SkyWater Technology Reports Second Quarter 2024 Results

Eighth Straight Quarter of Record Revenue and 34% Growth Year-Over-Year

SkyWater Technology, Inc. (NASDAQ: SKYT), the trusted technology realization partner, today announced financial results for the second quarter 2024 ended June 30, 2024.

Financial Highlights for Q2 2024:

  • Revenue increased 34% year-over-year to a record $93.3 million.
  • Gross margin decreased to 18.3% on a GAAP basis, compared to 23.9% in Q2 2023, and decreased to 18.9% on a non-GAAP basis, compared to 25.3% in Q2 2023.
  • Net loss to shareholders of $1.9 million, or $0.04 per share on a GAAP basis, and net income to shareholders of $0.8 million, or $0.02 per share on a non-GAAP basis, compared to net loss to shareholders of $8.6 million, or $0.19 per share on a GAAP basis, and net loss to shareholders of $2.0 million, or $0.04 per share on a non-GAAP basis in Q2 2023.
  • Adjusted EBITDA of $8.1 million, or 8.7% of revenue, compared to $10.3 million, or 14.7% of revenue in Q2 2023.

“We are pleased to report continued strong results for our unique and differentiated Advanced Technology Services business, which – coupled with record levels of customer-funded CapEx – drove another record revenue quarter and positive non-GAAP EPS,” commented Thomas Sonderman, SkyWater Chief Executive Officer. “With continued progress in efficiency gains, our second quarter results are indicative of the new revenue baseline required to support future profitability and positive cash flow from operations as we move into next year and beyond. With our revenue outlook for the underlying business remaining relatively consistent as we have progressed through 2024, our customers’ commitments to fund the technical capabilities and capacity that will support future growth have continued to expand further. We believe these unprecedented levels of customer co-investment make SkyWater a uniquely CapEx-light semiconductor manufacturing partner, with an expanding gross margin profile and significant earnings growth potential in the years to come.”

Recent Business Highlights:

  • Advanced Technology Service (ATS) development revenue exceeded expectations to reach a new record in Q2, reflecting strong operational execution and improved cycle times in response to accelerated demand on multiple aerospace and defense programs.
  • Record revenue results, along with significant progress achieved in our ongoing cost-control efforts, enabled positive non-GAAP EPS along with strong operating cash flow generation in Q2.
  • In next-generation medical applications, through our recent ATS collaboration with Quantum-Si, we are now transitioning their baseline technology to Wafer Services, a key milestone as they progress commercialization efforts for their state-of-the-art proteome sequencing technology.
  • The recent installation of Multibeam’s high-productivity, direct-write patterning system is a key development supporting strong customer demand for our Technology as a Service (“TaaS”) business model. The first-of-its-kind Multicolumn E-Beam Lithography (MEBL) system enables advanced lithography capability from early-concept prototyping through the production ramp.
  • The recent delivery of the first fan-out wafer-level packaging tool to SkyWater Florida is a significant milestone as we accelerate the tooling and facilitation of our operations in preparation for an expected 2025 ramp of our advanced packaging service offering.

Q2 2024 Summary:

GAAP

 

 

 

 

 

 

 

 

 

In millions, except per share data

Q2 2024

 

Q2 2023

 

Y/Y

 

Q1 2024

 

Q/Q

 

 

 

 

 

 

 

 

 

 

ATS development revenue (1)

$61.7

 

$52.1

 

18%

 

$61.2

 

1%

Tools revenue (2)

$25.9

 

$0.9

 

NM

 

$8.5

 

206%

Wafer Services revenue

$5.8

 

$16.8

 

(66)%

 

$10.0

 

(42)%

Total revenue

$93.3

 

$69.8

 

34%

 

$79.6

 

17%

Gross profit

$17.1

 

$16.7

 

3%

 

$13.0

 

32%

Gross margin

18.3%

 

23.9%

 

(560) bps

 

16.3%

 

200 bps

Net loss to shareholders

$(1.9)

 

$(8.6)

 

78%

 

$(5.7)

 

67%

Basic loss per share

$(0.04)

 

$(0.19)

 

79%

 

$(0.12)

 

67%

Net loss margin to shareholders

(2.0)%

 

(12.3)%

 

1,030 bps

 

(7.2)%

 

520 bps

__________________

NM - Not meaningful

(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)

Tools revenue and cost of tools revenue represents GAAP revenue and cost primarily derived from the procurement and subsequent sale of equipment to our customers. While this equipment is owned by our customers, the equipment is retained in one of SkyWater’s fabs and is used to complete ATS customer programs.

