![Earnings call: Intevac reports strong 2023 results, optimistic on TRIO platform](https://i-invdn-com.investing.com/news/LYNXNPEC180BO_L.jpg)
© Reuters.
Intevac , Inc. (NASDAQ:) has introduced sturdy monetary outcomes for the fourth quarter and the complete yr of 2023, with a major discount in web losses and a formidable report stage of upgrades. The firm’s transition to Heat-Assisted Magnetic Recording (HAMR) expertise has been a key driver on this success. Despite a delay in collections affecting money positions, Intevac concluded the yr with a powerful money and funding steadiness, whereas quickly suspending near-term monetary steering to focus on long-term targets.
Key Takeaways
- Intevac’s This autumn income reached practically $13M, contributing to a complete annual income of $52.7M.
- The firm achieved a report stage of upgrades and performed a key position within the HAMR expertise transition.
- Gross margin exceeded expectations, and web losses considerably decreased from the earlier yr.
- The TRIO platform is predicted to faucet right into a $1B market, with system {qualifications} already achieved.
- Intevac has over $72M in money and investments, with a constructive money movement from operations at $5.9M for the quarter.
- Negotiations for the TRIO system’s industrial settlement are ongoing, with an anticipated conclusion by the top of Q1.
- Multiple TRIO system shipments are anticipated in 2024, focusing on sectors comparable to client gadgets and automotive.
Company Outlook
- Intevac maintains its annual income steering at round $50M.
- The firm expects to take care of comparable money and funding balances by the top of 2024.
- Long-term monetary fashions recommend a cross-cycle income run fee of roughly $70M.
Bearish Highlights
- Collections delay from a big buyer impacted the money place.
- Intevac has quickly withdrawn near-term monetary steering to prioritize long-term progress.
- HDD order achievement will probably be quickly suspended to give attention to monetary efficiency enchancment.
Bullish Highlights
- Intevac’s TRIO platform has confirmed its functionality in delivering exhausting scratch-resistant and antireflective coatings.
- Positive outlook for HAMR upgrades within the coming years.
- The firm is in negotiations to safe agreements that maximize worth and increase into new sectors.
Misses
- The firm is not going to present upgrades till excellent receivables are collected, with no particular timeline for decision.
Q&A Highlights
- CEO Nigel Hunton emphasised the significance of defending the steadiness sheet and enhancing in-house metrology capabilities.
- Hunton expressed confidence in concluding TRIO system negotiations and expects a number of shipments in 2024.
- Updates on progress and system orders will probably be offered within the subsequent earnings name.
Intevac, regardless of dealing with challenges with collections, stays optimistic about its future, notably with the TRIO platform. The firm’s strategic give attention to long-term progress and profitability, together with the anticipated market alternatives for its glass coatings, positions it properly for future success. Intevac’s subsequent earnings name in early May is anticipated to supply additional updates on the corporate’s progress and monetary well being.
InvestingPro Insights
Intevac, Inc. (IVAC) has exhibited a mix of challenges and alternatives in its latest monetary efficiency. While the corporate’s transition to HAMR expertise and the potential of the TRIO platform are noteworthy, sure monetary metrics warrant investor consideration.
InvestingPro Data reveals a market capitalization of $105.76M, reflecting the corporate’s present valuation available in the market. Despite a adverse P/E ratio of -7.84, which suggests the corporate is just not at present worthwhile, there’s a silver lining with a income progress of 26.21% during the last twelve months as of Q3 2023. This signifies that the corporate is increasing its gross sales, which might be a constructive signal for future profitability.
The InvestingPro Tips spotlight that Intevac holds additional cash than debt on its steadiness sheet, offering a level of monetary stability. Additionally, analysts anticipate gross sales progress within the present yr, aligning with the corporate’s personal expectations of sustaining annual income steering round $50M.
However, it is necessary to notice that Intevac is rapidly burning by money and has not been worthwhile during the last twelve months. The valuation additionally implies a poor free money movement yield, which might be a priority for traders searching for firms with sturdy money era capabilities.
Investors thinking about a deeper dive into Intevac’s monetary well being and future prospects can discover extra insights with a complete of seven InvestingPro Tips out there on https://www.investing.com/pro/IVAC. For these contemplating an InvestingPro+ subscription, use coupon code SFY24 to get an extra 10% off a 2-year subscription, or SFY241 to get an extra 10% off a 1-year subscription. These ideas present a complete understanding of Intevac’s monetary place and market potential.
