SANTA CLARA, Calif. — BUSINESS WIRE — August 1, 2006
Intevac, Inc. (Nasdaq:IVAC) reported financial results for the second quarter and six months ended July 1, 2006.
Net income for the quarter was $9.3 million, or $0.42 per diluted share on 22.0 million weighted-average shares outstanding, which included $695,000 of non-cash stock-based compensation expense. Second-quarter earnings include the effect of adjusting the Company's 2006 year-to-date income tax provision to an effective tax rate of 8.8% from the 3.0% tax rate provided for in the first quarter of 2006. The increase in the effective tax rate was a result of the Company projecting a higher level of income for 2006 than it had projected earlier in the year. For second-quarter 2005, net income was $3.9 million, or $0.19 per share on 21.1 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the quarter were $59.5 million, including $56.4 million of Equipment revenues and $3.1 million of Imaging revenues. Equipment revenues consisted of eleven magnetic media manufacturing systems, disk lubrication systems, equipment upgrades, spares, consumables, and service. Imaging revenues consisted of $2.7 million of research and development contracts and $378,000 of product sales. In second-quarter 2005, net revenues were $30.4 million, including $28.3 million of Equipment revenues and $2.1 million of Imaging revenues.
Equipment and Imaging gross margins for the quarter increased to 36.4% and 25.4%, respectively, from 33.4% and 9.2%, respectively, in second-quarter 2005. Equipment margins for the quarter improved primarily from lower manufacturing costs and higher average selling prices for 200 Lean® systems. Imaging margins improved primarily as the result of a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 35.7% from 31.8% in second-quarter 2005.
Operating expenses for the quarter totaled $11.3 million, or 19% of revenues, versus $6.2 million, or 20% of revenues, in second-quarter 2005. Operating expenses increased as the result of higher R&D spending in Equipment, provisions for employee profit sharing and bonus plans, the inclusion of stock-based compensation expense in second-quarter 2006 results, and higher costs in Equipment related to business development, customer service, and support.
Net income for the first six months of 2006 was $16.3 million, or $0.75 per diluted share on 21.9 million weighted-average shares outstanding, which included $1.1 million of non-cash stock- based compensation expense. For the first six months of 2005, net income was $30,000, or less than one cent per share on 21.0 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the first six months of 2006 were $109.2 million, including $104.1 million of Equipment revenues and $5.1 million of Imaging revenues. Equipment revenues consisted of twenty magnetic media manufacturing systems, disk lubrication systems, equipment upgrades, spares, consumables, and service. Imaging revenues consisted of $4.2 million of research and development contracts and $879,000 of product sales. In the first six months of 2005, net revenues were $41.0 million, including $36.9 million of Equipment revenues and $4.1 million of Imaging revenues.
Equipment and Imaging gross margins for the first six months of 2006 increased to 35.8% and 25.7%, respectively, from 30.2% and 12.1%, respectively, in the first six months of 2005. Equipment margins improved primarily from lower manufacturing costs and higher average selling prices for 200 Lean® systems. Imaging margins improved primarily as the result of a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 35.3% from 28.4% in first six months of 2005.
Order backlog totaled $96.2 million on July 1, 2006, compared to $124.8 million on April 1, 2006, and $65.4 million on July 2, 2005. Backlog as of July 1, 2006, included twenty 200 Lean systems and excludes orders for twelve 200 Lean systems subsequently received. A portion of the thirty-two 200 Leans currently in backlog are scheduled for delivery in 2007.
Intevac Chief Executive Kevin Fairbairn commented: "We are pleased to report excellent second-quarter results, well above our prior guidance on revenue and net income. Record revenues of $59.5 million were achieved as we delivered eleven 200 Leans, all configured for perpendicular production, and multiple disk lubrication systems. Orders for spares and upgrades were also strong and contributed to the revenue upside. Cash grew by $20 million to $66 million. On top of this excellent financial performance we continued to invest heavily in developing new capabilities for the hard drive industry, an entirely new equipment product line, and extreme low light imaging products."
Conference Call Information
The Company will discuss its financial results in a conference call today at 1:30 p.m. PDT (4:30 p.m. EDT). To participate in the teleconference, please call toll-free (800) 291-8929 prior to the start time. For international callers, the dial-in number is (706) 634-0478. You may also listen live via the Internet at the Company's website, www.Intevac.com, under the Investors link, or at www.earnings.com. For those unable to attend, these web sites will host an archive of the call. Additionally, a telephone replay of the call will be available for 48 hours beginning today at 3:30 p.m. PDT. You may access the playback by calling (800) 642-1687 or, for international callers (706) 645-9291, and providing conference ID 3098710.
About Intevac
Intevac is the world's leading supplier of disk sputtering equipment to manufacturers of magnetic media used in hard disk drives and a developer and provider of leading edge extreme low light imaging sensors, cameras and systems. For more information please visit our website at www.intevac.com.
