- Revenue: $93.3 million, up 17% from Q1 and 34% from Q2 2023.
- ATS Development Revenue: $61.7 million, up 1% from Q1 and 18% from Q2 2023.
- Wafer Services Revenue: $5.8 million, slightly higher than forecast.
- Tools Revenue: $25.9 million, exceeding the forecast of at least $20 million.
- Non-GAAP Gross Margin: 18.9%, impacted by 570 basis points due to Tools revenue.
- Non-GAAP Operating Expenses: $13.5 million, below forecast.
- Non-GAAP Operating Income: $4.1 million.
- Adjusted EBITDA: $8.1 million.
- Non-GAAP Net Income: $0.02 per share.
- Total Cash: $18.4 million at quarter end.
- Free Cash Flow: $9.3 million from operations, $1.1 million CapEx.
- Total Debt: $66.3 million at quarter end.
- Available Revolver: $74 million.
- Q3 Revenue Forecast: Mid $90 million range.
- Q3 ATS Development Revenue Forecast: $60 million ± 3%.
- Q3 Wafer Services Revenue Forecast: $4 million to $5 million.
- Q3 Tools Revenue Forecast: Approximately $30 million.
- Q3 Non-GAAP Gross Margin Forecast: Mid to high teens, impacted by 700 basis points due to Tools revenue.
- Q3 Non-GAAP Operating Expenses Forecast: Approximately $14 million.
- 2024 ATS Development Revenue Growth Forecast: 10% to 20% over 2023.
- 2024 Wafer Services Revenue Decline Forecast: 60% to 65%.
- 2024 Tools Revenue Forecast: Approximately $80 million.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SkyWater Technology Inc (SKYT, Financial) reported record revenue of $93 million for Q2 2024, marking a significant increase from previous quarters.
- The company achieved non-GAAP positive EPS for the first time, indicating improved profitability.
- ATS development revenue reached nearly $62 million, driven by strong demand in the aerospace and defense sectors.
- Customer-funded tool installations are adding critical new capabilities to SkyWater's fabs, supporting future growth.
- The company announced a successful transition of QuantumPsi from ATS to Wafer Services, highlighting progress in the biomedical sector.
Negative Points
- Wafer Services revenue remains weak, with Q2 revenue at just under $6 million, reflecting continued softness in the broader industrial market.
- The company expects Wafer Services to remain soft for at least another quarter or two, impacting overall revenue growth.
- SkyWater's legacy Wafer Services business is expected to decline by 60% to 65% for the full year 2024.
- The company faces ongoing challenges in ramping up new technologies and transitioning customers from ATS to Wafer Services.
- Despite strong Q2 results, the company remains cautious about future revenue growth, particularly in the Wafer Services segment.
Q & A Highlights
Q: What kind of programs are you seeing in ATS, particularly in aerospace and defense?
A: We are seeing strong growth in thermal imaging, specialized ASICs, and Rad-Hard programs. These areas are driving our engagement with the aerospace and defense business. (Thomas Sonderman, CEO)
Q: Can you elaborate on the potential of the Florida advanced packaging facility?
A: The Florida facility will focus on advanced packaging, including fan-out wafer level packaging. This will initially support prototyping and early-stage production, with potential for larger scale operations in the future. (Thomas Sonderman, CEO)
Q: What is the outlook for demand from Wafer Services customers, especially large ones like Infineon?
A: Demand remains weak for the rest of the year, particularly in the industrial segment. We expect a modest recovery in 2025, driven by thermal imaging and biomedical segments. (Thomas Sonderman, CEO)
Q: Can you clarify the CapEx needs for the Florida packaging facility and its relation to the $120 million funding?
A: The $120 million is part of the original funding and will be spent over the next couple of years. A small portion of this is included in the $80 million tool revenue expected for 2024. (Steve Manko, CFO)
Q: What does the new MEBL system mean for SkyWater in the near and long term?
A: The MEBL system enhances our capability for advanced 200mm patterning, enabling sub-50 nanometer geometries. This positions us as a leader in 200mm fabs and opens up new customer opportunities. (Thomas Sonderman, CEO)
Q: How long have you been working with QuantumPsi before their transition to Wafer Services, and what is the expected ramp timeline?
A: Typically, these transitions take about two years of ATS engagement. We expect the ramp to begin in late 2025, with a transition period of 9 to 18 months. (Thomas Sonderman, CEO)
Q: When will the revenue from new ATS customers transitioning to Wafer Services become noticeable?
A: We expect to see growth in Wafer Services next year, with significant contributions from these transitions by late 2025 and into 2026. (Thomas Sonderman, CEO)
Q: What are your expectations for profitability in the near future?
A: We are targeting non-GAAP EPS positive results at revenue levels in the upper 60s to 70 million range. We expect to maintain or improve profitability with this revenue profile. (Steve Manko, CFO)
Q: Can you discuss the pipeline for transitioning more ATS customers to Wafer Services?
A: We have announced multiple transitions this year and expect more in the future. This will help replace legacy volume with new, highly-profitable technologies. (Thomas Sonderman, CEO)
Q: How are you adding to your ATS pipeline?
A: We continue to bring in new customers in advanced compute, biomedical, AI, and IoT spaces. This ongoing addition to our pipeline supports our long-term growth strategy. (Thomas Sonderman, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
