Company Reaffirms Year-End Cash Outlook and
Increases 2023 Revenue Outlook
Intevac, Inc. (Nasdaq: IVAC), a leading supplier of thin-film
processing systems, announced today that the Company has retained
investment banking firm Houlihan Lokey Capital, Inc. (“Houlihan
Lokey”) to advise management and the board of directors on
strategic alternatives. Additionally, the board has formed a
strategic committee comprised of independent directors David Dury
and Kevin Barber to work with management and Houlihan Lokey in
evaluating options to increase stockholder value.
“The ongoing challenges within the hard disk drive (HDD)
industry resulted in the unprecedented cancellation of $54 million
in 200 Lean® system orders late last month,” commented Nigel
Hunton, president and chief executive officer. “In our nearly 20
years of supplying these industry-leading media processing tools,
this is the very first time one of our customers has elected to
cancel an order. Our purchase order terms with this customer
include very specific contractual protections related to our
working capital exposure, and these include not only advanced
deposits to fund the receipt of long-lead-time materials, but all
inventory related to these systems. As we discussed on our Q1
earnings call, we previously made commitments to our suppliers that
are resulting in continued material receipts for HDD systems
year-to-date. These material receipts will continue through the
second quarter, which will further increase our HDD inventory
levels from Q1 levels, and therefore will have a temporarily
negative impact on cash at the end of Q2, yet it is critical to
communicate that any material receipts not already funded by
advanced deposits will be funded by our customer, and not by
Intevac.”
Given that Intevac expects to have no exposure to inventory risk
related to these cancelled systems, today the Company has
reaffirmed its prior outlook reported on the Company’s earnings
call held on May 3, 2023 that the expected balance of cash,
restricted cash, and investments at its fiscal 2023 year-end will
be in the range of $75 to $80 million. Furthermore, today the
Company is providing updated guidance for full-year 2023 revenue,
which is now expected to be in the range of $43 to $48 million, and
is expected to be comprised of one 200 Lean system, HDD service,
and HAMR upgrades. This revised revenue outlook for fiscal 2023
does not include any customer payments for inventory, as the
accounting treatment will require these payments to be recorded as
pass-through revenue.
Commenting on the strategic process, Chairman David Dury said,
“There is no question that our outlook for the HDD business over
the 2024 to 2026 time period has changed materially year-to-date,
especially as a result of the recent order cancellations. As we
entered 2023, we had a strong outlook for growth, and a return to
profitability and positive free cash flow generation expected in
our 2024 forecast, which was supported by over $120 million in HDD
backlog as well as a minimum revenue requirement for our joint
development partner to maintain exclusivity for the TRIO™ in the
consumer electronics market. With the continued softening of HDD
demand and the unprecedented cancellation of a meaningful portion
of our order backlog, the board of directors has made the decision
to evaluate strategic options for the Company, which includes
appointing investment banking firm Houlihan Lokey and a strategic
committee within our board to evaluate strategic options to
maximize stockholder value. In our view, the Intevac enterprise has
significant unrealized value embedded across the range of our
products, technology, and customer relationships that we’ve
developed over the years, and we believe our current market
capitalization does not fully reflect the growth potential of the
Company once we get beyond this challenging period.”
Mr. Hunton concluded, “While the year-to-date changes to our
mid- and longer-term HDD forecasts are significant, today we wish
to convey that our outlook for 2023 has actually strengthened since
our last earnings call. Whereas previously we conveyed concern of
as much as 10% risk to our $40 million HDD revenue forecast for
full-year 2023, with our current visibility we are now forecasting
fiscal 2023 revenues of $43 to $48 million. We also plan to ship
one TRIO system and remain confident in the significant growth
potential ahead for the TRIO, where our joint development agreement
continues to progress towards qualification and first purchase
order before year-end. This expected TRIO order also supports our
reaffirmed cash forecast for year-end, as does our expectation that
our aged HDD accounts receivable will be resolved in the second
half of the year.”
Regarding the appointment of Houlihan Lokey and a strategic
committee of the board of directors, there can be no assurance that
the exploration process will result in any transaction or other
strategic alternative, and Intevac has not set a definitive
timetable for completion of this process. The Company does not
expect to disclose further developments relating to this strategic
evaluation process, unless and until the board of directors
approves a specific transaction or otherwise concludes this review
of strategic alternatives.
About Intevac, Inc.
Founded in 1991, we are a leading provider of thin-film process
technology and manufacturing platforms for high-volume
manufacturing environments. As a long-time supplier to the hard
disk drive (HDD) industry, over the last 20 years we have delivered
over 180 of our industry-leading 200 Lean® systems, which currently
represent the majority of the world’s capacity for HDD disk media
production. Today, we believe that all of the technology upgrade
initiatives for next-generation media for the HDD industry, along
with planned media capacity additions over the next several years,
are being deployed on our 200 Lean platform. With over 30 years of
leadership in designing, developing, and manufacturing
high-productivity, thin-film processing systems, we also are
leveraging our technology and know-how for additional applications,
such as protective coatings for the display cover glass market. For
more information call 408-986-9888, or visit the Company's website
at www.intevac.com. 200 Lean® and TRIO™ 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:
the Company’s (1) guidance for a fiscal year-end 2023 balance of
$75 to $80 million in cash, restricted cash, and investments and
$43 to $48 million in fiscal 2023 revenues, (2) expectations that
full-year 2023 revenues will be comprised of HDD service, HAMR
upgrades, and one 200 Lean system, (3) resolution of the Company’s
aged HDD accounts receivable, (4) the plan to receive a purchase
order and ship a TRIO system by fiscal year-end 2023, and (5)
confidence in the significant growth potential ahead for the TRIO.
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, changes in market dynamics that could change the
delivery schedule of our systems and upgrades, shipment delays,
availability of components, unforeseen technical issues, supply
chain constraints and other disruptions, 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.
All forward-looking statements in this press release are based
on information available to the Company as of the date hereof, and
Intevac does not assume any obligation to update the
forward-looking statements provided to reflect events that occur or
circumstances that exist after the date on which they were made,
except as required by law. Any future product, service, feature, or
related specification that may be referenced in this release is for
informational purposes only and is not a commitment to deliver any
offering, technology or enhancement.
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version on businesswire.com: https://www.businesswire.com/news/home/20230613583824/en/
James Moniz Chief Financial Officer (408) 986-9888
Claire McAdams Investor Relations (530) 265-9899
Intevac (NASDAQ:IVAC)
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