Full transcript – Intevac (IVAC) This autumn 2023:
Operator: Financial Results Conference Call. At this time, all contributors are in a list-only mode. A matter-and-answer session will comply with the formal presentation. [Operator Instructions] Please notice that this convention name is being recorded right now, February fifth, 2024. At this time, I wish to flip the decision over to Claire McAdams, Investor Relations for Intevac. Please go forward.
Claire McAdams: Thank you, Sherry, and good afternoon to everybody on right now’s name. Thank you for becoming a member of us right now to debate Intevac’s monetary outcomes for the fourth quarter and full yr 2023, which ended on December thirtieth. In addition to discussing the corporate’s latest outcomes, we are going to talk about our outlook trying ahead. Joining me on right now’s name are Nigel Hunton, President and Chief Executive Officer, and Kevin Soulsby, Chief Financial Officer. Nigel will start with an outline of our enterprise and outlook, after which Kevin will overview our monetary outcomes earlier than turning the decision over to Q&A. I’d wish to remind everybody that right now’s convention name comprises sure forward-looking statements, together with however not restricted to, statements concerning monetary outcomes for the corporate’s most not too long ago accomplished fiscal quarter and yr, which stays topic to adjustment in reference to the preparation of our Form 10-Okay, in addition to feedback concerning future occasions and projections concerning the future monetary efficiency of Intevac. These forward-looking statements are based mostly upon our present expectations, and precise outcomes might differ materially on account of varied dangers and uncertainties relating to those feedback and different threat elements mentioned in paperwork filed by us with the Securities and Exchange Commission, together with our annual report on Form 10-Okay and quarterly reviews on Form 10-Q. The contents of this February fifth name embrace time-sensitive, forward-looking statements that symbolize our projections as of right now. We undertake no obligation to replace the forward-looking statements made throughout this convention name. I’ll now flip the decision over to Nigel. Nigel?
Nigel Hunton: Thanks, Claire, and good afternoon. Intevac posted sturdy outcomes for the fourth quarter, marking a strong end to what was a key yr of progress and execution in 2023. This autumn revenues totaled practically $13 million, properly forward of our expectations coming into the quarter. As evident by our report stage of upgrades in 2023, Intevac is a key expertise enabler within the exhausting drive business’s transition to HAMR. The fourth quarter was one other interval of accelerated demand from our main buyer as they ramped to ship manufacturing portions of HAMR drives. The key position of Intevac in enabling this ramp resulted in very sturdy 47% progress in revenues for fiscal 2023 and we achieved a [four-year] (ph) report in annual gross sales for our gear enterprise. The ensuing favorable income combine drove sturdy gross margin efficiency exceeding our steering at 46% for the fourth quarter and 38% for the complete yr. With continued dividends controlling discretionary spending, we sharply diminished our web losses each for This autumn and the complete yr in comparison with the prior yr durations. Protecting the steadiness sheet stays a key precedence for the corporate and we ended the yr with over $72 million of whole money and funding. This will stay a key focus in 2024. The year-end steadiness was slightly below our earlier steering, solely because of the late cost of receivables by one buyer. Total backlog at year-end was $42 million, reflecting the continued sturdy order exercise for HAMR upgrades. In This autumn, these orders included the profitable rebooking of two 200 Leans in favor of extra HAMR course of module upgrades. As a reminder, these two techniques have been in backlog for the previous six quarters and had been initially geared toward enhancing capability versus expertise. We are happy with the renegotiation of order backlog in direction of HAMR initiatives as these are clearly the precedence within the business proper now and from a monetary perspective, whereas upgrades carry much less income in comparison with whole gross sales, the rebooking is predicted to have a minimal influence on our forecast for gross revenue. Finally, as we mirror on fiscal 2023, it was a crucial yr for the expertise improvement and industrial launch of our groundbreaking TRIO platform. We efficiently accomplished the event section of our JDA and achieved system qualification as promised by year-end. This is a key milestone within the progress trajectory of Intevac because the TRIO achieved key efficiency metrics as a part of the analysis course of that may allow Intevac to handle market alternatives far bigger than our current exhausting drive enterprise. We see the TRIO as having huge potential with an estimated $1 billion greenback served market and the achievements in 2023 are key steps ahead in our plan to diversify and develop our product portfolio and buyer base, which brings me to a dialogue of our views on the longer term and our methods to ship constant and worthwhile progress within the years forward. The necessary developments that unfolded in fiscal 2023 inside every of our major markets have underscored two key attributes of our enterprise. First and foremost is that Intevac performs a crucial position within the world electronics manufacturing business and that we’re uniquely