200 Lean® is a registered trademark of Intevac, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
3 months ended 6 months ended
---------------------- ----------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
---------------------- ----------------------
(Unaudited)(Unaudited) (Unaudited)(Unaudited)
Net revenues
Equipment $56,465 $28,337 $104,038 $36,873
Imaging 3,077 2,081 5,124 4,150
---------------------- ----------------------
Total net revenues 59,542 30,418 109,162 41,023
Gross profit 21,262 9,661 38,568 11,656
Gross margin
Equipment 36.4% 33.4% 35.8% 30.2%
Imaging 25.4% 9.2% 25.7% 12.1%
---------------------- ----------------------
Consolidated 35.7% 31.8% 35.3% 28.4%
Operating expenses
Research and
development 6,290 3,413 11,851 6,538
Selling, general and
administrative 5,004 2,741 10,118 5,932
---------------------- ----------------------
Total operating
expenses 11,294 6,154 21,969 12,470
Operating income/(loss)
Equipment Products 10,974 4,672 19,454 2,001
Imaging (1,159) (1,278) (3,028) (2,459)
Corporate 153 113 173 (356)
---------------------- ----------------------
Total operating
profit/(loss) 9,968 3,507 16,599 (814)
Other income 729 423 1,327 854
---------------------- ----------------------
Profit before provision
for income taxes 10,697 3,930 17,926 40
Provision for income
taxes 1,364 3 1,582 10
---------------------- ----------------------
Net income $9,333 $3,927 $16,344 $30
====================== ======================
Income per share
Basic $0.44 $0.19 $0.78 $0.00
Diluted $0.42 $0.19 $0.75 $0.00
Weighted average common
shares outstanding
Basic 20,987 20,391 20,910 20,317
Diluted 21,972 21,144 21,883 20,989
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS July 1, Dec. 31,
2006 2005
----------- ---------
(Unaudited)
Current assets
Cash, cash equivalents and short term
investments $65,633 $49,731
Accounts receivable, net 41,558 42,847
Inventories - production 30,991 21,373
Inventories - pending acceptance at customer
site 2,866 3,464
Deferred tax assets 2,479 -
Prepaid expenses and other current assets 2,063 1,814
----------- ---------
Total current assets 145,590 119,229
Property, plant and equipment, net 8,853 7,980
Investment in 601 California Avenue LLC 2,431 2,431
Other long-term assets 1,437 804
----------- ---------
Total assets $158,311 $130,444
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $11,639 $7,049
Accrued payroll and related liabilities 6,634 5,509
Other accrued liabilities 5,852 6,182
Customer advances 25,569 23,136
----------- ---------
Total current liabilities 49,694 41,876
Other long-term liabilities 933 694
Shareholders' equity
Common stock 99,388 97,165
Paid in Capital - Stock Compensation 1,180 -
Accumulated other comprehensive income 301 238
Retained earnings (deficit) 6,815 (9,529)
----------- ---------
Total shareholders' equity 107,684 87,874
----------- ---------
Total liabilities and shareholders' equity $158,311 $130,444
=========== =========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION TO GAAP
(in thousands, except per share data)
(Unaudited)
Three-Months Ended July 1,
2006
-----------------------------
Non-GAAP
GAAP Adjustment Non-GAAP
Revenues $59,542 $59,542
Cost of revenue 38,280 ($93)A 38,187
------------------- --------
Gross profit 21,262 93 21,355
Gross margin 35.7% 35.9%
Operating expense
Research and development 6,290 (328)A 5,962
Selling, general and administrative 5,004 (274)A 4,730
------------------- --------
Total operating expense 11,294 (602) 10,692
Operating income 9,968 695 10,663
Other income 729 729
------------------- --------
Profit before provision for income taxes 10,697 695 11,392
Provision for income taxes 1,364 61 1,425
------------------- --------
Net Income $9,333 $634 $9,967
=================== ========
Income per share
Basic $0.44 $0.03 $0.47
Diluted $0.42 $0.03 $0.45
Weighted average common shares outstanding
Basic 20,987 20,987
Diluted 21,972 21,972
Footnotes - for the three-months ended July 1, 2006
A To exclude stock-based compensation expense (Cost of Revenue
$93, Research and Development $328, Marketing and Administrative $274)
for the three-months ended July 1, 2006.
Six-Months Ended July 1, 2006
-------------------------------
Non-GAAP
GAAP Adjustment Non-GAAP
Revenues $109,162 $109,162
Cost of revenue 70,594 ($139)A 70,455
-------------------- ---------
Gross profit 38,568 139 38,707
Gross margin 35.3% 35.5%
Operating expense
Research and development 11,851 (532)A 11,319
Selling, general and administrative 10,118 (452)A 9,666
-------------------- ---------
Total operating expense 21,969 (984) 20,985
Operating income 16,599 1,123 17,722
Other income 1,327 1,327
-------------------- ---------
Profit before provision for income
taxes 17,926 1,123 19,049
Provision for income taxes 1,582 99 1,681
-------------------- ---------
Net Income $16,344 $1,024 $17,368
==================== =========
Income per share
Basic $0.78 $0.05 $0.83
Diluted $0.75 $0.04 $0.79
Weighted average common shares outstanding
Basic 20,910 20,910
Diluted 21,883 21,883Footnotes - for the six-months ended July 1, 2006
A To exclude stock-based compensation expense (Cost of Revenue
$139, Research and Development $532, Marketing and Administrative
$452) for the six-months ended July 1, 2006.
The non-GAAP measures provided herein exclude the impact of
non-cash charges related to stock-based compensation expense. We
believe these measures are useful to investors because they provide an
alternative method for measuring the operating performance of the
Company's business, excluding stock based compensation expense.
The non-GAAP financial measures are not prepared in accordance
with generally accepted accounting principles and may be different
from non-GAAP financial measures used by other companies. Non-GAAP
financial measures should not be considered a substitute for, or
superior to, measures of financial performance prepared in accordance
with GAAP.