Non-GAAP

 

 

 

 

 

 

 

 

 

In millions, except per share data

Q2 2024

 

Q2 2023

 

Y/Y

 

Q1 2024

 

Q/Q

Non-GAAP gross profit

$17.6

 

$17.7

 

—%

 

$13.4

 

31%

Non-GAAP gross margin

18.9%

 

25.3%

 

(640) bps

 

16.9%

 

200 bps

Non-GAAP net income (loss) to shareholders

$0.8

 

$(2.0)

 

NM

 

$(3.7)

 

NM

Non-GAAP basic income (loss) per share

$0.02

 

$(0.04)

 

NM

 

$(0.08)

 

NM

Adjusted EBITDA

$8.1

 

$10.3

 

(21)%

 

$4.9

 

65%

Adjusted EBITDA margin

8.7%

 

14.7%

 

(600) bps

 

6.2%

 

250 bps

__________________

NM - Not meaningful

Q2 2024 Results:

  • Revenue: Revenue of $93.3 million increased 34% year-over-year. ATS development revenue of $61.7 million increased 18% year-over-year. Tools revenue was $25.9 million in the second quarter of 2024 compared to $0.9 million in the second quarter of 2023. Wafer Services revenue of $5.8 million decreased 66% compared to the second quarter of 2023.
  • Gross Profit: GAAP gross profit was $17.1 million, or 18.3% of total revenue, compared to gross profit of $16.7 million, or 23.9% of total revenue, in the second quarter of 2023. Non-GAAP gross profit was $17.6 million, or 18.9% of total revenue, compared to non-GAAP gross profit of $17.7 million, or 25.3% of total revenue, in the second quarter of 2023.
  • Operating Expenses: GAAP operating expenses were $15.7 million, compared to $20.2 million in the second quarter of 2023.
  • Net Loss: GAAP net loss to shareholders was $1.9 million, or $0.04 per share, compared to a net loss to shareholders of $8.6 million, or $0.19 per share, in the second quarter of 2023. Non-GAAP net income to shareholders was $0.8 million, or $0.02 per share, compared to a non-GAAP net loss to shareholders of $2.0 million, or $0.04 per share, in the second quarter of 2023.
  • Adjusted EBITDA: Adjusted EBITDA was $8.1 million, or 8.7% of total revenue, compared to $10.3 million, or 14.7% of total revenue, in the second quarter of 2023.

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 Wednesday, August 7, 2024, at 3:30 p.m. CT to discuss its second quarter 2024 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 Supplier. 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 U.S. facilities. This pioneering model enables innovators to co-create the next wave of technology within diverse categories including mixed-signal CMOS, ROICs, rad-hard ICs, MEMS, superconducting ICs, photonics and advanced packaging. SkyWater serves the growing markets of aerospace & defense, automotive, biomedical, industrial and quantum computing. For more information, visit: www.skywatertechnology.com.

Cautionary Statement Regarding Preliminary Results

The Company’s results for the second quarter ended June 30, 2024 are preliminary, unaudited and subject to the finalization of the Company’s second 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, 2024 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.

Condensed Consolidated Balance Sheets

(Unaudited)

 

June 30, 2024

 

December 31, 2023

 

 

 

 

 

(in thousands, except share data)

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

18,362

 

 

$

18,382

 

Accounts receivable (net of allowance for credit losses of $433 and $180, respectively)

 

52,237

 

 

 

65,961

 

Contract assets (net of allowance for credit losses of $49 and $99, respectively)

 

18,467

 

 

 

29,666

 

Inventory

 

14,614

 

 

 

15,341

 

Prepaid expenses and other current assets

 

16,732

 

 

 

16,853

 

Income tax receivable

 

255

 

 

 

172

 

Total current assets

 

120,667

 

 

 

146,375

 

Property and equipment, net

 

156,926

 

 

 

159,367

 

Intangible assets, net

 

6,798

 

 

 

5,672

 

Other assets

 

6,024

 

 

 