able to producing gear that addresses the wants of technologically difficult knowledge pushed processes in extremely demanding, excessive quantity manufacturing environments and inside industries that require extraordinarily low value of possession. This is very evident in the course of the difficult macroeconomic environments of 2023, a yr when our clients confronted huge headwinds financially and operationally, but by no means diverted their consideration from strategic manufacturing priorities in shut partnership with Intevac. But it is these identical headwinds that manifested within the second [reality] (ph) for Intevac’s management staff in 2023. And that’s the [underlying] (ph) affect that our giant clients can actual on our short-term monetary outcomes, which is a matter that right now we’re addressing head on. As we enter the brand new yr, we’re steadfast in taking a long-term give attention to bettering the underlying monetary efficiency of Intevac. We are all the time going to be centered on crucial features of our monetary efficiency comparable to income volumes and our money place. At this junction nevertheless, we have now made a dedication to quickly redirect our focus away from quick time period metrics to only quarterly income and money targets to be able to arrange a stronger long-term worth proposition for our stakeholders. Which means we have now made the choice to quickly withdraw near-term monetary steering to be able to allow our focus to reside totally on the long-term and particularly on bettering our longer-term progress, profitability and money movement profile. This has implications for every of our served markets. First, in our major HDD market, the income ramp we achieved in 2023 demonstrates our operational agility and our potential to execute to satisfy buyer timelines for HAMR upgrades. Even extra importantly, Intevac has emerged because the enabling expertise associate for the adoption of HAMR, and our income leads to 2023 reveal that we’re a direct beneficiary of the HDD media expertise improve initiatives at present underway. We have demonstrated our crucial position for the exhausting disk drive business concurrently we assist the energy of our buyer’s monetary place on the expense of our personal. Our money conversion cycle has slowed to historic lows and [collection] (ph) delays have change into pervasive or a quarterly norm. We encountered an unprecedented order cancellation greater than eight months in the past, however nonetheless have but to resolve the switch of stock and materials receipts off our steadiness sheet. For this quarter, we have now decided to quickly droop our achievement of HDD orders and to let clients fulfill their obligations concerning payables and stock. We are assured that we will get the enterprise again in alignment with our customary phrases however we’re not utilizing Intevac’s money to fund our clients. I do know our traders will perceive the place we have now taken. Next, turning to the actions we’re taking within the show market. The not too long ago accomplished qualification of our TRIO system is testomony to the standard of engineering assets resident inside Intevac, and our potential to satisfy key efficiency specs for a really demanding and thrilling buyer. Upon attaining qualification and the profitable completion of our joint improvement settlement, we interact with our JDA associate in negotiations for a industrial settlement for a number of techniques. While we’re not capable of full such settlement by yr finish as we would initially hoped, we count on such negotiations to conclude by the top of the primary quarter. As we stated earlier than, the provision chain for show cowl glass for high-volume client system functions is very advanced, to say the least. Meanwhile, situations within the show market have change into more difficult within the face of slowing buyer demand, which is manifesting itself in conservative monetary planning by our JDA associate within the quick time period. It’s additionally fairly obvious to us there may be vital buyer pull coming from the top gadgets OEMs to quickly deploy TRIO techniques into quantity manufacturing environments that the advantages of our software may be realized on a number of system varieties. Whether by the initially contemplated unique association with our present associate which is tied to a minimal buy of a number of techniques, estimated roughly $100 million over a 5 yr interval or by different buyer gross sales, we are going to work in direction of maximizing the long-term potential of TRIO. Which means, by withdrawing near-term steering, we will probably be agency in our negotiations concerning any industrial phrases for the TRIO which have long-range implications. While we work by this course of inside every of our markets, I will even notice there’s been no materials modifications [in demand] (ph) we’ve indicated from beforehand offering our preliminary outlook for 2024 which we shared on the final two earnings calls. For functions of annual income steering, our outlook for the complete yr is essentially unchanged on the $50 million stage. Furthermore, we count on to finish 2024 with the same steadiness of money and investments as year-end 2023. However, given our determination to halt the deployment of sure of Intevac’s assets within the quick time period in favor of maximizing the corporate’s long term potential, we’re not offering official steering ranges for margins or profitability or a particular income vary for Q1. And with that, I’ll flip the decision over to Kevin for his This autumn overview.
