Intevac
INTEVAC INC (Form: 8-K, Received: 01/31/2018 16:10:11)

 

 

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

January 31, 2018

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 January 31, 2018, Intevac, Inc. issued a press release reporting its financial results for the three months and full year ended December 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: January 31, 2018      

/s/ JAMES MONIZ

      James Moniz
      Executive Vice President, Finance and Administration,
      Chief Financial Officer and Treasurer

Exhibit 99.1

 

LOGO  

3560 Bassett Street, Santa Clara CA 95054      

 

 

 

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

INTEVAC ANNOUNCES FOURTH QUARTER AND FULL YEAR 2017 FINANCIAL RESULTS

Santa Clara, Calif.—January 31, 2018—Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the fiscal fourth quarter and year ended December 30, 2017.

2017 Highlights

 

    Third straight year of growth in total revenues and orders

 

    Total revenues up 41% from 2016

 

    New orders of $108 million, up 11% from 2016

 

    Significant growth in Thin-film Equipment (TFE) business

 

    Revenues up 75% year-over-year, with significant growth in both new TFE growth initiatives, as well as Hard Disk Drive (HDD) systems and upgrades

 

    Year-end backlog up for the 5 th straight year, to $52 million

 

    Revenues recognized on multiple new product platforms:

 

    INTEVAC VERTEX® in the display cover panel market

 

    INTEVAC MATRIX® in the solar market

 

    ENERG i ® ion implant in the solar market

 

    Third straight year of improving operating results

 

    Return to profitability, with EPS of $0.18 per diluted share for 2017

“As expected, strong growth in our Thin-film Equipment business led to overall revenues increasing 41% year-over-year, and a return to profitability in 2017,” commented Wendell Blonigan, president and chief executive officer of Intevac. “The continued technology investments by our HDD customers helped drive favorable results in TFE revenues, gross margins and profitability, both for the fourth quarter and for the full year. 2017 was also a pivotal year for our TFE growth initiatives, with revenues recognized on the VERTEX and MATRIX, our newest high-productivity, substrate-independent platforms serving multiple new end markets outside of the HDD industry. These platforms are gaining traction and represent significant future revenue growth opportunities for the Company.

“In our Photonics business, we were successful in capturing new development programs during 2017. Importantly, we secured funding for our next-generation night-vision sensor, the ISIE-19. We were pleased to report the approval of the DELTA-I program under the Department of Defense’s Coalition Warfare Program funded by the DoD, SOCOM and several foreign nation coalition partners. The DELTA-I program includes a $12 million funding commitment to complete the design of our ISIE-19 sensor as well as the development of a digitally-fused infrared/night vision goggle. We were also placed on contract for our integrated night vision camera on the Striker II helmet for Europe’s Typhoon aircraft. Accordingly, we expect our Photonics revenue profile in the near term to transition from a product-driven one to a funded R&D profile.

“Year-end backlog in our TFE business is up for five straight years, as we continue to execute against our TFE growth initiatives. 2018 will be another important year, as we continue to work toward new market opportunities for both the VERTEX and the MATRIX. Our customers in the


display cover panel market continue to evaluate the VERTEX, and our oDLC™ coating has now been adopted for a top-5 cell phone application. We also are working with multiple outsourced semiconductor assembly and test (OSAT) vendors in advanced wafer-level and panel-level packaging to adapt our MATRIX for fan-out applications. In total, we believe we are on a path to continue to drive revenue growth and profitability for the Company.”

 

($ Millions, except per share

amounts)

   Q4 2017      Q4 2016  
     GAAP Results      Non-GAAP
Results
     GAAP Results     Non-GAAP Results  

Net Revenues

   $ 24.8      $ 24.8      $ 29.0     $ 29.0  

Operating Income

   $ 0.2      $ 0.1      $ 2.9     $ 2.9  

Net Income (Loss)

   $ —        $ (0.1    $ 2.8     $ 2.8  

Net Income (Loss) per Diluted Share

   $ —        $ —        $ 0.13     $ 0.13  
     Year Ended
December 30, 2017
     Year Ended
December 31, 2016
 
     GAAP Results      Non-GAAP
Results
     GAAP Results     Non-GAAP Results  

Net Revenues

   $ 112.8      $ 112.8      $ 80.1     $ 80.1  

Operating Income (Loss)

   $ 4.8      $ 4.6      $ (7.6   $ (7.7

Net Income (Loss)

   $ 4.1      $ 3.9      $ (7.4   $ (7.5

Net Income (Loss) per Diluted Share

   $ 0.18      $ 0.17      $ (0.36   $ (0.36

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.

