SANTA CLARA, Calif. — BUSINESS WIRE — October 30, 2006
Intevac, Inc. (Nasdaq:IVAC) reported financial results for the third quarter and nine months ended September 30, 2006.
Net income for the quarter was $9.0 million, or $0.41 per diluted share on 21.9 million weighted-average shares outstanding, which included $878,000 of non-cash stock-based compensation expense. For third-quarter 2005, net income was $6.2 million, or $0.29 per share on 21.4 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the quarter were $54.8 million, including $51.6 million of Equipment revenues and $3.2 million of Imaging revenues. Equipment revenues consisted of nine 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 $465,000 of product sales. In third-quarter 2005, net revenues were $43.5 million, including $41.5 million of Equipment revenues and $2.0 million of Imaging revenues, which included $343,000 of product sales.
Equipment gross margins for the quarter rose to 42.5% from 32.0% in third-quarter 2005, and Imaging gross margins increased to 41.1% from 13.8% in third-quarter 2005. Equipment margins improved primarily from lower manufacturing costs, higher average selling prices for 200 Lean(R) systems, and higher sales of spares and upgrades. Imaging margins improved primarily as the result of favorable adjustments related to closing our prior year government rate audits and a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 42.5% from 31.2% in third-quarter 2005.
Operating expenses for the quarter totaled $14.1 million, or 26% of revenues, versus $7.6 million, or 18% of revenues, in third-quarter 2005. Operating expenses increased as the result of higher spending in Equipment related to research and development and business development, provisions for employee profit sharing and bonus plans, and the inclusion of stock-based compensation expense in third-quarter 2006 results.
Net income for the first nine months of 2006 was $25.4 million, or $1.16 per diluted share on 21.9 million weighted-average shares outstanding, which included $2.0 million of non-cash stock-based compensation expense. For the first nine-months of 2005, net income was $6.2 million, or $0.29 per diluted share on 21.1 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the first nine months of 2006 were $164.0 million, including $155.7 million of Equipment revenues and $8.3 million of Imaging revenues. Equipment revenues consisted of 29 magnetic media manufacturing systems, disk lubrication systems, equipment upgrades, spares, consumables, and service. Imaging revenues consisted of $7.0 million of research and development contracts and $1.3 million of product sales. In the first nine months of 2005, net revenues were $84.5 million, including $78.4 million of Equipment revenues and $6.1 million of Imaging revenues.
Equipment and Imaging gross margins for the first nine-months of 2006 increased to 38.0% and 31.6%, respectively, from 31.2% and 12.7%, respectively, in the first nine months of 2005. Equipment margins for the quarter improved primarily from lower manufacturing costs, higher average selling prices for 200 Lean(R) systems, and increased sales of spares and upgrades. Imaging margins improved primarily as the result of favorable adjustments related to closing our prior year government rate audits and a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 37.7% from 29.8% in the first nine months of 2005.
Order backlog totaled $129.7 million on September 30, 2006, compared to $96.2 million on July 1, 2006, and $65.4 million on October 1, 2005. Backlog as of September 30, 2006, included twenty-four 200 Lean systems and excludes orders for two 200 Lean systems subsequently received.
Intevac Chief Executive Kevin Fairbairn commented: "This was a tremendous quarter for Intevac. We delivered significantly more revenue and net income than we expected at the beginning of the quarter. Our Imaging business significantly improved its financial performance and received its first volume production order for LIVAR(R) cameras. Good progress was made in both Equipment and Imaging in new product development activities that will drive the future growth of the company."
Conference Call Information
The Company will discuss its financial results in a conference call today at 1:30 p.m. PST (4:30 p.m. EST). 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. PST. You may access the playback by calling (800) 642-1687 or, for international callers (706) 645-9291, and providing conference ID 8532356.
