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Subjects: EARNINGS, Conference Call, Webcast

SkyWater Technology Reports Fourth Quarter and Full Fiscal Year 2023 Results


SkyWater Technology, Inc. (NASDAQ: SKYT), the trusted technology realization partner, today announced financial results for the fourth quarter and full fiscal year 2023 ended December 31, 2023.

Financial Highlights for Q4 2023:

Financial Highlights for Fiscal Year 2023:

"We are pleased to deliver a solid finish to fiscal 2023, with revenue growth exceeding our earlier expectations as a result of strong customer demand for our differentiated Advanced Technology Services (ATS) business," commented Thomas Sonderman, SkyWater president and chief executive officer. "We are now entering a multi-year stage of increased levels of customer investments in our production capacity and capabilities, and we anticipate these investments will enable SkyWater to achieve another year of revenue growth in 2024. The continued robust demand for our ATS business demonstrates that our customers' innovation investments remain strong."

Recent Business Highlights:

Q4 2023 Summary:

GAAP

 

 

 

 

 

 

 

 

 

In millions, except per share data

Q4 2023

 

Q4 2022

 

Y/Y

 

Q3 2023

 

Q/Q

ATS development revenue (1)

$57.2

 

$47.8

 

19%

 

$53.9

 

6%

Tool revenue (2)

$9.9

 

$0.0

 

nm

 

$3.2

 

206%

Total ATS revenue

$67.1

 

$47.9

 

40%

 

$57.1

 

17%

Wafer Services revenue

$12.0

 

$17.2

 

(30)%

 

$14.5

 

(17)%

Total revenue

$79.2

 

$65.1

 

22%

 

$71.6

 

11%

Gross profit

$12.0

 

$16.6

 

(27)%

 

$14.1

 

(15)%

Gross margin

15.2%

 

25.4%

 

(1,020) bps

 

19.8%

 

(460) bps

Net loss to shareholders

$(10.3)

 

$(3.0)

 

240%

 

$(7.6)

 

(36)%

Basic loss per share

$(0.22)

 

$(0.07)

 

214%

 

$(0.16)

 

(38)%

Net loss margin to shareholders

(13.0)%

 

(4.7)%

 

(830) bps

 

(10.6)%

 

(240) bps

nm - Not meaningful

Non-GAAP

 

 

 

 

 

 

 

 

 

In millions, except per share data

Q4 2023

 

Q4 2022

 

Y/Y

 

Q3 2023

 

Q/Q

Non-GAAP gross profit

$13.8

 

$17.0

 

(19)%

 

$14.6

 

(5)%

Non-GAAP gross margin

17.4%

 

26.1%

 

(870) bps

 

20.4%

 

(300) bps

Non-GAAP net loss to shareholders

$(1.1)

 

$(1.5)

 

27%

 

$(2.2)

 

51%

Non-GAAP basic loss per share

$(0.02)

 

$(0.03)

 

33%

 

$(0.05)

 

60%

Adjusted EBITDA

$10.6

 

$10.3

 

2%

 

$8.3

 

28%

Adjusted EBITDA margin

13.4%

 

15.9%

 

(250) bps

 

11.6%

 

180 bps

Fiscal Year 2023 Summary:

GAAP

 

 

 

 

 

In millions, except per share data

FY 2023

 

FY 2022

 

Y/Y

ATS development revenue (1)

$210.9

 

$137.9

 

53%

Tool revenue (2)

$14.7

 

$1.5

 

848%

Total ATS revenue

$225.6

 

$139.4

 

62%

Wafer Services revenue

$61.1

 

$73.5

 

(17)%

Total revenue

$286.7

 

$212.9

 

35%

Gross profit

$59.3

 

$26.0

 

128%

Gross margin

20.7%

 

12.2%

 

850 bps

Net loss to shareholders

$(30.8)

 

$(39.6)

 

(22)%

Basic loss per share

$(0.68)

 

$(0.97)

 

(30)%

Net loss margin to shareholders

(10.7)%

 

(18.6)%

 

790 bps

Non-GAAP

 

 

 

 

 

In millions, except per share data

FY 2023

 

FY 2022

 

