- Revenue: Revenue of $71.6 million increased 37% year-over-year. ATS revenue of $57.1 million increased 62% year-over-year. ATS revenue contained $3.2 million of tool revenue in the third quarter of 2023 and $0.2 million in the third quarter of 2022. Wafer Services revenue of $14.5 million decreased (16)% compared to the third quarter of 2022.
- Gross Profit: GAAP gross profit was $14.1 million, or 19.8% of revenue, compared to gross profit of $8.3 million, or 15.8% of revenue, in the third quarter of 2022. Non-GAAP gross profit was $14.6 million, or 20.4% of revenue, compared to non-GAAP gross profit of $8.8 million, or 16.9% of revenue, in the third quarter of 2022.
- Operating Expenses: GAAP operating expenses were $18.3 million, compared to $13.4 million in the third quarter of 2022, and included $3.5 million of project-based management consulting transformation fees related to long-term improvement in automation and operational efficiency that were not a component of operating expenses in the third quarter of 2022.
- Net Loss: GAAP net loss to shareholders of $7.6 million, or $(0.16) per share, compared to a net loss to shareholders of $6.9 million, or $(0.17) per share, in the third quarter of 2022. Non-GAAP net loss to shareholders of $2.2 million, or $(0.05) per share, compared to a non-GAAP net loss to shareholders of $5.1 million, or $(0.13) per share, in the third quarter of 2022.
- Adjusted EBITDA: Adjusted EBITDA was $8.3 million, or 11.6% of revenue, compared to $3.8 million, or 7.3% of revenue, in the third quarter of 2022.
A reconciliation between historical GAAP and non-GAAP information is contained in the tables below in the section titled, “Non-GAAP Financial Measures.”
Investor Webcast
SkyWater will host a conference call on Wednesday, November 8, 2023, at 3:30 p.m. CT to discuss its third quarter 2023 financial results. A live webcast of the call will be available online at IR.SkyWaterTechnology.com.
About SkyWater Technology
SkyWater (NASDAQ: SKYT) is a U.S.-based semiconductor manufacturer and a DMEA-accredited Category 1A Trusted Foundry. SkyWater’s Technology as a Service model streamlines the path to production for customers with development services, volume production and heterogeneous integration solutions in its world-class U.S. facilities. This pioneering model enables innovators to co-create the next wave of technology with diverse categories including mixed-signal CMOS, read-out ICs, rad-hard ICs, power management, MEMS, superconducting ICs, photonics, carbon nanotubes and interposers. SkyWater serves growing markets including aerospace & defense, automotive, biomedical, cloud & computing, consumer, industrial and IoT. For more information, visit: www.skywatertechnology.com.
Cautionary Statement Regarding Preliminary Results
The Company’s results for the third quarter of 2023 are preliminary, unaudited and subject to the finalization of the Company’s third quarter review and full-year audit and should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. The Company cautions that actual results may differ materially from those described in this press release.
SkyWater Technology Forward-Looking Statements
This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements that are based on the Company’s current expectations or forecasts of future events, rather than past events and outcomes, and such statements are not guarantees of future performance. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including information or predictions concerning the Company’s future business, results of operations, financial performance, plans and objectives, competitive position, market trends, and potential growth and market opportunities. In some cases, you can identify forward-looking statements by words such as “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will,” “targets,” “projects,” “seeks” or the negative of these terms or other comparable terminology.