5,342

 

Total assets

$

290,415

 

 

$

316,756

 

Liabilities and shareholders’ equity

 

 

 

Current liabilities

 

 

 

Current portion of long-term debt

$

4,984

 

 

$

3,976

 

Accounts payable

 

18,976

 

 

 

19,614

 

Accrued expenses

 

32,998

 

 

 

48,291

 

Short-term financing, net of unamortized debt issuance costs

 

23,879

 

 

 

22,765

 

Contract liabilities

 

53,087

 

 

 

49,551

 

Total current liabilities

 

133,924

 

 

 

144,197

 

Long-term liabilities

 

 

 

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

 

37,410

 

 

 

36,098

 

Long-term contract liabilities

 

52,790

 

 

 

65,754

 

Deferred income tax liability, net

 

565

 

 

 

679

 

Other long-term liabilities

 

8,906

 

 

 

9,327

 

Total long-term liabilities

 

99,671

 

 

 

111,858

 

Total liabilities

 

233,595

 

 

 

256,055

 

Shareholders’ equity

 

 

 

Preferred stock, $0.01 par value per share (80,000,000 shares authorized, zero shares issued and outstanding as of June 30, 2024 and December 31, 2023)

 

 

 

 

 

Common stock, $0.01 par value per share (200,000,000 shares authorized; 47,468,475 and 47,028,159 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)

 

474

 

 

 

470

 

Additional paid-in capital

 

183,817

 

 

 

178,473

 

Accumulated deficit

 

(132,829

)

 

 

(125,203

)

Total shareholders’ equity, SkyWater Technology, Inc.

 

51,462

 

 

 

53,740

 

Noncontrolling interests

 

5,358

 

 

 

6,961

 

Total shareholders’ equity

 

56,820

 

 

 

60,701

 

Total liabilities and shareholders’ equity

$

290,415

 

 

$

316,756

 

SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three-Month Period Ended

 

Six-Month Period Ended

 

June 30, 2024

 

March 31, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

Revenue

$

93,329

 

 

$

79,636

 

 

$

69,811

 

 

$

172,965

 

 

$

135,905

 

Cost of revenue

 

76,215

 

 

 

66,656

 

 

 

53,144

 

 

 

142,871

 

 

 

102,770

 

Gross profit

 

17,114

 

 

 

12,980

 

 

 

16,667

 

 

 

30,094

 

 

 

33,135

 

Research and development expense

 

3,382

 

 

 

4,012

 

 

 

2,396

 

 

 

7,394

 

 

 

5,063

 

Selling, general, and administrative expense

 

12,332

 

 

 

11,169

 

 

 

17,820

 

 

 

23,502

 

 

 

32,716

 

Operating income (loss)

 

1,400

 

 

 

(2,201

)

 

 

(3,549

)

 

 

(802

)

 

 

(4,644

)

Interest expense

 

(2,482

)

 

 

(2,390

)

 

 

(2,950

)

 

 

(4,871

)

 

 

(5,421

)

Loss before income taxes

 

(1,082

)

 

 

(4,591

)

 

 

(6,499

)

 

 

(5,673

)

 

 

(10,065

)

Income tax (benefit) expense

 

(127

)

 

 

41

 

 

 

25

 

 

 

(86

)

 

 

25

 

Net loss

 

(955

)

 

 

(4,632

)

 

 

(6,524

)

 

 

(5,587

)

 

 

(10,090

)

Less: net income attributable to noncontrolling interests

 

942

 

 

 

1,097

 

 

 

2,066

 

 

 

2,039

 

 

 

2,773

 

Net loss attributable to SkyWater Technology, Inc.

$

(1,897

)

 

$

(5,729

)

 

$

(8,590

)

 

$

(7,626

)

 

$

(12,863

)

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

$

(0.04

)

 

$

(0.12

)

 

$

(0.19

)

 

$

(0.16

)

 

$

(0.29

)

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

 

47,394,969

 

 

 

47,098,519

 

 

 

44,743,269

 

 

 

47,246,744

 

 

 

44,280,343

 

SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Six-Month Period Ended

 

June 30, 2024

 

July 2, 2023

 

 

 

 

 

(in thousands)

Cash flows from operating activities

 

 

 

Net loss

$

(5,587

)

 

$

(10,090

)

