Intevac Announces Fourth Quarter and Full Year 2015 Financial Results
Intevac, Inc. (Nasdaq:IVAC) today reported financial results for the quarter and year ended January 2, 2016.
Highlights for Fiscal 2015:
- Revenues at the high end of guidance, up 15% from 2014
- Gross margin improved 842bp, compared to 2014
- Orders up 43% from 2014 – reflecting 40% and 47% increases in Thin-Film Equipment and Photonics, respectively
- Achieved sign-off on first VERTEX™ system for display cover panel; received order on second system from a new Tier 1 customer
- Achieved sign-off on first MATRIX™ PVD system for solar; received order on second system from a new Tier 1 customer
- Passed key milestones of joint development program and received first MATRIX implant order from Tier 1 solar customer
- Multiple contract awards in Photonics, and $25 million funding vehicle in place for next-generation sensor development
- Upgrades, spares and services for the hard disk drive industry up over 130% from 2014
- Executed $18.5 million in stock repurchases, bringing the cumulative total to $28.5 million at year-end out of a $30 million plan
“2015 was a year of execution on our strategic growth initiatives; and we made significant progress on all fronts,” commented Wendell Blonigan, president and chief executive officer of Intevac. “We won new Tier 1 customers in our growth markets for our Thin-Film Equipment business, we increased the program opportunity pipeline for Photonics, and raised revenue guidance each quarter based upon significant strengthening of upgrade business with our hard disk drive customers. We accomplished all this while demonstrating a disciplined approach to capital management and reducing R&D and SG&A expenses by 5% compared to 2014. We limited the decline in cash, restricted cash and investments, net of stock repurchases, to $3.5 million for the full year, well below our $5 million goal. As we enter 2016, we expect revenues for the year to be weighted toward the second half, as we continue to execute on our Thin-Film Equipment growth strategy. Based on our customers’ current factory build-out plans, continued traction and follow-on system orders will help us achieve our 2016 objective to be cash flow positive from operations.”
| ($ Millions, except per share amounts) | Q4 2015 | Q4 2014 | ||||||||||||||||||
| Non-GAAP | ||||||||||||||||||||
| GAAP Results | Results | GAAP Results | Non-GAAP Results | |||||||||||||||||
| Net Revenues | $ | 16.4 | $ | 16.4 | $ | 19.1 | $ | 19.1 | ||||||||||||
| Operating Loss | $ | (2.3 | ) | $ | (2.2 | ) | $ | (5.3 | ) | $ | (5.6 | ) | ||||||||
| Net Loss | $ | (2.5 | ) | $ | (2.4 | ) | $ | (14.4 | ) | $ | (5.2 | ) | ||||||||
| Net Loss per Share | $ | (0.12 | ) | $ | (0.12 | ) | $ | (0.62 | ) | $ | (0.23 | ) | ||||||||
| Year Ended | Year Ended | |||||||||||||||||||
| January 2, 2016 | January 3, 2015 | |||||||||||||||||||
| Non-GAAP | ||||||||||||||||||||
| GAAP Results | Results | GAAP Results | Non-GAAP Results | |||||||||||||||||
| Net Revenues | $ | 75.2 | $ | 75.2 | $ | 65.6 | $ | 65.6 | ||||||||||||
| Operating Loss | $ | (8.7 | ) | $ | (8.8 | ) | $ | (19.4 | ) | $ | (19.3 | ) | ||||||||
| Net Loss | $ | (9.2 | ) | $ | (9.3 | ) | $ | (27.4 | ) | $ | (18.0 | ) | ||||||||
| Net Loss per Share | $ | (0.41 | ) | $ | (0.42 | ) | $ | (1.16 | ) | $ | (0.76 | ) | ||||||||
| Intevac’s non-GAAP adjusted results exclude the impact of the following, where applicable: (1) changes in fair value of contingent consideration liabilities associated with business combinations; (2) restructuring charges and (3) deferred tax asset valuation allowance. 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 2015 Summary
The net loss for the quarter was $2.5 million, or $0.12 per diluted share. This compares to a net loss of $14.4 million, or $0.62 per diluted share, in the fourth quarter of 2014. The non-GAAP net loss was $2.4 million, or $0.12 per share, compared to a non-GAAP net loss $5.2 million, or $0.23 per share, for the fourth quarter of 2014.
