Intevac
Jul 31, 2012

Intevac Announces Second Quarter 2012 Financial Results

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the quarter and six months ended June 30, 2012.

"We are pleased to report that we met the high end of our second quarter guidance, with better than forecasted operating results, through a combination of higher-margin upgrades and prudent management of expenses," commented Kevin Fairbairn, president and chief executive officer of Intevac. "As we look to the remainder of 2012, expectations for hard drive unit growth have softened, due principally to the difficult global economic environment. While expectations for hard drive capacity additions have certainly diminished since earlier this year, the long term business opportunities for our hard drive business remain intact.

"We continued to make positive progress in diversifying our equipment business into the solar cell market, as we recognized revenue on our first LEAN SOLAR NanoTextureTM system and shipped our first two ion implant systems to well-capitalized solar cell manufacturers. Our Photonics business continued to gain momentum in the first half of this year and achieved a record level of orders and backlog during the quarter."

Second Quarter 2012 Summary

The net loss for the quarter was $1.5 million, or $0.06 per share, and includes a $1.1 million unfavorable tax rate adjustment, as compared to a net loss of $2.6 million, or $0.11 per share, in the second quarter of 2011.

Revenues were $31.8 million, including $25.1 million of Equipment revenues and Intevac Photonics revenues of $6.7 million. Equipment revenues included two 200 Lean® systems and one LEAN SOLAR NanoTextureTM system. Intevac Photonics revenues consisted of $3.2 million of research and development contracts and $3.6 million of product sales. In the second quarter of 2011, revenues were $27.6 million, including $19.8 million of Equipment revenues and Intevac Photonics revenues of $7.8 million, which included $5.9 million of product sales.

Equipment gross margin improved to 47.1% compared to 38.3% in the second quarter of 2011. The increase in gross margin was primarily as a result of higher system margins and a higher mix of upgrade and spares shipments. Intevac Photonics gross margin improved to 36.3% compared to 32.7% in the second quarter of 2011. The increase was primarily a result of improving yields related to our night vision products. Consolidated gross margin was 44.8%, compared to 36.7% in the second quarter of 2011. Operating expenses were flat as compared to the second quarter of 2011, and represented a sequential decrease of 6.6% compared to first quarter 2012 operating expenses.

Order backlog totaled $43.3 million on June 30, 2012, compared to $41.3 million on March 31, 2012 and $36.9 million on July 2, 2011. Backlog as of June 30, 2012 does not include any 200 Lean systems or Solar systems, compared to two 200 Lean systems and one Solar system on March 31, 2012 and two Solar systems on July 2, 2011.

Our balance sheet remains strong, with $103.5 million of cash and investments and $165.7 million in tangible book value, equivalent to $4.45 and $7.12 per share, respectively, based upon 23.3 million shares outstanding at quarter end.

First Six Months 2012 Summary

The net loss was $4.7 million, or $0.20 per share, compared to a net loss of $9.7 million, or $0.42 per share, for the first six months of 2011.

Revenues were $49.1 million, including $35.8 million of Equipment revenues and Intevac Photonics revenues of $13.3 million, compared to revenues of $45.0 million, including $30.0 million of Equipment revenues and Intevac Photonics revenues of $15.0 million, for the first six months of 2011.

Equipment gross margin was 46.5%, compared to 40.7% in the first six months of 2011, primarily as a result of higher system margins and a higher mix of upgrades and spares. Intevac Photonics gross margin improved to 33.2% compared to 28.7% in the first six months of 2011, reflecting improved yields related to our night vision products. Consolidated gross margin was 42.9%, compared to 36.7% in the first six months of 2011. Operating expenses were $30.9 million, essentially flat as compared to the first six months of 2011.

Conference Call Information

The company will discuss its financial results and outlook in a conference call today at 1:30 p.m. PDT (4:30 p.m. EDT). 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 websites 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. EDT. You may access the replay by calling (800) 642-1687 or, for international callers, (706) 645-9291, and providing Replay Passcode 98309867.

About Intevac

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

In our Equipment business, we are a leader in the design, development and manufacturing of high-productivity, vacuum process equipment solutions. Our systems are production-proven for high-volume manufacturing of small substrates with precise thin film properties, such as those required in the hard drive and solar cell markets we currently serve.