Y/Y

 

 

 

 

 

 

Non-GAAP gross profit

$63.0

 

$29.1

 

116%

Non-GAAP gross margin

22.0%

 

13.7%

 

830 bps

Non-GAAP net loss to shareholders

$(7.7)

 

$(30.3)

 

75%

Non-GAAP basic loss per share

$(0.17)

 

$(0.74)

 

77%

Adjusted EBITDA

$37.2

 

$7.7

 

383%

Adjusted EBITDA margin

13.0%

 

3.6%

 

940 bps

(1)

ATS development revenue represents GAAP revenue primarily derived from process development services, tool installation and qualification services, facility and tool access, and security services.

(2)

Tool revenue primarily represents GAAP revenue that arises from the purchase of equipment for our customers. This equipment is used to complete ATS customer programs.

Q4 2023 Results:

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 Monday, February 26, 2024, at 3:30 p.m. CT to discuss its fourth quarter and fiscal year 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 fourth quarter and fiscal year ended December 31, 2023 are preliminary, unaudited and subject to the finalization of the Company's fourth 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 fabrication facilities 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)

 

 

December 31, 2023

 

January 1, 2023

 

(in thousands, except share data)

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

18,382

 

 

$

30,025

 

Accounts receivable (net of allowance for credit losses of $180 and $1,638, respectively)

 

65,961

 

 

 

28,045

 

Contract assets (net of allowance for credit losses of $99 and $0, respectively)

 

29,666

 

 

 

34,625

 

Inventory

 

15,341

 

 

 

13,397

 

Prepaid expenses and other current assets

 

16,853

 

 

 

10,290

 

Income tax receivable

 

172

 

 

 

169

 

Total current assets

 

146,375

 

 

 

116,551

 

Property and equipment, net

 

159,367

 

 

 

179,915

 

Intangible assets, net

 

5,672

 

 

 

5,608

 

Other assets

 

5,342

 

 

 

3,690

 

Total assets

$

316,756

 

 

$

305,764

 

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

Current portion of long-term debt

$

3,976

 

 

$

1,855

 

Accounts payable

 

19,614

 

 

 

21,102

 

Accrued expenses

 

48,291

 

 

 

25,212

 

Short-term financing, net of unamortized debt issuance costs

 

22,765

 

 

 

55,817

 

Contract liabilities

 

49,551

 

 

 

28,186

 

Total current liabilities

 

144,197

 

 

 

132,172

 

Long-term liabilities

 

 

 

Long-term debt, less current portion and net of unamortized debt issuance costs

 

36,098

 

 

 

35,181

 

Long-term incentive plan

 

?

 

 

 

1,643

 

Long-term contract liabilities

 

65,754

 

 

 

67,967

 

Deferred income tax liability, net

 

679

 

 

 

1,239

 

Other long-term liabilities

 

9,327

 

 

 

13,585

 

Total long-term liabilities

 

111,858

 

 

 

119,615

 

Total liabilities

 

256,055

 

 

 

251,787

 

Shareholders' equity

 

 

 

Preferred stock, $0.01 par value per share (80,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2023 and January 1, 2023)

 

?

 

 

 

?

 

Common stock, $0.01 par value per share (200,000,000 shares authorized; 47,028,159 and 43,704,876 shares issued and outstanding as of December 31, 2023 and January 1, 2023, respectively)

 

470

 

 

 

437

 

Additional paid-in capital

 

178,473

 

 

 

147,304

 

Accumulated deficit

 

(125,203

)

 

 

(94,072

)

Total shareholders' equity, SkyWater Technology, Inc.

 

53,740

 

 

 

53,669

 

Noncontrolling interests

 

6,961

 

 

 

308

 

Total shareholders' equity

 

60,701

 

 

 

53,977

 

Total liabilities and shareholders' equity

$

316,756

 

 

$

305,764

 

SKYWATER TECHNOLOGY, INC.