Kevin Soulsby: Thank you, Nigel. Turning to our outcomes, This autumn revenues totaled $12.9 million, which exceeded the midpoint of steering by $2.7 million because of the acceleration of HAMR upgrades in the course of the quarter. For the complete yr, revenues grew to $52.7 million, up 47% from 2022 gross sales of $35.8 million. 2023 gross sales included a report stage of HDD upgrades in addition to one new 200 Lean and one refurbished 200 Lean system. This autumn gross margin benefited from favorable combine and exceeded our forecast at 46%. For the complete yr, gross margin was 38.4%. This autumn working bills had been $7.8 million, down each sequentially and year-over-year, reflecting the restructuring of our enterprise and leaner working construction. As a outcome, we had been capable of cut back our working and web loss each for This autumn and the complete yr in comparison with the yr in the past durations. Turning to the steadiness sheet. We ended the quarter with money and investments, together with restricted money of $72.2 million, equal to $2.74 per share based mostly on 26.4 million shares at quarter-end. As Nigel talked about, we’d have ended the yr with whole money within the vary of $75 million to $80 million, if not for the persistent delay in collections from one giant buyer. Cash movement from operations was a constructive $5.9 million in the course of the quarter. This autumn capital expenditures had been $500,000 and our non-cash prices for the quarter included $1 million of inventory based mostly compensation and $400,000 of depreciation and amortization. This completes the formal a part of our presentation. Operator, we’re prepared for questions.
Operator: Thank you. [Operator Instructions] Our first query is from Mark Miller with The Benchmark Company. Please proceed.
Mark Miller: You talked about that the TRIO negotiations, you count on them to be full this quarter. I’m simply questioning, might you present any extra shade on what’s being mentioned?
Nigel Hunton: If you are taking the JDA settlement we have now, the plan for that was to go from the JDA settlement after which negotiate a industrial settlement for ongoing provide. So we’re in the midst of negotiating a gross sales and buy settlement for the longer term. So that is what’s been concerned within the negotiations.
Mark Miller: So we’re nonetheless taking a look at roughly $100 million no less than in gross sales for TRIO?
Nigel Hunton: We’re trying to conclude that negotiation on this quarter, and the result of that negotiation we’ll cowl on the subsequent earnings name.
Mark Miller: Any ideas concerning the [TRIO] (ph) that was simply certified when it comes to being revenued?
Nigel Hunton: The JDA needs its qualification then strikes to a negotiation on the industrial settlement. And right now, we need to get one of the best final result, that is one of the best curiosity for our shareholders, simply in all probability not finest to debate particular outcomes of that merchandise.
Mark Miller: Western Digital (NASDAQ:) throughout its latest convention name indicated that they had been going to attend till 4 terabytes per platter to section in HAMR. Do you might have any feeling when that will probably be? Will that be later this yr or 2025?
Nigel Hunton: I feel Western Digital’s announcement was very constructive for us. I feel as you see the business transfer in direction of HAMR was historically centered actually round one buyer. I feel now you are seeing the business following. And I feel on prior calls, we’ve form of stated that WD is likely to be a yr behind, I feel we’ll see in direction of the top of this yr into 2025, I feel it is a very constructive factor for the corporate.
Mark Miller: Thank you.
Operator: Our subsequent query is from Hendi Susanto with Gabelli Funds. Please proceed.
Hendi Susanto: Good afternoon, Nigel and Kevin.
Nigel Hunton: Good afternoon.
Kevin Soulsby: Good afternoon.
Hendi Susanto: Nigel, I wish to ask your perspective, the most recent forecast of 2024 exhausting disk drive market after which the outlook for HAMR improve. And then second, I’m questioning whether or not you’ll be able to share some shade on like what sort of timing or cyclicality of HAMR upgrades. Does it are typically lumpy? Or can it’s considerably like linear and incremental?