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

 

 

 

Depreciation and amortization

 

9,129

 

 

 

14,559

 

Gain on sale of property and equipment

 

(78

)

 

 

 

Amortization of debt issuance costs included in interest expense

 

880

 

 

 

876

 

Long-term incentive and equity-based compensation

 

4,088

 

 

 

3,820

 

Deferred income taxes

 

(115

)

 

 

(37

)

Provision for credit losses

 

203

 

 

 

3,602

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable and contract assets

 

24,775

 

 

 

(17,425

)

Inventories

 

727

 

 

 

(2,627

)

Prepaid expenses and other assets

 

(560

)

 

 

(606

)

Accounts payable and accrued expenses

 

(18,529

)

 

 

(1,771

)

Contract liabilities, current and long-term

 

(9,427

)

 

 

(8,371

)

Income tax receivable and payable

 

(83

)

 

 

62

 

Net cash provided by (used in) operating activities

 

5,423

 

 

 

(18,008

)

Cash flows from investing activities

 

 

 

Purchase of software and technology licenses

 

(1,155

)

 

 

(612

)

Proceeds from sale of property and equipment

 

23

 

 

 

 

Purchases of property and equipment

 

(2,086

)

 

 

(2,608

)

Net cash used in investing activities

 

(3,218

)

 

 

(3,220

)

Cash flows from financing activities

 

 

 

Draws on revolving line of credit

 

168,500

 

 

 

121,350

 

Paydowns of revolving line of credit

 

(163,900

)

 

 

(123,810

)

Proceeds from tool financings

 

920

 

 

 

496

 

Repayment of tool financings

 

(920

)

 

 

 

Principal payments on long-term debt

 

(2,047

)

 

 

(791

)

Cash paid for principal on finance leases

 

(396

)

 

 

(456

)

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

 

1,260

 

 

 

1,276

 

Proceeds from the issuance of common stock under the ATM

 

 

 

 

12,144

 

Cash paid on licensed technology obligations

 

(2,000

)

 

 

(2,350

)

Contributions from noncontrolling interest

 

323

 

 

 

 

Distributions to noncontrolling interest

 

(3,965

)

 

 

(478

)

Net cash (used in) provided by financing activities

 

(2,225

)

 

 

7,381

 

Net decrease in cash and cash equivalents

 

(20

)

 

 

(13,847

)

Cash and cash equivalents - beginning of period

 

18,382

 

 

 

30,025

 

Cash and cash equivalents - end of period

$

18,362

 

 

$

16,178

 

Supplemental Financial Information by Quarter

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

Q1 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

ATS development revenue (1)

$

61,669

 

$

61,185

 

$

57,170

 

$

53,891

 

$

52,073

 

$

47,770

Tools revenue (2)

 

25,880

 

 

8,459

 

 

9,936

 

 

3,243

 

 

936

 

 

536

Wafer Services revenue

 

5,780

 

 

9,992

 

 

12,048

 

 

14,490

 

 

16,802

 

 

17,788

Total revenue

$

93,329

 

$

79,636

 

$

79,154

 

$

71,624

 

$

69,811

 

$

66,094

 

 

 

 

 

 

 

 

 

 

 

 

Tools revenue (2)

$

25,880

 

$

8,459

 

$

9,936

 

$

3,243

 

$

936

 

$

536

Cost of tools revenue (2)

 

24,869

 

 

8,260

 

 

9,125

 

 

2,861

 

 

290

 

 

484

Tools gross profit

$

1,011

 

$

199

 

$

811

 

$

382

 

$

646

 

$

52

 

 

 

 

 

 

 

 

 

 

 

 

Revenue impact of modified customer contracts

$

 

$

 

$

 

$

 

$

3,601

 

$

Cost of revenue impact of modified customer contracts

 

 

 

 

 

 

 

 

 

 

 

Gross profit (loss) impact of modified customer contracts

$

 

$

 

$

 

$

 

$

3,601

 

$

__________________

(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)

Tools revenue and cost of tools revenue represents GAAP revenue and cost primarily derived from the procurement and subsequent sale of equipment to our customers. While this equipment is owned by our customers, the equipment is retained in one of SkyWater’s fabs and 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 cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP selling, general and administrative expense, 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 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, management transition expense, and CHIPS Act specialist fees. 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.