Consolidated Statements of Operations

(Unaudited)

 

 

Three-Month Period Ended

 

Fiscal Year Ended

 

December 31, 2023

 

October 1, 2023

 

January 1, 2023

 

December 31, 2023

 

January 1, 2023

 

(in thousands, except share data)

Revenue

$

79,154

 

 

$

71,624

 

 

$

65,087

 

 

$

286,682

 

 

$

212,941

 

Cost of revenue

 

67,143

 

 

 

57,477

 

 

 

48,536

 

 

 

227,390

 

 

 

186,974

 

Gross profit

 

12,011

 

 

 

14,147

 

 

 

16,551

 

 

 

59,292

 

 

 

25,967

 

Research and development expense

 

2,872

 

 

 

2,233

 

 

 

2,208

 

 

 

10,169

 

 

 

9,431

 

Selling, general, and administrative expense

 

15,092

 

 

 

16,105

 

 

 

13,040

 

 

 

63,911

 

 

 

46,303

 

Operating (loss) income

 

(5,953

)

 

 

(4,191

)

 

 

1,303

 

 

 

(14,788

)

 

 

(29,767

)

Other expense

 

 

 

 

 

 

 

 

 

Loss on debt extinguishment

 

?

 

 

 

?

 

 

 

(1,101

)

 

 

?

 

 

 

(1,101

)

Interest expense

 

(2,898

)

 

 

(2,507

)

 

 

(1,794

)

 

 

(10,826

)

 

 

(5,194

)

Total other expense

 

(2,898

)

 

 

(2,507

)

 

 

(2,895

)

 

 

(10,826

)

 

 

(6,295

)

Loss before income taxes

 

(8,851

)

 

 

(6,698

)

 

 

(1,592

)

 

 

(25,614

)

 

 

(36,062

)

Income tax (benefit) expense

 

(450

)

 

 

(96

)

 

 

852

 

 

 

(521

)

 

 

809

 

Net loss

 

(8,401

)

 

 

(6,602

)

 

 

(2,444

)

 

 

(25,093

)

 

 

(36,871

)

Less: net income attributable to noncontrolling interests

 

1,924

 

 

 

966

 

 

 

597

 

 

 

5,663

 

 

 

2,722

 

Net loss attributable to SkyWater Technology, Inc.

$

(10,325

)

 

$

(7,568

)

 

$

(3,041

)

 

$

(30,756

)

 

$

(39,593

)

Net loss per share attributable to common shareholders, basic and diluted

$

(0.22

)

 

$

(0.16

)

 

$

(0.07

)

 

$

(0.68

)

 

$

(0.97

)

Weighted average shares used in computing net loss per common share, basic and diluted

 

47,020,395

 

 

 

46,445,309

 

 

 

42,612,763

 

 

 

45,506,598

 

 

 

40,835,186

 

SKYWATER TECHNOLOGY, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Fiscal Year Ended

 

December 31, 2023

 

January 1, 2023

 

(in thousands)

Cash flows from operating activities

 

 

 

Net loss

$

(25,093

)

 

$

(36,871

)

Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities

 

 

 

Depreciation and amortization

 

28,930

 

 

 

28,192

 

Gain on sale of property and equipment

 

?

 

 

 

(3

)

Write-off of capital projects in process

 

1,262

 

 

 

?

 

Amortization of debt issuance costs included in interest expense

 

1,755

 

 

 

909

 

Long-term incentive and equity-based compensation

 

6,860

 

 

 

8,610

 

Cash paid for contingent consideration in excess of initial valuation

 

?

 

 

 

(816

)

Deferred income taxes

 

(560

)

 

 

244

 

Cash paid for operating leases

 

(49

)

 

 

(49

)

Cash paid for interest on finance leases

 

(848

)

 

 

(757

)

Provision for credit losses

 

38

 

 

 

1,638

 

Loss on debt extinguishment

 

?