Nigel Hunton: I feel as we have stated on the prior name, we have put in base of round 140 techniques with over 10% of that upgraded in direction of HAMR. We see that persevering with by the subsequent three to 4 years. So we see the HAMR alternative as being considerably giant. And as Mark Miller commented there, we’re really seeing now a stage of curiosity from WD coming in as properly. The key for us is absolutely is ensuring we’re able to assist the HAMR ramp, ensuring we’re capable of really assist that enterprise, we have been a key enabler. The expertise has helped show the institution of that as a step change in expertise. The crucial factor for now could be to ensure we make the fitting selections for the enterprise. And subsequently, that is specializing in getting our — one among our key clients again into customary phrases, getting our money place again to the place it needs to be is a key focus in the mean time, after which we’ll — as soon as we get that carried out and resolved, then we’ll look to persevering with additional shipments. Hence, we have postponed steering this quarter whereas we resolve that as a result of we do consider essentially HAMR has acquired a terrific future.
Hendi Susanto: And then could I confirm for like HAMR improve, can it’s lumpy from one quarter to a different?
Nigel Hunton: I feel as you’ve got seen, it is — it’ll rely upon the uptake in demand and how briskly the takeoff of that product is. So I feel it is going to be over the subsequent couple of years, it is going to be — I feel we have talked about roughly $35 million to $40 million a yr. But that quarter-to-quarter, we’re at a stage of lumpiness relying on what upgrades are pulled in and the timing of these investments.
Hendi Susanto: And then to be able to place Intevac to assist the HAMR [ramp] (ph), any recommendation on how we needs to be fascinated about the inventories?
Nigel Hunton: I imply a key factor for us is to, one, resolve the inventories across the system cancellation. That’s a key side of our focus. And as we take a look at really constructing the enterprise, we have to truly make sure that we really reduce stock, take a look at one of the best use of our money and guarantee we will deploy that business in opposition to these key HAMR shipments as we get orders for them shifting ahead. I feel our stock is form of cut up roughly a 3rd, a 3rd, a 3rd of the month between HDD, TRIO techniques and the cancellations. So we have quite a bit to do on stock to scale back stock, make sure that we really flip that return stock to our buyer for the cancellations after which deploy our stock to maximise our enterprise shifting ahead.
Hendi Susanto: Can you employ the cancellation inventories for HAMR improve?
Nigel Hunton: One of the important thing issues that occurred final quarter, we talked about within the ready remarks was to truly efficiently negotiate and alternate two of the techniques into HAMR upgrades and by utilizing the related components of these techniques, we will really then transfer them into HAMR upgrades fairly efficiently. That’s one of many issues why it was a profitable renegotiation to switch these two techniques into HAMR upgrades. And really, as you stated and rightly level out, we will leverage and really switch a major a part of that into HAMR.
Hendi Susanto: And then I do not know whether or not you’ll be able to reply these questions. Can you point out like what number of put in base items that obtained the HAMR upgrades in Q3? And then I’m additionally questioning when Intevac units like report gross sales of HAMR upgrades, whether or not you’ll be able to quantify what the magnitude of the HAMR improve in greenback phrases?
Nigel Hunton: I feel what we stated on prior calls is 2023 noticed us full round in all probability 15 or 16 HAMR upgrades. And that was the quantity we did by the yr, and that is form of the quantity we’re giving for 2023. And as we have stated on many events, the HAMR upgrades — the worth of these rely upon the improve of the system. Some techniques want extra course of modules, if it is going from a 5 course of module to a seven course of module after which the addition of the cooling and heating stations and different key improve techniques. Or some already have seven course of modules, and it is simply a few of the key upgrades round heating and cooling. So the vary of upgrades may be between $1 million to $2 million. So it modifications relying on the combo of the system that we’re upgrading, which is once more provides to a few of the lumpiness quarter-to-quarter.
Hendi Susanto: And, Nigel, one final query for me. When we come to a negotiation for like TRIO system gross sales, any background on the probability of the purchasers shopping for one, two or three? In different phrases, what’s going to drive clients to purchase two as an alternative of 1 or three as an alternative of two? I feel previously, you talked about that clients have like a number of places. But apart from location, are there different elements that drive the choices when it comes to the variety of techniques that they need to buy?