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

 

Six-Month Period Ended

 

June 30, 2024

 

March 31, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

GAAP revenue

$

93,329

 

 

$

79,636

 

 

$

69,811

 

 

$

172,965

 

 

$

135,905

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenue

$

76,215

 

 

$

66,656

 

 

$

53,144

 

 

$

142,871

 

 

$

102,770

 

Equity-based compensation (1)

 

(504

)

 

 

(455

)

 

 

(291

)

 

 

(959

)

 

 

(804

)

Management transition expense (2)

 

 

 

 

 

 

 

(705

)

 

 

 

 

 

(705

)

Non-GAAP cost of revenue

$

75,711

 

 

$

66,201

 

 

$

52,148

 

 

$

141,912

 

 

$

101,261

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

$

17,114

 

 

$

12,980

 

 

$

16,667

 

 

$

30,094

 

 

$

33,135

 

GAAP gross margin

 

18.3

%

 

 

16.3

%

 

 

23.9

%

 

 

17.4

%

 

 

24.4

%

Equity-based compensation (1)

$

504

 

 

$

455

 

 

$

291

 

 

$

959

 

 

$

804

 

Management transition expense (2)

 

 

 

 

 

 

 

705

 

 

 

 

 

 

705

 

Non-GAAP gross profit

$

17,618

 

 

$

13,435

 

 

$

17,663

 

 

$

31,053

 

 

$

34,644

 

Non-GAAP gross margin

 

18.9

%

 

 

16.9

%

 

 

25.3

%

 

 

18.0

%

 

 

25.5

%

 

 

 

 

 

 

 

 

 

 

GAAP research and development expense

$

3,382

 

 

$

4,012

 

 

$

2,396

 

 

$

7,394

 

 

$

5,063

 

Equity-based compensation (1)

 

(90

)

 

 

(107

)

 

 

(217

)

 

 

(197

)

 

 

(379

)

Non-GAAP research and development expense

$

3,292

 

 

$

3,905

 

 

$

2,179

 

 

$

7,197

 

 

$

4,684

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general, and administrative expense

$

12,332

 

 

$

11,169

 

 

$

17,820

 

 

$

23,502

 

 

$

32,716

 

Equity-based compensation (1)

 

(1,422

)

 

 

(1,510

)

 

 

(1,459

)

 

 

(2,932

)

 

 

(2,637

)

Management transition expense (2)

 

(664

)

 

 

 

 

 

(130

)

 

 

(664

)

 

 

(130

)

Business transformation costs (3)

 

 

 

 

 

 

 

(2,500

)

 

 

 

 

 

(2,500

)

CHIPS Act specialist fees (4)

 

 

 

 

 

 

 

(1,320

)

 

 

 

 

 

(1,320

)

Non-GAAP selling, general, and administrative expense

$

10,246

 

 

$

9,659

 

 

$

12,411

 

 

$

19,906

 

 

$

26,129

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss to shareholders

$

(1,897

)

 

$

(5,729

)

 

$

(8,590

)

 

$

(7,626

)

 

$

(12,863

)

Equity-based compensation (1)

 

2,016

 

 

 

2,072

 

 

 

1,967

 

 

 

4,088

 

 

 

3,820

 

Management transition expense (2)

 

664

 

 

 

 

 

 

835

 

 

 

664

 

 

 

835

 

Business transformation costs (3)

 

 

 

 

 

 

 

2,500

 

 

 

 

 

 

2,500

 

CHIPS Act specialist fees (4)

 

 

 

 

 

 

 

1,320

 

 

 

 

 

 

1,320

 

Non-GAAP net income (loss) to shareholders

$

783

 

 

$

(3,657

)

 

$

(1,968

)

 

$

(2,874

)

 

$

(4,388

)

 

Three-Month Period Ended

 

Six-Month Period Ended

 

June 30, 2024

 

March 31, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

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

 

 

 

 

 

 

 

 

 

Cost of revenue

$

504

 

$

455

 

$

291

 

$

959

 

$

804

Research and development expense

 

90

 

 

107

 

 

217

 

 

197

 

 

379

Selling, general, and administrative expense

 

1,422

 

 

1,510

 

 

1,459

 

 

2,932

 

 

2,637

 

$

2,016

 