 

 

 

1,101

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable and contract assets

 

(33,371

)

 

 

(11,596

)

Inventories

 

(1,944

)

 

 

(9,225

)

Prepaid expenses and other assets

 

(8,218

)

 

 

(5,288

)

Accounts payable and accrued expenses

 

22,296

 

 

 

21,787

 

Contract liabilities, current and long-term

 

19,152

 

 

 

(12,749

)

Income tax receivable and payable

 

(3

)

 

 

576

 

Net cash provided by (used in) operating activities

 

10,207

 

 

 

(14,297

)

Cash flows from investing activities

 

 

 

Purchase of software and licenses

 

(1,871

)

 

 

(400

)

Purchases of property and equipment

 

(8,618

)

 

 

(17,053

)

Net cash used in investing activities

 

(10,489

)

 

 

(17,453

)

Cash flows from financing activities

 

 

 

Draws on revolving line of credit

 

259,350

 

 

 

63,006

 

Paydowns of revolving line of credit

 

(297,649

)

 

 

?

 

Net repayment on Revolver

 

?

 

 

 

(26,220

)

Proceeds from tool financings

 

9,012

 

 

 

?

 

Principal payments on long-term debt

 

(2,482

)

 

 

(1,224

)

Cash paid for debt issuance costs

 

?

 

 

 

(4,168

)

Proceeds from the issuance of common stock in secondary offering

 

?

 

 

 

16,168

 

Cash paid for offering costs

 

?

 

 

 

(456

)

Cash paid for principal on finance leases

 

(935

)

 

 

(1,603

)

Proceeds from the issuance of common stock pursuant to equity compensation plans

 

2,305

 

 

 

1,800

 

Proceeds from the issuance of common stock under the ATM

 

20,398

 

 

 

3,919

 

Cash paid on licensed technology obligations

 

(2,350

)

 

 

(1,150

)

Net contributions (distributions) from (to) noncontrolling interest

 

990

 

 

 

(1,214

)

Net cash (used in) provided by financing activities

 

(11,361

)

 

 

48,858

 

Net change in cash and cash equivalents

 

(11,643

)

 

 

17,108

 

Cash and cash equivalents - beginning of period

 

30,025

 

 

 

12,917

 

Cash and cash equivalents - end of period

$

18,382

 

 

$

30,025

 

Supplemental Financial Information by Quarter

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

Q1 2023

 

Q4 2022

 

Q3 2022

 

Q2 2022

 

Q1 2022

 

(in thousands)

ATS development revenue (1)

$

57,170

 

$

53,891

 

$

52,073

 

$

47,770

 

$

47,846

 

 

$

34,953

 

$

29,510

 

$

25,591

 

Tool revenue (2)

 

9,936

 

 

3,243

 

 

936

 

 

536

 

 

30

 

 

 

219

 

 

313

 

 

984

 

Total ATS revenue

$

67,106

 

$

57,134

 

$

53,009

 

$

48,306

 

$

47,876

 

 

$

35,172

 

$

29,823

 

$

26,575

 

Wafer Services revenue

 

12,048

 

 

14,490

 

 

16,802

 

 

17,788

 

 

17,211

 

 

 

17,154

 

 

17,584

 

 

21,546

 

Total revenue

$

79,154

 

$

71,624

 

$

69,811

 

$

66,094

 

$

65,087

 

 

$

52,326

 

$

47,407

 

$

48,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tool revenue (2)

$

9,936

 

$

3,243

 

$

936

 

$

536

 

$

30

 

 

$

219

 

$

313

 

$

984

 

Tool cost of revenue (2)

 

9,125

 

 

2,861

 

 

290

 

 

484

 

 

46

 

 

 

152

 

 

200

 

 

984

 

Tool gross profit (loss)

$

811

 

$

382

 

$

646

 

$

52

 

$

(16

)

 

$

67

 

$

113

 

$

?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue impact of modified customer contracts

$

?

 

$

?

 

$

3,601

 

$

?

 

$

4,685

 

 

$

?

 

$

?

 

$

8,230

 

Cost of revenue impact of modified customer contracts

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

 

 

?

 

 

?

 

 

10,887

 

Gross profit (loss) impact of modified customer contracts

$

?

 

$

?

 

$

3,601

 

$

?

 

$

4,685

 

 

$

?

 

$

?

 

$

(2,657

)

__________________

(1)

ATS development revenue represents GAAP revenue primarily derived from process development services, tool installation and qualification services, facility and tool access, and security services.

(2)

Tool revenue and cost of tool revenue primarily represent GAAP amounts that arise from the purchase of equipment for our customers. This equipment is used to complete ATS customer programs.