Revenues were $16.4 million, including $8.3 million of Thin-film Equipment revenues and Photonics revenues of $8.1 million. Thin-film Equipment revenues consisted of upgrades, spares and service. Photonics revenues included $1.4 million of research and development contracts. In the fourth quarter of 2014, revenues were $19.1 million, including $9.1 million of Thin-film Equipment revenues and Photonics revenues of $10.0 million, which included $2.3 million of research and development contracts.
Thin-film Equipment gross margin was 41.8% compared to (20.1)% in the fourth quarter of 2014 and 17.8% in the third quarter of 2015. The improvement from the fourth quarter of 2014 and the third quarter of 2015 reflected a higher mix of higher-margin upgrades and improved factory absorption. Thin-film Equipment gross margin in the fourth quarter of 2014 reflected a $3.1 million reserve against certain solar implant inventory, equivalent to 34.3 percentage points of margin. Thin-film Equipment gross margin in the third quarter of 2015 reflected the lower margin on the first MATRIX PVD system for solar panels.
Photonics gross margin was 39.6% compared to 44.4% in the fourth quarter of 2014 and 35.5% in the third quarter of 2015. The decline from the fourth quarter of 2014 was due to lower margins on technology development contracts and higher factory overhead due to the modified cost structure implemented in the second quarter of 2015. The improvement from the third quarter of 2015 was primarily due to improved sensor yields, offset in part by lower margins on technology development contracts. Consolidated gross margin was 40.7%, compared to 13.6% in the fourth quarter of 2014 and 26.7% in the third quarter of 2015.
R&D and SG&A expenses were $8.9 million, compared to $8.2 million in the fourth quarter of 2014 and $8.8 million in the third quarter of 2015.
Order backlog totaled $51.2 million on January 2, 2016, compared to $52.8 million on October 3, 2015 and $48.4 million on January 3, 2015. Backlog at January 2, 2016 andOctober 3, 2015 included three solar systems and one PVD display cover glass coating system. Backlog as of January 3, 2015 included one 200 Lean system, two solar systems and one PVD display cover glass coating system.
The company ended the year with $48.4 million of total cash, restricted cash and investments and $72.9 million in tangible book value.
The company repurchased 1.5 million shares of common stock for a total of $7.6 million during the fourth quarter. As of January 2, 2016 the company has repurchased 4.8 million shares for $28.5 million out of the $30 million plan announced in November of 2013.
Fiscal Year 2015 Summary
The net loss was $9.2 million, or $0.41 per share, compared to a net loss of $27.4 million, or $1.16 per share, for fiscal 2014. The non-GAAP net loss was $9.3 million or$0.42 per share, compared to the non-GAAP net loss of $18.0 million or $0.76 per share for fiscal 2014.
Revenues were $75.2 million, including $39.6 million of Thin-film Equipment revenues and Photonics revenues of $35.5 million, compared to revenues of $65.6 million, including$25.3 million of Thin-film Equipment revenues and Photonics revenues of $40.3 million for 2014.
Thin-film Equipment gross margin was 32.4%, compared to 0.7% in 2014. The improvement from 2014 reflected a higher level of revenue and improved factory absorption. Thin-film Equipment gross margin in 2014 reflected a $3.1 million reserve against certain solar implant inventory, equivalent to 12.3 percentage points of margin. Photonics gross margin was 37.9% compared to 42.9% in 2014, reflecting lower contractual pricing on Apache camera shipments and higher factory overhead due to the modified cost structure implemented in the second quarter of 2015. Consolidated gross margin was 35.0% compared to 26.6% in 2014.
R&D and SG&A expenses were $35.3 million compared to $37.0 million in 2014. Total operating expenses were $35.1 million compared to $36.8 million in 2014.
The company repurchased 3.4 million shares of common stock for a total of $18.5 million during fiscal 2015.
Use of Non-GAAP Financial Measures
Intevac’s non-GAAP results exclude the impact of the following, where applicable: (1) changes in fair value of contingent consideration liabilities associated with business combinations; (2) restructuring charges and (3) deferred tax asset valuation allowance. 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.