Forward-looking statements are subject to risks, uncertainties and assumptions, which may cause the Company’s actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Key factors that could cause the Company’s actual results to be different than expected or anticipated include, but are not limited to: our goals and strategies; our future business development, financial condition and results of operations; our ability to continue operating our sole semiconductor foundry at full capacity; our ability to appropriately respond to changing technologies on a timely and cost-effective basis; our customer relationships and our ability to retain and expand our customer relationships; our ability to accurately predict our future revenues for the purpose of appropriately budgeting and adjusting our expenses; our expectations regarding dependence on our largest customers; our ability to diversify our customer base and develop relationships in new markets; the performance and reliability of our third-party suppliers and manufacturers; our ability to procure tools, materials, and chemicals; our ability to control costs, including our operating and capital expenses; the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets; the level of demand in our customers’ end markets; our ability to attract, train and retain key qualified personnel in a competitive labor market; adverse litigation judgments, settlements or other litigation-related costs; changes in trade policies, including the imposition of tariffs; our ability to raise additional capital or financing; our ability to accurately forecast demand; the level and timing of U.S. government program funding; our ability to maintain compliance with certain U.S. government contracting requirements; regulatory developments in the United States and foreign countries; our ability to protect our intellectual property rights; our ability to meet our long-term growth targets; and other factors discussed in the “Risk Factors” section of the annual report on Form 10-K the Company filed with the SEC on March 15, 2023 and in other documents that the Company files with the SEC, which are available at http://www.sec.gov. The Company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
SKYWATER TECHNOLOGY, INC. Consolidated Balance Sheets (Unaudited) |
|||||||
|
October 1, 2023 |
|
January 1, 2023 |
||||
|
(in thousands, except share data) |
||||||
Assets |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
17,346 |
|
|
$ |
30,025 |
|
| Accounts receivable (net of allowance for credit losses of $4,699 and $1,638, respectively) |
|
43,492 |
|
|
|
28,045 |
|
| Contract assets (net of allowance for credit losses of $227 and $0, respectively) |
|
37,733 |
|
|
|
34,625 |
|
| Inventory |
|
16,648 |
|
|
|
13,397 |
|
| Prepaid expenses and other current assets |
|
8,654 |
|
|
|
10,290 |
|
| Income tax receivable |
|
122 |
|
|
|
169 |
|
| Total current assets |
|
123,995 |
|
|
|
116,551 |
|
| Property and equipment, net |
|
165,818 |
|
|
|
179,915 |
|
| Intangible assets, net |
|
4,843 |
|
|
|
5,608 |
|
| Other assets |
|
5,053 |
|
|
|
3,690 |
|
| Total assets |
$ |
299,709 |
|
|
$ |
305,764 |
|
| Liabilities and shareholders' equity |
|
|
|
||||
| Current liabilities |
|
|
|
||||
| Current portion of long-term debt |
$ |
4,241 |
|
|
$ |
1,855 |
|
| Accounts payable |
|
14,378 |
|
|
|
21,102 |
|
| Accrued expenses |
|
39,381 |
|
|
|
25,212 |
|
| Short-term financing, net of unamortized debt issuance costs |
|
45,253 |
|
|
|
55,817 |
|
| Contract liabilities |
|
24,674 |
|
|
|
28,186 |
|
| Total current liabilities |
|
127,927 |
|
|
|
132,172 |
|
| Long-term liabilities |
|
|
|
||||
| Long-term debt, less current portion and net of unamortized debt issuance costs |
|
37,729 |
|
|
|
35,181 |
|
| Long-term incentive plan |
|
— |
|
|
|
1,643 |
|
| Long-term contract liabilities |
|
55,636 |
|
|
|
67,967 |
|
| Deferred income tax liability, net |
|
1,121 |
|
|
|
1,239 |
|
| Other long-term liabilities |
|
9,466 |
|
|
|
13,585 |
|
| Total long-term liabilities |
|
103,952 |
|
|
|
119,615 |
|
| Total liabilities |
|
231,879 |
|
|
|
251,787 |
|
| Shareholders' equity |
|
|
|
||||
| Preferred stock, $0.01 par value per share (80,000,000 shares authorized, zero shares issued and outstanding) |
|
— |
|
|
|
— |
|
| Common stock, $0.01 par value per share (200,000,000 shares authorized; 47,006,694 and 43,704,876 shares issued and outstanding) |
|
470 |
|
|
|
437 |
|
| Additional paid-in capital |
|
177,286 |
|
|
|
147,304 |
|
| Accumulated deficit |
|
(114,878 |
) |
|
|
(94,072 |
) |
| Total shareholders' equity, SkyWater Technology, Inc. |
|
62,878 |
|
|
|
53,669 |
|
| Noncontrolling interests |
|
4,952 |
|
|
|
308 |
|
| Total shareholders' equity |
|
67,830 |
|
|
|
53,977 |
|
| Total liabilities and shareholders' equity |
$ |
299,709 |
|
|
$ |
305,764 |
|
| SKYWATER TECHNOLOGY, INC. Consolidated Statements of Operations (Unaudited) |
|||||||||||||||||||
|
|
Three-Month Period Ended |
|
Nine-Month Period Ended |
||||||||||||||||
|
|
October 1, 2023 |
|
July 2, 2023 |
|
October 2, 2022 |
|
October 1, 2023 |
|
October 2, 2022 |
||||||||||
|
|