Non-GAAP Financial Measures

We provide supplemental, non-GAAP financial information that our management regularly evaluates to provide additional insight to investors as supplemental information to our results reported using U.S. generally accepted accounting principles (GAAP). We provide non-GAAP gross profit, non-GAAP gross margin, non-GAAP net loss to shareholders, and non-GAAP net loss to shareholders per share. Our management uses these non-GAAP financial measures to make informed operating decisions, complete strategic planning, prepare annual budgets, and evaluate Company and management performance. We believe these non-GAAP financial measures are useful performance measures to our investors because they provide a baseline for analyzing trends in our business and exclude certain items that may not be indicative of our core operating results. The non-GAAP financial measures disclosed in this earnings press release should not be viewed as an alternative to, or more meaningful than, the reported results prepared in accordance with GAAP. In addition, because these non-GAAP financial measures are not determined in accordance with GAAP, other companies, including our peers, may calculate their non-GAAP financial measures differently than we do. As a result, the non-GAAP financial measures presented in this earnings press release may not be directly comparable to similarly titled measures presented by other companies.

We also provide adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) and adjusted EBITDA margin as supplemental non-GAAP measures. We define adjusted EBITDA as net (loss) income before net interest expense, income tax (benefit) expense, depreciation and amortization, equity-based compensation and certain other items that we do not view as indicative of our ongoing performance, including net income attributable to noncontrolling interests, business transformation costs, CHIPS Act specialist fees, management transition expense, SkyWater Florida start-up costs, and restructuring costs. Our management uses adjusted EBITDA and adjusted EBITDA margin to make informed operating decisions, complete strategic planning, prepare annual budgets, and evaluate Company and management performance. We believe adjusted EBITDA is a useful performance measure to our investors because it allows for an effective evaluation of our operating performance when compared to other companies, including our peers, without regard to financing methods or capital structures. We exclude the items listed above from net income or loss in arriving at adjusted EBITDA because the amounts of these items can vary substantially within our industry depending on the accounting methods and policies used, book values of assets, capital structures, and the methods by which assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net (loss) income determined in accordance with GAAP. Certain items excluded from adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic cost bases of depreciable assets, none of which are reflected in adjusted EBITDA. Our presentation of adjusted EBITDA should not be construed as an indication that our results will be unaffected by the items excluded from adjusted EBITDA. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, the exclusion of these items and other similar items in our non-GAAP financial measures should not be interpreted as implying that these items are non-recurring, infrequent or unusual, unless otherwise expressly indicated.

We continuously evaluate the non-GAAP financial measures we use, the manner in which non-GAAP financial measures are calculated, and the adjustments we make to GAAP results to derive our non-GAAP financial measures. In the third quarter of 2023, we made the following changes to our non-GAAP financial measures and revised prior period non-GAAP financial measures to conform the calculation of non-GAAP financial measures across all periods and provide comparability:

The following tables present a reconciliation of the most directly comparable financial measures, calculated and presented in accordance with GAAP, to our non-GAAP financial measures.

SKYWATER TECHNOLOGY, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

 

 

Three-Month Period Ended

 

Fiscal Year Ended

 

December 31, 2023

 

October 1, 2023

 

January 1, 2023

(Revised)

 

December 31, 2023

 

January 1, 2023
(Revised)

 

(in thousands)

GAAP revenue

$

79,154

 

 

$

71,624

 

 

$

65,087

 

 

$

286,682

 

 

$

212,941

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenue

$

67,143

 

 

$

57,477

 

 

$

48,536

 

 

$

227,390

 

 

$

186,974

 

Equity-based compensation (1)

 

(313

)

 

 

(438

)

 

 

(452

)

 

 

(1,555

)

 

 

(2,578

)

SkyWater Florida start-up costs (2)

 

?

 

 

 

?

 

 

 

(14

)

 

 

?

 

 

 

(582

)

Restructuring costs (3)

 

(679

)

 

 

?

 

 

 

?

 

 

 

(679

)

 

 

?

 

Business transformation costs (4)

 

(806

)

 

 

?

 

 

 

?

 

 

 

(806

)

 

 

?

