Intevac
INTEVAC INC (Form: 8-K, Received: 10/30/2017 16:07:55)

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

October 30, 2017

Date of Report (date of earliest event reported)

 

 

INTEVAC, INC.

(Exact name of Registrant as specified in its charter)

 

 

 

State of Delaware   0-26946   94-3125814

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

3560 Bassett Street

Santa Clara, CA 95054

(Address of principal executive offices)

(408) 986-9888

(Registrant’s telephone number, including area code)

N/A

(Former name or former address if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

     Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

     Emerging growth company  ☐

 

     If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition

On October 30, 2017, Intevac, Inc. issued a press release reporting its financial results for the three and nine months ended September 30, 2017. A copy of the press release issued by the Company concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The foregoing information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

 

  (d) Exhibits

99.1 Press Release.


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

    INTEVAC, INC.
Date: October 30, 2017    

/s/ JAMES MONIZ

    James Moniz
   

Executive Vice President, Finance and Administration,

Chief Financial Officer and Treasurer

Exhibit 99.1

 

LOGO

 

James Moniz    Claire McAdams
Chief Financial Officer    Investor Relations
(408) 986-9888    (530) 265-9899

INTEVAC ANNOUNCES THIRD QUARTER 2017 FINANCIAL RESULTS

Santa Clara, Calif.—October 30, 2017—Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the quarter and nine months ended September 30, 2017.

Third Quarter Highlights

 

  - Revenue and earnings exceeding guidance, primarily due to pull-ins of technology upgrades in our core HDD (hard disk drive) business;

 

  - Revenues recognized on two 200 Lean ® HDD systems; two additional 200 Leans booked for delivery in 2018, bringing 200 Lean backlog to five systems at quarter end; and

 

  - Improved performance for Photonics, with new orders, revenues, gross margin and operating margin each increasing quarter-over-quarter.

Commenting on the third quarter, President and CEO Wendell Blonigan said, “With continued favorable conditions for our hard drive business, we exceeded our expectations for the quarter, and again added to backlog for 2018 revenue. Year to date, we have recognized revenue on every one of our three new Thin-film Equipment platforms: the INTEVAC VERTEX™, the MATRIX™ and the ENERG i ™ ion implant tool. In the third quarter, we continued to make progress moving through customer evaluations and qualifications of oDLC™ for multiple applications. With our Photonics business on track to deliver a similar year in 2017, the strengthening of our HDD business – and the actions we have taken to build VERTEX inventory ahead of anticipated orders – gives us the confidence that we will achieve our strong revenue growth and profitability objectives for the full year.”

 

($ Millions, except per share amounts)    Q3 2017      Q3 2016  
     GAAP
Results
     Non-GAAP
Results
     GAAP
Results
    Non-GAAP
Results
 

Net Revenues

   $ 26.7      $ 26.7      $ 22.6     $ 22.6  

Operating Income (Loss)

   $ 1.3      $ 1.0      $ (0.3   $ (0.3

Net Income (Loss)

   $ 1.2      $ 0.9      $ (0.5   $ (0.4

Net Income (Loss) per Share

   $ 0.05      $ 0.04      $ (0.02   $ (0.02
     Nine Months Ended
September 30, 2017
     Nine Months Ended
October 1, 2016
 
     GAAP
Results
     Non-GAAP
Results
     GAAP
Results
    Non-GAAP
Results
 

Net Revenues

   $ 88.1      $ 88.1      $ 51.1     $ 51.1  

Operating Income (Loss)

   $ 4.7      $ 4.5      $ (10.4   $ (10.5

Net Income (Loss)

   $ 4.2      $ 4.0      $ (10.3   $ (10.4

Net Income (Loss) per Share

   $ 0.18      $ 0.17      $ (0.50   $ (0.50

Intevac’s non-GAAP adjusted results exclude the impact of changes in fair value of contingent consideration liabilities associated with business combinations. A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial table included in this release. See also “Use of Non-GAAP Financial Measures” section.


Third Quarter 2017 Summary

Net income for the quarter was $1.2 million, or $0.05 per diluted share, compared to a net loss of $481,000, or $0.02 per diluted share, in the third quarter of 2016. Non-GAAP net income was $947,000 or $0.04 per diluted share. This compares to the third quarter 2016 non-GAAP net loss of $429,000 or $0.02 per diluted share.

Revenues were $26.7 million, including $17.2 million of Thin-film Equipment revenues and Photonics revenues of $9.5 million. Thin-film Equipment revenues included two 200 Lean HDD systems, upgrades, spares and service. Photonics revenues included $2.2 million of research and development contracts. In the third quarter of 2016, revenues were $22.6 million, including $14.3 million of Thin-film Equipment revenues and Photonics revenues of $8.3 million, which included $1.6 million of research and development contracts.

