower revenues and lower factory utilization. Intevac Photonics gross margin of 28.9% improved compared to 23.9% in 2010, reflecting lower manufacturing and warranty costs related to our night vision camera module for our NATO customer. Consolidated gross margin was 36.7%, compared to 43.3% in 2010. Operating expenses were $61.2 million, compared to $56.4 million in 2010, and increased primarily as a result of additional R&D investments in new equipment products.

Conference Call Information

The company will discuss its financial results and outlook in a conference call today at 1:30 p.m. PST (4:30 p.m. EST). To participate in the teleconference, please call toll-free (877) 334-0811 prior to the start time. For international callers, the dial-in number is (408) 427-3734. You may also listen live via the Internet at the company's website, www.intevac.com, under the Investors link, or at www.earnings.com. For those unable to attend, these web sites will host an archive of the call. Additionally, a telephone replay of the call will be available for 48 hours beginning today at 7:30 p.m. EST. You may access the replay by calling (855) 859-2056 or, for international callers, (404) 537-3406, and providing Replay Passcode 41846930.

About Intevac

Intevac was founded in 1991 and has two businesses: Equipment and Intevac Photonics.

Equipment Business: We are a leader in the design, development and marketing of high productivity lean manufacturing systems and have been producing Lean Thinking platforms since 1994. We provide process manufacturing equipment solutions to the hard disk drive industry and high-productivity process manufacturing equipment and inspection solutions to the solar photovoltaic industry.

Intevac Photonics: We are a leader in the development and manufacture of leading edge, high-sensitivity imaging products and vision systems, as well as table-top and handheld Raman instruments. Markets addressed include military, industrial, medical and scientific.

For more information call 408-986-9888, or visit the company's website at www.intevac.com.

200 Lean® is a registered trademark, and LEAN SOLARTM is a trademark, of Intevac, Inc.

Safe Harbor Statement

This press release includes statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Intevac claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts. Specific forward-looking statements contained in this press release include, but are not limited to: expected recovery of the hard drive and Photonics businesses, the demand for hard drives, the timing of shipments for our new products, and the future growth of our product portfolio for the solar cell manufacturing market. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from the company's expectations. These risks include, but are not limited to: adjustments to 2011 financial results in connection with preparation of the company's 10-K, the completion of consolidation in the hard drive industry, a slowdown in demand for hard drives, significant changes in the hard drive industry supply chain, the failure to deliver new products for the solar market, and maintaining photonics gross margins, each of which could have a material impact on our business, our financial results, and the company's stock price. These risks and other factors are detailed in the company's regular filings with the U.S. Securities and Exchange Commission.

INTEVAC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

  Three months ended Year ended

December 31,

2011

 

December 31,

2010

 

December 31,

2011

 

December 31,

2010

Net revenues    
Equipment $ 12,499 $ 26,799 $ 54,878 $ 168,252
Intevac Photonics   6,146  

 

  9,360     28,096       34,274  
Total net revenues 18,645 36,159 82,974 202,526
 
Gross profit 6,395 14,576 30,431 87,672
Gross margin
Equipment 36.4 % 47.7 % 40.7 % 47.2 %
Intevac Photonics   30.0 %     19.1 %   28.9 %     23.9 %
Consolidated 34.3 % 40.3 % 36.7 % 43.3 %
 
Operating expenses
Research and development 8,374 7,300 34,287 27,918
Selling, general and administrative   6,511       7,243     26,885       28,516  
Total operating expenses 14,885 14,543 61,172 56,434
 
Operating income (loss)
Equipment (5,899 ) 2,752 (20,321 ) 40,286
Intevac Photonics (1,117 ) (1,400 ) (4,141 ) (4,901 )
Corporate   (1,474 )     (1,319 )   (6,279 )     (4,147 )
Total operating income (loss) (8,490 ) 33 (30,741 ) 31,238
 
Interest and other income (expense)   198       394     635       773  
Profit (loss) before income taxes (8,292 ) 427 (30,106 ) 32,011
Provision (benefit) for income taxes   (2,083 )     (676 )   (8,131 )     3,962  
Net income (loss) $ (6,209 )   $ 1,103   $ (21,975 )

 

$ 28,049  
 
Income (loss) per share
Basic $ (0.27 ) $ 0.05 $ (0.96 ) $ 1.26
Diluted $ (0.27 ) $ 0.05 $ (0.96 ) $ 1.22
Weighted average common shares outstanding
Basic 23,084 22,497 22,903 22,340
Diluted 23,084 23,116 22,903 22,977
 
INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

December 31,

2011

December 31,

2010

(Unaudited) (see Note)
ASSETS
 
Current assets
Cash, cash equivalents and short-term investments $ 82,145 $ 114,514
Accounts receivable, net 18,561 25,911
Inventories 18,070 20,671
Deferred income tax assets 2,202 3,124
Prepaid expenses and other current assets   7,114   6,630
Total current assets 128,092 170,850
 
Long-term investments 32,677 22,866
Property, plant and equipment, net 14,449 13,918
Deferred income tax assets 21,717 14,594
Goodwill 18,389 18,389
Other intangible assets, net 6,441 6,984
Other long-term assets   4,056   4,170
Total assets $ 225,821 $ 251,771
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities
Accounts payable $ 4,857 $ 5,562
Accrued payroll and related liabilities 4,205 11,365
Other accrued liabilities 9,887 11,104
Customer advances   5,040   4,867
Total current liabilities 23,989 32,898
 
Other long-term liabilities 9,922 11,630
Stockholders' equity
Common stock ($0.001 par value) 23 23
Additional paid in capital 146,307 139,824
Accumulated other comprehensive income (loss) 414 255
Retained earnings   45,166   67,141
Total stockholders' equity   191,910   207,243
Total liabilities and stockholders' equity $ 225,821 $ 251,771
 

Note: Amounts as of December 31, 2010 are derived from the December 31, 2010 audited consolidated financial statements.

Intevac, Inc.
Jeff Andreson, 408-986-9888
Chief Financial Officer
Claire McAdams, 530-265-9899
Investor Relations

Source: Intevac, Inc.

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