 

Management transition expense (5)

 

?

 

 

 

?

 

 

 

?

 

 

 

(705

)

 

 

?

 

Non-GAAP cost of revenue

$

65,345

 

 

$

57,039

 

 

$

48,070

 

 

$

223,645

 

 

$

183,814

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

$

12,011

 

 

$

14,147

 

 

$

16,551

 

 

$

59,292

 

 

$

25,967

 

GAAP gross margin

 

15.2

%

 

 

19.8

%

 

 

25.4

%

 

 

20.7

%

 

 

12.2

%

Equity-based compensation (1)

$

313

 

 

$

438

 

 

$

452

 

 

$

1,555

 

 

$

2,578

 

SkyWater Florida start-up costs (2)

 

?

 

 

 

?

 

 

 

14

 

 

 

?

 

 

 

582

 

Restructuring costs (3)

 

679

 

 

 

?

 

 

 

?

 

 

 

679

 

 

 

?

 

Business transformation costs (4)

 

806

 

 

 

?

 

 

 

?

 

 

 

806

 

 

 

?

 

Management transition expense (5)

 

?

 

 

 

?

 

 

 

?

 

 

 

705

 

 

 

?

 

Non-GAAP gross profit

$

13,809

 

 

$

14,585

 

 

$

17,017

 

 

$

63,037

 

 

$

29,127

 

Non-GAAP gross margin

 

17.4

%

 

 

20.4

%

 

 

26.1

%

 

 

22.0

%

 

 

13.7

%

 

 

 

 

 

 

 

 

 

 

GAAP research and development expense

$

2,872

 

 

$

2,233

 

 

$

2,208

 

 

$

10,169

 

 

$

9,431

 

Equity-based compensation (1)

 

134

 

 

 

(218

)

 

 

(126

)

 

 

(464

)

 

 

(596

)

Restructuring costs (3)

 

(655

)

 

 

?

 

 

 

?

 

 

 

(655

)

 

 

?

 

Non-GAAP research and development expense

$

2,351

 

 

$

2,015

 

 

$

2,082

 

 

$

9,050

 

 

$

8,835

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general, and administrative expense

$

15,092

 

 

$

16,105

 

 

$

13,040

 

 

$

63,911

 

 

$

46,303

 

Equity-based compensation (1)

 

(1,008

)

 

 

(1,197

)

 

 

(995

)

 

 

(4,841

)

 

 

(5,432

)

SkyWater Florida start-up costs (2)

 

?

 

 

 

?

 

 

 

2

 

 

 

?

 

 

 

(104

)

Restructuring costs (3)

 

(587

)

 

 

?

 

 

 

?

 

 

 

(587

)

 

 

?

 

Business transformation costs (4)

 

(5,341

)

 

 

(3,522

)

 

 

?

 

 

 

(11,363

)

 

 

?

 

Management transition expense (5)

 

?

 

 

 

?

 

 

 

?

 

 

 

(130

)

 

 

?

 

CHIPS Act specialist fees (6)

 

?

 

 

 

?

 

 

 

?

 

 

 

(1,320

)

 

 

?

 

Non-GAAP selling, general, and administrative expense

$

8,156

 

 

$

11,386

 

 

$

12,047

 

 

$

45,670

 

 

$

40,767

 

 

Three-Month Period Ended

 

Fiscal Year Ended

 

December 31, 2023

 

October 1, 2023

 

January 1, 2023

(Revised)

 

December 31, 2023

 

January 1, 2023
(Revised)

 

(in thousands)

GAAP net loss to shareholders

$

(10,325

)

 

$

(7,568

)

 

$

(3,041

)

 

$

(30,756

)

 

$

(39,593

)

Equity-based compensation (1)

 

1,187

 

 

 

1,853

 

 

 

1,573

 

 

 

6,860

 

 

 

8,606

 

SkyWater Florida start-up costs (2)

 

?

 

 

 

?

 

 

 

12

 

 

 

?

 

 

 

686

 

Restructuring costs (3)

 

1,921

 

 

 

?

 

 

 

?

 

 

 

1,921

 

 

 

?