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(R) and LIVAR(R) are registered trademarks of Intevac, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
3 months ended 9 months ended
----------------------- -----------------------
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
2006 2005 2006 2005
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues
Equipment $51,625 $41,519 155,663 $78,392
Imaging 3,204 1,988 8,328 6,138
----------- ----------- ----------- -----------
Total net revenues 54,829 43,507 163,991 84,530
Gross profit 23,280 13,554 61,848 25,210
Gross margin
Equipment 42.5% 32.0% 38.0% 31.2%
Imaging 41.1% 13.8% 31.6% 12.7%
----------- ----------- ----------- -----------
Consolidated 42.5% 31.2% 37.7% 29.8%
Operating expenses
Research and
development 8,571 3,897 20,422 10,435
Selling, general and
administrative 5,565 3,746 15,683 9,678
----------- ----------- ----------- -----------
Total operating
expenses 14,136 7,643 36,105 20,113
Operating
income/(loss)
Equipment Products 9,833 7,177 29,287 9,178
Imaging (673) (1,415) (3,701) (3,874)
Corporate (16) 149 157 (207)
----------- ----------- ----------- -----------
Total operating
profit 9,144 5,911 25,743 5,097
Other income 1,113 438 2,440 1,292
----------- ----------- ----------- -----------
Profit before
provision for income
taxes 10,257 6,349 28,183 6,389
Provision for income
taxes 1,244 158 2,826 168
----------- ----------- ----------- -----------
Net income $9,013 $6,191 $25,357 $6,221
=========== =========== =========== ===========
Income per share
Basic $0.43 $0.30 $1.21 $0.30
Diluted $0.41 $0.29 $1.16 $0.29
Weighted average
common shares
outstanding
Basic 21,082 20,567 20,967 20,400
Diluted 21,889 21,438 21,888 21,138
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS Sept 30, Dec. 31,
2006 2005
----------- ---------
(Unaudited)
Current assets
Cash, cash equivalents and short term
investments $85,857 $49,731
Accounts receivable, net 33,999 42,847
Inventories 41,372 24,837
Deferred tax assets 2,479 -
Prepaid expenses and other current assets 2,272 1,814
----------- ---------
Total current assets 165,979 119,229
Long term investments 4,000 -
Property, plant and equipment, net 11,392 7,980
Investment in 601 California Avenue LLC 2,431 2,431
Other long-term assets 1,770 804
----------- ---------
Total assets $185,572 $130,444
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $17,924 $7,049
Accrued payroll and related liabilities 8,026 5,509
Other accrued liabilities 6,383 6,182
Customer advances 33,849 23,136
----------- ---------
Total current liabilities 66,182 41,876
Other long-term liabilities 955 694
Shareholders' equity
Common stock 100,193 97,165
Paid in Capital - Stock Compensation 2,119 -
Accumulated other comprehensive income 295 238
Retained earnings (deficit) 15,828 (9,529)
----------- ---------
Total shareholders' equity 118,435 87,874
----------- ---------
Total liabilities and shareholders' equity $185,572 $130,444
=========== =========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION TO GAAP
(in thousands, except per share data)
(Unaudited)
Three-Months Ended Sept. 30, 2006
---------------------------------
Non-GAAP
GAAP Adjustment Non-GAAP
Revenues $54,829 $54,829
Cost of revenue 31,549 (70)A 31,479
----------- ----------- --------
Gross profit 23,280 70 23,350
Gross margin 42.5% 42.6%
Operating expense
Research and development 8,571 (376)A 8,195
Selling, general and
administrative 5,565 (432)A 5,133
----------- ----------- --------
Total operating expense 14,136 (808) 13,328
Operating income 9,144 878 10,022
Other income 1,113 1,113
----------- ----------- --------
Profit before provision for income
taxes 10,257 878 11,135
Provision for income taxes 1,244 106 1,350
----------- ----------- --------
Net Income $9,013 $772 $9,785
=========== =========== ========
Income per share
Basic $0.43 $0.03 $0.46
Diluted $0.41 $0.04 $0.45
Weighted average common shares
outstanding
Basic 21,082 21,082
Diluted 21,889 21,889
Footnotes - for the three-months ended September 30, 2006
A - To exclude stock-based compensation expense (Cost of Revenue $70,
Research and Development $376, Selling, General and Administrative
$432) for the three-months ended September 30, 2006.
Nine-Months Ended Sept. 30, 2006
--------------------------------
Non-GAAP
GAAP Adjustment Non-GAAP
Revenues $163,991 $163,991
Cost of revenue 102,143 ($242)A 101,901
--------- ----------- ---------
Gross profit 61,848 242 62,090
Gross margin 37.7% 37.9%
Operating expense
Research and development 20,422 (908)A 19,514
Selling, general and administrative 15,683 (884)A 14,799
--------- ----------- ---------
Total operating expense 36,105 (1,792) 34,313
Operating income 25,743 2,034 27,777
Other income 2,440 2,440
--------- ----------- ---------
Profit before provision for income
taxes 28,183 2,034 30,217
Provision for income taxes 2,826 203 3,029
--------- ----------- ---------
Net Income 25,357 $1,831 $27,188
========= =========== =========
Income per share
Basic $1.21 $0.09 $1.30
Diluted $1.16 $0.08 $1.24
Weighted average common shares outstanding
Basic 20,967 20,967
Diluted 21,888 21,888
Footnotes - for the nine-months ended September 30, 2006
A - To exclude stock-based compensation expense (Cost of Revenue $242,
Research and Development $908, Selling General and Administrative
$884 for the nine-months ended September 30, 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, and provide for
comparability between periods due the absence of stock-based
compensation in comparative prior year periods.
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.
CONTACT: Intevac, Inc.
Charles Eddy, Chief Financial Officer, 408-986-9888
or
Silverman Heller Associates
Dan Matsui/Gene Heller, 310-208-2550
SOURCE: Intevac, Inc.