(in thousands, except share data) |
||||||||||||||||||
| Revenue |
$ |
71,624 |
|
|
$ |
69,811 |
|
|
$ |
52,326 |
|
|
$ |
207,529 |
|
|
$ |
147,854 |
|
| Cost of revenue |
|
57,477 |
|
|
|
53,144 |
|
|
|
44,049 |
|
|
|
160,247 |
|
|
|
138,437 |
|
| Gross profit |
|
14,147 |
|
|
|
16,667 |
|
|
|
8,277 |
|
|
|
47,282 |
|
|
|
9,417 |
|
| Research and development expense |
|
2,233 |
|
|
|
2,396 |
|
|
|
2,580 |
|
|
|
7,296 |
|
|
|
7,223 |
|
| Selling, general, and administrative expense |
|
16,105 |
|
|
|
17,820 |
|
|
|
10,778 |
|
|
|
48,821 |
|
|
|
33,263 |
|
| Operating loss |
|
(4,191 |
) |
|
|
(3,549 |
) |
|
|
(5,081 |
) |
|
|
(8,835 |
) |
|
|
(31,069 |
) |
| Interest expense |
|
(2,507 |
) |
|
|
(2,950 |
) |
|
|
(1,331 |
) |
|
|
(7,928 |
) |
|
|
(3,400 |
) |
| Loss before income taxes |
|
(6,698 |
) |
|
|
(6,499 |
) |
|
|
(6,412 |
) |
|
|
(16,763 |
) |
|
|
(34,469 |
) |
| Income tax (benefit) expense |
|
(96 |
) |
|
|
25 |
|
|
|
87 |
|
|
|
(71 |
) |
|
|
(44 |
) |
| Net loss |
|
(6,602 |
) |
|
|
(6,524 |
) |
|
|
(6,499 |
) |
|
|
(16,692 |
) |
|
|
(34,425 |
) |
| Less: net income attributable to noncontrolling interests |
|
966 |
|
|
|
2,066 |
|
|
|
440 |
|
|
|
3,739 |
|
|
|
2,125 |
|
| Net loss attributable to SkyWater Technology, Inc. |
$ |
(7,568 |
) |
|
$ |
(8,590 |
) |
|
$ |
(6,939 |
) |
|
$ |
(20,431 |
) |
|
$ |
(36,550 |
) |
| Net loss per share attributable to common shareholders, basic and diluted |
$ |
(0.16 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.91 |
) |
| Weighted average shares used in computing net loss per common share, basic and diluted |
|
46,445,309 |
|
|
|
44,743,269 |
|
|
|
40,669,322 |
|
|
|
45,001,998 |
|
|
|
40,245,736 |
|
| SKYWATER TECHNOLOGY, INC. Consolidated Statements of Cash Flows (Unaudited) |
|||||||
|
|
Nine-Month Period Ended |
||||||
|
|
October 1, 2023 |
|
October 2, 2022 |
||||
|
|
(in thousands) |
||||||
| Cash flows from operating activities |
|
|
|
||||
| Net loss |
$ |
(16,692 |
) |
|
$ |
(34,425 |
) |
| Adjustments to reconcile net loss to net cash flows used in operating activities |
|
|
|
||||
| Depreciation and amortization |
|
21,651 |
|
|
|
20,740 |
|
| Amortization of debt issuance costs included in interest expense |
|
1,349 |
|
|
|
521 |
|
| Long-term incentive and equity-based compensation |
|
5,673 |
|
|
|
7,033 |
|
| Cash paid for contingent consideration in excess of initial valuation |
|
— |
|
|
|
(816 |
) |
| Deferred income taxes |
|
(118 |
) |
|
|
(30 |
) |
| Cash paid for operating leases |
|
(37 |
) |
|
|
— |
|
| Cash paid for interest on finance leases |
|
(649 |
) |
|
|
— |
|
| Provision for credit losses |
|
4,133 |
|
|
|
— |
|
| Changes in operating assets and liabilities |
|
|
|
||||
| Accounts receivable and contract assets |
|
(23,063 |
) |
|
|
773 |
|
| Inventory |
|
(3,251 |
) |
|
|
(4,686 |
) |
| Prepaid expenses and other assets |
|
270 |
|
|
|
(1,212 |
) |
| Accounts payable and accrued expenses |
|
4,868 |
|
|
|
16,705 |
|
| Contract liabilities, current and long-term |
|
(15,843 |
) |
|
|
(10,612 |
) |
| Income tax receivable and payable |
|
47 |
|
|
|
1 |
|
| Net cash used in operating activities |
|
(21,662 |
) |
|
|
(6,008 |
) |
| Cash flows from investing activities |
|
|
|
||||
| Purchase of software and licenses |
|
(612 |
) |
|
|
(400 |
) |
| Purchases of property and equipment |
|
(3,864 |
) |
|
|
(11,325 |
) |
| Net cash used in investing activities |
|
(4,476 |
) |
|
|
(11,725 |
) |
| Cash flows from financing activities |
|
|
|
||||
| Draws on revolving line of credit |
|
182,763 |
|
|
|
— |
|
| Paydowns of revolving line of credit |
|
(194,396 |
) |
|
|
— |
|
| Net proceeds on Revolver |
|
— |
|
|
|
14,522 |
|
| Proceeds from tool financings |
|
6,492 |
|
|
|
— |
|
| Repayment of VIE financing |
|
(1,839 |
) |
|
|
(765 |
) |
| Cash paid for principal on finance leases |
|
(818 |
) |
|
|
(1,158 |
) |
| Proceeds from the issuance of common stock pursuant to the employee stock purchase plan |
|
2,305 |
|
|
|
1,800 |
|
| Proceeds from the issuance of common stock, net of commissions |
|
20,397 |
|
|
|
2,186 |
|
| Cash paid on license technology obligations |
|
(2,350 |
) |
|
|
(1,150 |
) |
| Net contributions (distributions) from (to) noncontrolling interest |
|
905 |
|
|
|
(1,297 |
) |
| Net cash provided by financing activities |
|
13,459 |
|
|
|
14,138 |
|
| Net uses of cash and cash equivalents |
|
(12,679 |
) |
|
|
(3,595 |
) |
| Cash and cash equivalents - beginning of period |
|
30,025 |
|
|
|
12,917 |
|
| Cash and cash equivalents - end of period |
$ |
17,346 |
|
|
$ |
9,322 |
|