Thin-film Equipment gross margin was 45.5% compared to 32.4% in the third quarter of 2016 and 38.4% in the second quarter of 2017. The improvement from the third quarter of 2016 reflected a higher level of revenue and improved factory absorption. The improvement from the second quarter of 2017 reflected higher margins on systems shipments, offset in part by higher inventory provisions. Thin-film Equipment gross margin in the second quarter of 2017 reflected the lower margin on a pilot MATRIX ion implant system for solar panels.

Photonics gross margin was 36.5% compared to 46.9% in the third quarter of 2016 and 33.4% in the second quarter of 2017. The decrease from the third quarter of 2016 was due to lower margins on research and development contracts and higher inventory provisions. The improvement from the second quarter of 2017 was due to improved sensor yields and higher margins on research and development contracts, offset in part by higher inventory provisions. Consolidated gross margin was 42.3%, compared to 37.7% in the third quarter of 2016 and 37.0% in the second quarter of 2017.

R&D and SG&A expenses were $10.3 million, compared to $8.8 million in the third quarter of 2016 and to $10.1 million in the second quarter of 2017. Higher year-over-year expenses reflected increased variable compensation program accruals.

Order backlog totaled $72.8 million on September 30, 2017, compared to $68.9 million on July 1, 2017 and $72.9 million on October 1, 2016. Backlog at both September 30, 2017 and July 1, 2017 included five 200 Lean HDD systems and twelve ENERG i solar ion implant systems. Backlog at October 1, 2016 included four 200 Lean HDD systems, three INTEVAC VERTEX display cover panel coating systems, two INTEVAC MATRIX solar systems, and two ENERG i solar ion implant systems.

The Company ended the quarter with $44.8 million of total cash, restricted cash and investments and $79.8 million in tangible book value.

First Nine Months 2017 Summary

Net income was $4.2 million, or $0.18 per diluted share, compared to a net loss of $10.3 million, or $0.50 per diluted share, for the first nine months of 2016. Non-GAAP net income was $4.0 million or $0.17 per diluted share. This compares to the first nine months of 2016 non-GAAP net loss of $10.4 million or $0.50 per diluted share.

Revenues were $88.1 million, including $61.1 million of Thin-film Equipment revenues and Photonics revenues of $27.0 million, compared to revenues of $51.1 million, including $25.9 million of Thin-film Equipment revenues and Photonics revenues of $25.2 million, for the first nine months of 2016.


Thin-film Equipment gross margin was 42.0%, compared to 28.3% in the first nine months of 2016. The improvement reflected a higher level of revenue and improved factory absorption. Photonics gross margin was 37.5% compared to 44.3% in the first nine months of 2016, reflecting lower margins on research and development contracts and higher inventory provisions. Consolidated gross margin was 40.7%, compared to 36.2% in the first nine months of 2016.

R&D and SG&A expenses were $31.3 million compared to $29.0 million in the first nine months of 2016. The higher level of expenses reflects increased accruals for variable compensation programs as a result of the Company’s improved outlook for profitability for the year, and increased legal expenses for patent activity and contracts.

Use of Non-GAAP Financial Measures

Intevac’s non-GAAP results exclude the impact of changes in fair value of contingent consideration liabilities associated with business combinations. A reconciliation of the GAAP and non-GAAP results is provided in the financial tables included in this release.

Management uses non-GAAP results to evaluate the company’s operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Intevac believes these measures enhance investors’ ability to review the company’s business from the same perspective as the company’s management and facilitate comparisons of this period’s results with prior periods. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP.

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 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. EDT. You may access the replay by calling (855) 859-2056 or, for international callers, (404) 537-3406, and providing Replay Passcode 86944119.

About Intevac

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

In our Thin-film Equipment business, we are a leader in the design and development of high-productivity, thin-film processing systems. Our production-proven platforms are designed for high-volume manufacturing of substrates with precise thin film properties, such as the hard drive media, display cover panel, and solar photovoltaic markets we serve currently.

In our Photonics business, we are a recognized leading developer of advanced high-sensitivity digital sensors, cameras and systems that primarily serve the defense industry. We are the provider of integrated digital imaging systems for most U.S. military night vision programs.