Fourth Quarter Fiscal 2017 Summary

The net loss for the quarter was $41,000, or $0.00 per diluted share. This compares to net income of $2.8 million, or $0.13 per diluted share, in the fourth quarter of 2016. The non-GAAP net loss was $83,000, or $0.00 per diluted share, compared to non-GAAP net income of $2.8 million, or $0.13 per diluted share, for the fourth quarter of 2016.

Revenues were $24.8 million, including $17.9 million of TFE revenues and Photonics revenues of $6.9 million. TFE revenues consisted of two 200 Lean HDD systems, upgrades, spares and service. Photonics revenues included $2.7 million of research and development contracts. In the fourth quarter of 2016, revenues were $29.0 million, including $19.3 million of TFE revenues which consisted of two 200 Lean HDD systems, one MATRIX PVD solar system, upgrades, spares and service and Photonics revenues of $9.7 million, which included $2.0 million of research and development contracts.

TFE gross margin was 45.0% compared to 38.9% in the fourth quarter of 2016 and 45.5% in the third quarter of 2017. The improvement from the fourth quarter of 2016 reflected a higher mix of higher-margin upgrades versus systems shipments and improved factory absorption. The decline from the third quarter of 2017 reflected lower factory absorption.

Photonics gross margin was 26.0% compared to 45.5% in the fourth quarter of 2016 and 36.5% in the third quarter of 2017. The decline from the third quarter of 2017 and the fourth quarter of 2016 was due to lower margins on products and a higher-mix of lower margin research and development contracts. Consolidated gross margin was 39.8%, compared to 41.1% in the fourth quarter of 2016 and 42.3% in the third quarter of 2017.


R&D and SG&A expenses were $9.7 million, compared to $9.0 million in the fourth quarter of 2016 and to $10.3 million in the third quarter of 2017. Higher year-over-year expenses reflected increased variable compensation program accruals. The decrease from the third quarter of 2017 resulted from lower spending on R&D programs.

Order backlog totaled $64.0 million on December 30, 2017, compared to $72.8 million on September 30, 2017 and $68.5 million on December 31, 2016. Backlog at December 30, 2017 included three 200 Lean HDD systems and twelve ENERG i solar ion implant systems. Backlog at September 30, 2017 included five 200 Lean HDD systems and twelve ENERG i solar ion implant systems. Backlog at December 31, 2016 included four 200 Lean HDD systems, four INTEVAC VERTEX display cover panel coating systems, one INTEVAC MATRIX solar system, and two ENERG i solar ion implant systems.

The Company ended the year with $43.5 million of total cash, restricted cash and investments and $81.2 million in tangible book value.

Fiscal Year 2017 Summary

Net income was $4.1 million, or $0.18 per diluted share, compared to a net loss of $7.4 million, or $0.36 per diluted share. Non-GAAP net income was $3.9 million or $0.17 per diluted share, compared to the non-GAAP net loss of $7.5 million or $0.36 per diluted share for fiscal 2016.

Revenues were $112.8 million, including $79.0 million of TFE revenues and Photonics revenues of $33.8 million, of which $8.0 million was contract R&D revenues, compared to 2016 revenues of $80.1 million, including $45.3 million of TFE revenues and Photonics revenues of $34.9 million for 2016, of which $5.8 million was contract R&D revenues.

TFE gross margin was 42.7%, compared to 32.8% in 2016. The improvement from 2016 reflected a higher level of revenue, a higher mix of higher-margin upgrades versus systems shipments and improved factory absorption. Photonics gross margin was 35.2% compared to 44.6% in 2016, reflecting a higher mix of lower-margin research and development contracts versus product sales. Consolidated gross margin was 40.5% compared to 38.0% in 2016.

Total R&D and SG&A expenses were $41.0 million compared to $38.1 million in 2016. The higher level of SG&A expenses reflects increased accruals for variable compensation programs as a result of the Company’s profitability for the year.

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. 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 6190879.