Nigel Hunton: I feel the important thing message in the mean time was the form of the unique JDA we accomplished, the TRIO system was certified. And the crucial subsequent step is to finalize a proper settlement for TRIO software shipments. And I stated, we had hoped to conclude that for the top of December. However, the negotiations are ongoing now. And we actually cannot ship any extra at this stage aside from to verify we count on to ship a number of techniques in 2024.
Hendi Susanto: Okay. Thank you, Nigel. Thanks, Kevin.
Nigel Hunton: Thank you.
Operator: Our subsequent query is from Peter Wright with Partner Cap Securities. Please proceed.
Peter Wright: Great. Good afternoon guys and thanks for taking my questions.
Nigel Hunton: Hi, Peter.
Peter Wright: I’ve three questions. The first one is in your shift to a long-term give attention to the monetary mannequin, and I feel that is sensible simply on variety of clients, and it is easy to know. But what I’m hoping you are able to do is form of mirror on this remark. If I take a look at your backlog, serving to to information form of providers and name that about $40 million and throughout a 4, 5 yr cycle, you are taking a look at about 10 exhausting disk drive instruments and about 20 instruments on the contract together with your current one buyer there. It averages about $30 million a yr. It’s going to be lumpy, and it is powerful to determine that out. But that is a few $70 million common cross-cycle income run fee. Given form of the place your bills are actually, that is suggesting to me a few $4 million or $5 million free money movement yield on an annualized foundation form of on a cross cycle. Is there something I’m lacking there at a excessive stage of what your long-term steering and film would appear like?
Nigel Hunton: Yeah. I imply, I feel for me, it’s important that we focus our time in the mean time guaranteeing we really optimize the long run and get the fitting offers and the fitting negotiation and to get the fitting forecast for the longer term. So I do not actually need to touch upon the element inside the agreements we’re really in the midst of negotiating. But when you take the bottom from prior bulletins, I feel that’s in all probability a logical evaluation of what we introduced on prior earnings calls. I do not know whether or not Kevin, you need to add something to that?
Kevin Soulsby: No, I might agree that that is in line with what we stated within the final couple of quarters.
Peter Wright: Yeah. Okay. Fantastic. And if I take a look at the one remark you made on finish market pull, are you able to give us a bit of extra shade of what it’s that a few of these finish market clients are taking a look at and what they particularly like about your glass?
Nigel Hunton: I feel there’s a few key factors there. One, the potential of the TRIO and the qualification being accomplished, has confirmed that we have now a machine that has nice functionality. The potential to ship exhausting scratch-resistant and antireflective coatings on substrates is crucial and that has been confirmed. And when you take a look at the market alternatives, whether or not that be within the client system market the place it’s totally obvious the necessity for these form of coatings and people types of functions. As we have look past that and begin to speak to some key automotive clients and a few of the coating individuals in that sector, in the same manner, the deployment of glass throughout the auto sector, whether or not it’s touchscreens in automobiles, whether or not it’s taking a look at functions externally the place they’ve correct and anti-chip coatings on a few of these substrates across the cameras on exterior of automobiles, LIDAR, et cetera are proving that the alternatives in auto are going to return by and are available by over the subsequent three to 5 yr interval fairly strongly as properly. So we see form of a number of functions now for the TRIO platform. We see it having the ability to be expanded past client gadgets into a number of different sectors and the power of the software to place specialised coatings with the important thing attributes that we have confirmed on to a number of supplies can be going to show advantages long run. So I feel we have confirmed an exceptional software. It’s taken us over 18 months of improvement time and focus, however having gotten that software to some extent the place it is now totally certified, it is completely the fitting time to consider the long-term alternative for that. And the suggestions we have been getting about this high quality of the coatings offers you increasingly more confidence on the longer term.
Peter Wright: I can infer out of your final press launch and the naming of your associate in it that clearly, they see your worth on this equation. Can you assist us perceive in these negotiations, is there a sure factor that you simply’re extra enthusiastic about or has modified over the course of final yr, whether or not it’s from client electronics to client electronics plus, whether or not it’s an evolution of the enterprise mannequin from gear to gear plus or are the negotiations at this level on the TRIO aspect, primarily about numbers?