For more information call 408-986-9888, or visit the Company’s website at www.intevac.com . 200 Lean ® is a registered trademark and INTEVAC MATRIX™, INTEVAC VERTEX™, ENERG i ™ and oDLC™ 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: customer adoption of our products, an increase in the revenue opportunity pipeline for Photonics, and the future financial performance of Intevac, such as achieving profitability. 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: technology risk and challenges achieving customer adoption and revenue recognition in Thin-film Equipment markets and delays in Photonics programs, 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     Nine months ended  
     September 30,
2017
    October 1,
2016
    September 30,
2017
    October 1,
2016
 

Net revenues

        

Thin-film Equipment

   $ 17,177     $ 14,272     $ 61,087     $ 25,941  

Photonics

     9,549       8,287       26,990       25,201  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     26,726       22,559       88,077       51,142  

Gross profit

     11,298       8,515       35,816       18,497  

Gross margin

        

Thin-film Equipment

     45.5     32.4     42.0     28.3

Photonics

     36.5     46.9     37.5     44.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

     42.3     37.7     40.7     36.2

Operating expenses

        

Research and development

     4,535       4,067       13,635       14,220  

Selling, general and administrative

     5,778       4,720       17,663       14,814  

Acquisition-related 1

     (283     52       (181     (90
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     10,030       8,839       31,117       28,944  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income (loss)

     1,268       (324     4,699       (10,447

Operating income (loss)

        

Thin-film Equipment

     1,213       (998     4,821       (10,117

Photonics

     1,417       1,737       3,646       3,656  

Corporate

     (1,362     (1,063     (3,768     (3,986
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income (loss)

     1,268       (324     4,699       (10,447

Interest income and other income (expense), net

     28       60       265       184  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) before income taxes

     1,296       (264     4,964       (10,263

Provision for income taxes

     66       217       805       13  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 1,230     $ (481   $ 4,159     $ (10,276
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share

        

Basic

   $ 0.06     $ (0.02   $ 0.19     $ (0.50

Diluted

   $ 0.05     $ (0.02   $ 0.18     $ (0.50

Weighted average common shares outstanding

        

Basic

     21,714       20,869       21,475       20,704  

Diluted

     22,970       20,869       22,989       20,704  

1 Results for all periods presented include changes in fair value of contingent consideration obligations associated with the Solar Implant Technology (SIT) acquisition in 2010.


INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

     September 30,
2017
    December 31,
2016
 
     (Unaudited)     (see Note)  

ASSETS

  

Current assets

  

Cash, cash equivalents and short-term investments

   $ 37,234     $ 44,645  

Accounts receivable, net

     22,311       17,447  

Inventories

     32,581       24,876  

Prepaid expenses and other current assets

     2,825       1,768  
  

 

 

   

 

 

 

Total current assets

     94,951       88,736  

Long-term investments

     6,165       3,593  

Restricted cash

     1,400       1,602  

Property, plant and equipment, net

     12,509       11,237  

Intangible assets, net

     1,662       2,258  

Other long-term assets

     745       898  
  

 

 

   

 

 

 

Total assets

   $ 117,432     $ 108,324  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

  

Current liabilities

  

Accounts payable

   $ 7,036     $ 5,323  

Accrued payroll and related liabilities

     5,781       4,220  

Other accrued liabilities

     7,856       17,011  

Customer advances

     12,347       5,422  
  

 

 

   

 

 

 

Total current liabilities

     33,020       31,976  

Other long-term liabilities

     2,994       3,082  

Stockholders’ equity

  

Common stock ($0.001 par value)

     22       21  

Additional paid-in capital

     176,282       171,314  

Treasury stock, at cost

     (28,489     (28,489

Accumulated other comprehensive income

     443       321  

Accumulated deficit

     (66,840     (69,901
  

 

 

   

 

 

 

Total stockholders’ equity

     81,418       73,266  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 117,432     $ 108,324  
  

 

 

   

 

 

 

Note: Amounts as of December 31, 2016 are derived from the December 31, 2016 audited consolidated financial statements.


INTEVAC, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited, in thousands, except per share amounts)

 

     Three months ended     Nine months ended  
     September 30,
2017
    October 1,
2016
    September 30,
2017
    October 1,
2016
 

Non-GAAP Income (Loss) from Operations

        

Reported operating income (loss) (GAAP basis)

   $ 1,268     $ (324   $ 4,699     $ (10,447

Change in fair value of contingent consideration obligations 1

     (283     52       (181     (90
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating Income (Loss)

   $ 985     $ (272   $ 4,518     $ (10,537
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income (Loss)

        

Reported net income (loss) (GAAP basis)

   $ 1,230     $ (481   $ 4,159     $ (10,276

Change in fair value of contingent consideration obligations 1

     (283     52       (181     (90
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income (Loss)

   $ 947     $ (429   $ 3,978     $ (10,366
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income (Loss) Per Diluted Share

        

Reported net income (loss) per diluted share (GAAP basis)

   $ 0.05     $ (0.02   $ 0.18     $ (0.50

Change in fair value of contingent consideration obligations 1

     (0.01     —         (0.01     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income (Loss) Per Diluted Share

   $ 0.04     $ (0.02   $ 0.17     $ (0.50
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of diluted shares

     22,970       20,869       22,989       20,704  

1 Results for all periods presented include changes in fair value of contingent consideration obligations associated with the Solar Implant Technology (SIT) acquisition in 2010.