$

2,072

 

$

1,967

 

$

4,088

 

$

3,820

 

 

 

 

 

 

 

 

 

 

Management transition expense allocation in the consolidated statements of operations (2):

 

 

 

 

 

 

 

 

 

Cost of revenue

$

 

$

 

$

705

 

$

 

$

705

Selling, general, and administrative expense

 

664

 

 

 

 

130

 

 

664

 

 

130

 

$

664

 

$

 

$

835

 

$

664

 

835 

 

Three-Month Period Ended

June 30, 2024

 

Six-Month Period Ended

June 30, 2024

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

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

(in thousands, except per share data)

Numerator:

 

 

 

 

 

 

 

Net income (loss) attributable to SkyWater Technology, Inc.

$

(1,897

)

 

$

783

 

 

$

(7,626

)

 

$

(2,874

)

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

47,395

 

 

 

47,395

 

 

 

47,247

 

 

 

47,247

 

Net income (loss) per common share, basic

$

(0.04

)

 

$

0.02

 

 

$

(0.16

)

 

$

(0.06

)

Weighted-average common shares outstanding, diluted

 

47,395

 

 

 

47,521

 

 

 

47,247

 

 

 

47,247

 

Net income (loss) per common share, diluted

$

(0.04

)

 

$

0.02

 

 

$

(0.16

)

 

$

(0.06

)

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

March 31, 2024

 

 

 

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.

$

(5,729

)

 

$

(3,657

)

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

47,099

 

 

 

47,099

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.12

)

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

July 2, 2023

 

Six-Month Period Ended

July 2, 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.

$

(8,590

)

 

$

(1,968

)

 

$

(12,863

)

 

$

(4,388

)

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

44,743

 

 

 

44,743

 

 

 

44,280

 

 

 

44,280

 

Net loss per common share, basic and diluted

$

(0.19

)

 

$

(0.04

)

 

$

(0.29

)

 

$

(0.10

)

 

Three-Month Period Ended

 

Six-Month Period Ended

 

June 30, 2024

 

March 31, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Net loss to shareholders (GAAP)

$

(1,897

)

 

$

(5,729

)

 

$

(8,590

)

 

$

(7,626

)

 

$

(12,863

)

Net loss margin to shareholders

 

(2.0

)%

 

 

(7.2

)%

 

 

(12.3

)%

 

 

(4.4

)%

 

 

(9.5

)%

Interest expense

$

2,482

 

 

$

2,390

 

 

$

2,950

 

 

$

4,871

 

 

$

5,421

 

Income tax (benefit) expense

 

(127

)

 

 

41

 

 

 

25

 

 

 

(86

)

 

 

25

 

Depreciation and amortization

 

4,064

 

 

 

5,065

 

 

 

7,207

 

 

 

9,129

 

 

 

14,559

 

EBITDA

 

4,522

 

 

 

1,767

 

 

 

1,592

 

 

 

6,288

 

 

 

7,142

 

Equity-based compensation (1)

 

2,016

 

 

 

2,072

 

 

 

1,967

 

 

 

4,088

 

 

 

3,820

 

Management transition expense (2)

 

664

 

 

 

 

 

 

835

 

 

 

664

 

 

 

835

 

Business transformation costs (3)

 

 

 

 

 

 

 

2,500

 

 

 

 

 

 

2,500

 

CHIPS Act specialist fees (4)

 

 

 

 

 

 

 

1,320

 

 

 

 

 

 

1,320

 

Net income attributable to noncontrolling interests (5)

 

942

 

 

 

1,097

 

 

 

2,066

 

 

 

2,039

 

 

 

2,773

 

Adjusted EBITDA

$

8,144

 

 

$

4,936

 

 

$

10,280

 

 

$

13,079

 

 

$

18,390

 

Adjusted EBITDA margin

 

8.7

%

 

 

6.2

%

 

 

14.7

%

 

 

7.6

%

 

 

13.5

%

__________________

(1)

Represents non-cash equity-based compensation expense.

(2)

Represents severance, separation, and other costs related to the reorganization of the manufacturing, sales, marketing, and operations leadership team.

(3)

Represents expenses related to long-term transformation activities focused on improvement in automation and operational efficiency and includes project-based management consulting fees.

(4)

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

(5)

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.

 

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