 

Business transformation costs (4)

 

6,147

 

 

 

3,522

 

 

 

?

 

 

 

12,169

 

 

 

?

 

Management transition expense (5)

 

?

 

 

 

?

 

 

 

?

 

 

 

835

 

 

 

?

 

CHIPS Act specialist fees (6)

 

?

 

 

 

?

 

 

 

?

 

 

 

1,320

 

 

 

?

 

Non-GAAP net loss to shareholders

$

(1,070

)

 

$

(2,193

)

 

$

(1,456

)

 

$

(7,651

)

 

$

(30,301

)

 

 

 

 

 

 

 

 

 

 

Equity-based compensation allocation in the consolidated statements of operations (1):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

313

 

 

$

438

 

 

$

452

 

 

$

1,555

 

 

$

2,578

 

Research and development expense

 

(134

)

 

 

218

 

 

 

126

 

 

 

464

 

 

 

596

 

Selling, general, and administrative expense

 

1,008

 

 

 

1,197

 

 

 

995

 

 

 

4,841

 

 

 

5,432

 

 

$

1,187

 

 

$

1,853

 

 

$

1,573

 

 

$

6,860

 

 

$

8,606

 

 

 

 

 

 

 

 

 

 

 

SkyWater Florida start-up costs allocation in the consolidated statements of operations (2):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

?

 

 

$

?

 

 

$

14

 

 

$

?

 

 

$

582

 

Selling, general and administrative expenses

 

?

 

 

 

?

 

 

 

(2

)

 

 

?

 

 

 

104

 

 

$

?

 

 

$

?

 

 

$

12

 

 

$

?

 

 

$

686

 

 

 

 

 

 

 

 

 

 

 

Restructuring costs allocation in the consolidated statements of operations (3):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

679

 

 

$

?

 

 

$

?

 

 

$

679

 

 

$

?

 

Research and development expense

 

655

 

 

 

?

 

 

 

?

 

 

 

655

 

 

 

?

 

Selling, general, and administrative expense

 

587

 

 

 

?

 

 

 

?

 

 

 

587

 

 

 

?

 

 

$

1,921

 

 

$

?

 

 

$

?

 

 

$

1,921

 

 

$

?

 

 

 

 

 

 

 

 

 

 

 

Business transformation costs allocation in the consolidated statements of operations (4):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

806

 

 

$

?

 

 

$

?

 

 

$

806

 

 

$

?

 

Selling, general, and administrative expense

 

5,341

 

 

 

3,522

 

 

 

?

 

 

 

11,363

 

 

 

?

 

 

$

6,147

 

 

$

3,522

 

 

$

?

 

 

$

12,169

 

 

$

?

 

 

 

 

 

 

 

 

 

 

 

Management transition expense allocation in the consolidated statements of operations (5):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

?

 

 

$

?

 

 

$

?

 

 

$

705

 

 

$

?

 

Selling, general, and administrative expense

 

?

 

 

 

?

 

 

 

?

 

 

 

130

 

 

 

?

 

 

$

?

 

 

$

?

 

 

$

?

 

 

$

835

 

 

$

?

 

 

Three-Month Period Ended

December 31, 2023

 

Fiscal Year Ended

December 31, 2023

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

Computation of net loss per common share, basic and diluted:

(in thousands, except per share data)

Numerator:

 

 

 

 

 

 

 

Net loss attributable to SkyWater Technology, Inc.

$

(10,325

)

 

$

(1,070

)

 

$

(30,756

)

 

$

(7,651

)

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

47,020

 

 

 

47,020

 

 

 

45,507

 

 

 

45,507

 

Net loss per common share, basic and diluted

$

(0.22

)

 

$

(0.02

)

 

$

(0.68

)

 

$

(0.17

)

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

October 1, 2023

 

 

 

GAAP

 

Non-GAAP

 

 

 

 

Computation of net loss per common share, basic and diluted:

(in thousands, except per share data)

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Net loss attributable to SkyWater Technology, Inc.

$

(7,568

)

 

$

(2,193

)

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

46,445

 

 

 

46,445

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.16

)

 

$

(0.05

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

January 1, 2023

 

Fiscal Year Ended

January 1, 2023

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

Computation of net loss per common share, basic and diluted:

(in thousands, except per share data)

Numerator:

 

 

 

 

 

 

 

Net loss attributable to SkyWater Technology, Inc.