In the hard drive industry, our 200 Lean® systems process approximately 60% of all magnetic disk media produced worldwide. In the solar cell manufacturing industry, our recently-introduced LEAN SOLAR™ platform, with applications including deposition, texture etch and ion implant, increases the conversion efficiency of silicon solar cells.

In our Photonics business, we are a leader in the development and manufacture of leading-edge, high-sensitivity imaging products and vision systems as well as materials identification instruments utilizing Raman technology. Our products primarily address the defense markets in addition to the industrial, medical and scientific industries.

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 and LEAN SOLAR NanoTextureTM are trademarks, 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 demand for hard drives, the technology leadership and lead-time advantages of our systems, and the expansion 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: oversupply in the media industry, a slowdown in demand for hard drives and the failure to introduce new products for the solar market, 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 periodic 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     Six months ended
June 30,  

July 2,

June 30,  

July 2,

2012  

2011

2012  

2011

Net revenues
Equipment $ 25,059 $ 19,815 $ 35,778 $ 29,995
Intevac Photonics   6,732     7,770   13,329     15,013
Total net revenues 31,791 27,585 49,107 45,008
 
Gross profit 14,254 10,137 21,078 16,518
Gross margin
Equipment 47.1% 38.3% 46.5% 40.7%
Intevac Photonics   36.3%     32.7%   33.2%     28.7%
Consolidated 44.8% 36.7% 42.9% 36.7%
 
Operating expenses
Research and development 8,263 8,290 17,476 17,302
Selling, general and administrative   6,669     6,508   13,442     13,394
Total operating expenses 14,932 14,798 30,918 30,696
 

Gain on sale of mainframe technology

 

   

 

  2,207    
Total operating loss (678) (4,661) (7,633) (14,178)
 
Income/(Loss) from operations
Equipment 1,129 (2,794) (5,196) (9,064)
Intevac Photonics (616) (493) (1,656) (2,076)
Corporate1   (1,191)     (1,374)   (781)     (3,038)
Total operating loss (678) (4,661) (7,633) (14,178)
 
Interest and other income   48     169   420     298
Loss before income taxes (630) (4,492) (7,213) (13,880)
Provision for (benefit from) income taxes   863     (1,873)   (2,559)     (4,230)
Net loss $ (1,493)   $ (2,619) $ (4,654)   $ (9,650)
 
Loss per share
Basic and Diluted $ (0.06) $ (0.11) $ (0.20) $ (0.42)
Weighted average common shares outstanding
Basic and Diluted 23,265 22,851 23,241 22,789
 

1 Six months ended June 30, 2012 includes the gain on sale of the mainframe technology of $2.2 million.

 
INTEVAC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

  June 30,   Dec. 31,
2012 2011
(Unaudited) (see Note)
ASSETS
 
Current assets
Cash, cash equivalents and short-term investments $ 66,141 $ 82,145
Accounts receivable, net 25,945 18,561
Inventories 19,761 18,070
Deferred income tax assets 2,493 2,202
Prepaid expenses and other current assets   8,418   7,114
Total current assets 122,758 128,092
 
Long-term investments 37,323 32,677
Property, plant and equipment, net 13,911 14,449
Deferred income tax assets 24,176 21,717
Goodwill 18,389 18,389
Other intangible assets, net 6,169 6,441
Other long-term assets   3,000   4,056
Total assets $ 225,726 $ 225,821
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities
Accounts payable $ 5,839 $ 4,857
Accrued payroll and related liabilities 4,693 4,205
Other accrued liabilities 12,842 9,887
Customer advances   1,900   5,040
Total current liabilities 25,274 23,989
 
Other long-term liabilities 10,179 9,922
Stockholders' equity
Common stock ($0.001 par value) 23 23
Additional paid in capital 149,187 146,307
Accumulated other comprehensive income 551 414
Retained earnings   40,512   45,166
Total stockholders' equity   190,273   191,910
Total liabilities and stockholders' equity $ 225,726 $ 225,821
 
 

Note: Amounts as of December 31, 2011 are derived from the December 31, 2011 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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