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 ® , INTEVAC MATRIX ® , INTEVAC VERTEX ® , and ENERG i ® , are registered trademarks and oDLC™ 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: 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 percentages and per share amounts)

 

     Three months ended     Year ended  
     December 30,
2017
    December 31,
2016
    December 30,
2017
    December 31,
2016
 

Net revenues

        

Thin-film Equipment

   $ 17,916     $ 19,312     $ 79,004     $ 45,253  

Photonics

     6,853       9,670       33,843       34,871  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     24,769       28,982       112,847       80,124  

Gross profit

     9,847       11,912       45,663       30,409  

Gross margin

        

Thin-film Equipment

     45.0     38.9     42.7     32.8

Photonics

     26.0     45.5     35.2     44.6
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

     39.8     41.1     40.5     38.0

Operating expenses

        

Research and development

     4,089       3,937       17,724       18,156  

Selling, general and administrative

     5,650       5,102       23,314       19,916  

Acquisition-related 1

     (42     (10     (223     (100
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     9,697       9,029       40,815       37,972  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income (loss)

     150       2,883       4,848       (7,563

Operating income (loss)

        

Thin-film Equipment

     1,295       1,807       6,116       (8,309

Photonics

     254       2,157       3,900       5,813  

Corporate

     (1,399     (1,081     (5,168     (5,067
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income (loss)

     150       2,883       4,848       (7,563

Interest income and other income (expense), net

     107       190       373       373  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     257       3,073       5,221       (7,190

Provision for income taxes

     298       238       1,103       251  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (41   $ 2,835     $ 4,118     $ (7,441
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share

        

Basic

   $ —       $ 0.14     $ 0.19     $ (0.36

Diluted

   $ —       $ 0.13     $ 0.18     $ (0.36

Weighted average common shares outstanding

        

Basic

     21,794       20,935       21,555       20,761  

Diluted

     21,794       21,739       22,920       20,761  

 

1   Amounts 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)

 

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

ASSETS

  

Current assets

  

Cash, cash equivalents and short-term investments

   $ 35,639     $ 44,645  

Accounts receivable, net

     20,474       17,447  

Inventories

     33,792       24,876  

Prepaid expenses and other current assets

     2,524       1,768  
  

 

 

   

 

 

 

Total current assets

     92,429       88,736  

Long-term investments

     6,849       3,593  

Restricted cash

     1,000       1,602  

Property, plant and equipment, net

     12,478       11,237  

Intangible assets, net

     1,503       2,258  

Other long-term assets

     764       898  
  

 

 

   

 

 

 

Total assets

   $ 115,023     $ 108,324  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

  

Current liabilities

  

Accounts payable

   $ 3,949     $ 5,323  

Accrued payroll and related liabilities

     6,818       4,220  

Other accrued liabilities

     7,688       17,011  

Customer advances

     11,026       5,422  
  

 

 

   

 

 

 

Total current liabilities

     29,481       31,976  

Other long-term liabilities

     2,879       3,082  

Stockholders’ equity

  

Common stock ($0.001 par value)

     22       21  

Additional paid-in capital

     177,521       171,314  

Treasury stock, at cost

     (28,489     (28,489

Accumulated other comprehensive income

     490       321  

Accumulated deficit

     (66,881     (69,901
  

 

 

   

 

 

 

Total stockholders’ equity

     82,663       73,266  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 115,023     $ 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     Year ended  
     December 30,
2017
    December 31,
2016
    December 30,
2017
    December 31,
2016
 

Non-GAAP Income (Loss) from Operations

        

Reported operating income (loss) (GAAP basis)

   $ 150     $ 2,883     $ 4,848     $ (7,563

Change in fair value of contingent consideration obligations 1

     (42     (10     (223     (100
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating Income (Loss)

   $ 108     $ 2,873     $ 4,625     $ (7,663
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income (Loss)

        

Reported net income (loss) (GAAP basis)

   $ (41   $ 2,835     $ 4,118     $ (7,441

Change in fair value of contingent consideration obligations 1

     (42     (10     (223     (100

Income tax effect of non-GAAP adjustments 2

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income (Loss)

   $ (83   $ 2,825     $ 3,895     $ (7,541
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income (Loss) Per Diluted Share

        

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

   $ —       $ 0.13     $ 0.18     $ (0.36

Change in fair value of contingent consideration obligations 1

     —         —         (0.01     —    

Non-GAAP Net Income (Loss) Per Diluted Share

   $ —       $ 0.13     $ 0.17     $ (0.36

Weighted average number of diluted shares

     21,794       21,739       22,920       20,761  

 

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.
2   The amount represents the estimated income tax effect of the non-GAAP adjustments. The Company calculated the tax effect of non-GAAP adjustments by applying an applicable estimated jurisdictional tax rate to each specific non-GAAP item.