$

(3,041

)

 

$

(1,456

)

 

$

(39,593

)

 

$

(30,301

)

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

42,613

 

 

 

42,613

 

 

 

40,835

 

 

 

40,835

 

Net loss per common share, basic and diluted

$

(0.07

)

 

$

(0.03

)

 

$

(0.97

)

 

$

(0.74

)

 

Three-Month Period Ended

 

Fiscal Year Ended

 

December 31, 2023

 

October 1, 2023

 

January 1, 2023

 

December 31, 2023

 

January 1, 2023

 

(in thousands)

Net loss to shareholders (GAAP)

$

(10,325

)

 

$

(7,568

)

 

$

(3,041

)

 

$

(30,756

)

 

$

(39,593

)

Net loss margin to shareholders

(13.0

)%

 

 

(10.6

)%

 

 

(4.7

)%

 

 

(10.7

)%

 

 

(18.6

)%

Interest expense (8)

$

2,898

 

 

$

2,507

 

 

$

2,895

 

 

$

10,826

 

 

$

6,295

 

Income tax (benefit) expense

 

(450

)

 

 

(96

)

 

 

852

 

 

 

(521

)

 

 

809

 

Depreciation and amortization

 

7,279

 

 

 

7,092

 

 

 

7,451

 

 

 

28,930

 

 

 

28,192

 

EBITDA

 

(598

)

 

 

1,935

 

 

 

8,157

 

 

 

8,479

 

 

 

(4,297

)

Equity-based compensation (1)

 

1,187

 

 

 

1,853

 

 

 

1,573

 

 

 

6,860

 

 

 

8,606

 

SkyWater Florida start-up costs (2)

 

?

 

 

 

?

 

 

 

12

 

 

 

?

 

 

 

686

 

Restructuring costs (3)

 

1,921

 

 

 

?

 

 

 

?

 

 

 

1,921

 

 

 

?

 

Business transformation costs (4)

 

6,147

 

 

 

3,522

 

 

 

?

 

 

 

12,169

 

 

 

?

 

Management transition expense (5)

 

?

 

 

 

?

 

 

 

?

 

 

 

835

 

 

 

?

 

CHIPS Act specialist fees (6)

 

?

 

 

 

?

 

 

 

?

 

 

 

1,320

 

 

 

?

 

Net income attributable to noncontrolling interests (7)

 

1,924

 

 

 

966

 

 

 

597

 

 

 

5,663

 

 

 

2,722

 

Adjusted EBITDA

$

10,581

 

 

$

8,276

 

 

$

10,339

 

 

$

37,247

 

 

$

7,717

 

Adjusted EBITDA margin

 

13.4

%

 

 

11.6

%

 

 

15.9

%

 

 

13.0

%

 

 

3.6

%

__________________

(1)

Represents non-cash equity-based compensation expense.

(2)

Represents start-up costs associated with our 200 mm heterogeneous integration facility in Kissimmee, Florida, which includes legal fees, recruiting expenses, retention awards and facility start-up expenses. These expenses are not representative of our expected ongoing costs. Effective 2023, our Kissimmee, Florida plant is up and running and no longer in its start-up phase.

(3)

Represents severance and other costs related to the reorganization of our resources.

(4)

Represents expenses related to long-term transformation activities focused on improvement in automation and operational efficiency and includes project-based management consulting fees and the write-off of abandoned software assets.

(5)

Represents severance and other costs related to the reorganization of the manufacturing and operations leadership team.

(6)

Represents project-based specialist fees related to our CHIPS Act application process.

(7)

Represents net income attributable to our VIE, which was formed for the purpose of purchasing the land and building of our primary operating facility in Bloomington, Minnesota. Since interest expense is added back to net loss to shareholders in our adjusted EBITDA financial measure, we also add back the net income attributable to the VIE as its net income is derived from interest the VIE charges SkyWater.

(8)

Includes losses related to the extinguishment of our revolving credit agreement in 2022.

 


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