Nigel Hunton: I feel we have confirmed that we have now nice expertise and the work we have carried out across the materials science, what we have carried out growing the TRIO platform to satisfy the important thing market wants. They are exhibiting me that we have a functionality to not simply ship high-quality coatings into client gadgets however into different sectors. So as we glance within the negotiation, I do not need — I don’t need to get into particulars of that right now as a result of clearly, it’s totally key time within the negotiation. It’s about ensuring we do the fitting for the corporate, the fitting selections find yourself with the fitting settlement for the long run that is going to maximise worth for Intevac and that is my key focus is how will we really make sure that we have now an settlement that permits us to take Intevac ahead on a a lot stronger progress trajectory and with key companions. So I’m fairly excited concerning the alternatives with the present companions, however I’m additionally equally excited concerning the alternatives we’re seeing outdoors of that.
Peter Wright: Fantastic. My final query is, it simply appears that it doesn’t matter what you do, the market is just not supplying you with credit score on your money. What are one of the best makes use of of your money while you look ahead right here, is it natural, inorganic? When you take a look at the steadiness sheet, regardless that it is likely to be down a bit of bit on the collections, it is nonetheless a particularly giant quantity on the steadiness sheet. What is the makes use of in ’24 that you will be sharing with us that you simply’re most enthusiastic about?
Nigel Hunton: I feel the chance to proceed to guard this enterprise and proceed to guard the steadiness sheet is a key focus for me. We’ve carried out that fairly efficiently by 2023. There are some minor makes use of we have to increase a few of our capabilities round inspection and take a look at gear. I feel one of many issues that we have to utterly be skilled at is as we do world-class coatings is have the potential in-house to do key testing and key understandings of the supplies, whether or not that be into the optics, into the hardness, into the fabric science. So there will probably be some use of that money, however not vital round enhancing {our capability} for in-house metrology. As we take a look at different suggestions, our clients see the energy of our steadiness sheet as a key asset and subsequently, an organization our measurement, is sustaining that sturdy steadiness sheet is crucial to guard the corporate shifting ahead. We’ve acquired to look to how we really develop the corporate. And as we really assume by what the important thing strategic strikes we have now to do to take the corporate ahead, then we’ll take into consideration how we really optimize that money and use it successfully. But the primary focus in the mean time is completely defending the steadiness sheet and defending that money place.
Peter Wright: Fantastic. Thank you for the decision.
Kevin Soulsby: Thanks, Peter.
Nigel Hunton: Thank you.
Operator: Our subsequent query is from Dan Weston with West Capital Management. Proceed please.
Dan Weston: Yeah. Hi, thanks very a lot for taking the questions, most of which have been answered. Just some readability regarding the receivables that you simply mentioned. In that assortment course of, is there any dispute together with your buyer on what the receivable quantity is?
Nigel Hunton: There’s absolute readability on what the quantity is, sure. And we have now a long-term relationship. This was one thing that — this will probably be labored by with them. They’ve been a key associate of ours. We’ve helped allow a profitable evolution to HAMR and there is not any dispute on the receivables.
Dan Weston: Okay. So that is what you’ll classify as extra of a timing situation versus a dispute of the quantity?
Nigel Hunton: Correct.
Dan Weston: Fine. I respect that. Also, Nigel, simply to get some extra readability, to not belabor the purpose, however I feel you talked about in your final name that the profitable completion of analysis would then set off the cargo of the primary system. So I assume that didn’t set off the cargo of the primary system, perhaps you’ll be able to simply add a bit of shade for us when it comes to what happened. In different phrases, weren’t the phrases already outlined within the JDA that might outline precisely what the numbers had been as soon as the qualification was accomplished?
Nigel Hunton: The authentic JDA, the best way that was written and that was accomplished efficiently by the top of December. The subsequent step inside the JDA is one profitable completion of the JDA was carried out. The subsequent step is to then full a proper settlement for TRIO software shipments. We had hoped to conclude that as properly, however earlier than the top of December. However, these negotiations are nonetheless ongoing, in all probability I can not say something extra at this stage or to verify that we count on to nonetheless ship a number of tiers in 2024. But the method — it goes from JDA. There’s qualification, JDA completion, then we go into a proper settlement for gross sales and buy. So that is the important thing steps.
Dan Weston: Okay. Okay. Fine. And then again to your HDD enterprise simply to ensure I’m very clear right here since there is not any steering that you simply’re providing for the quarter. Did I hear you proper in that your organization is not going to be offering any upgrades till the receivables are collected? Just some readability on that, please.
Nigel Hunton: Correct. So we is not going to be supplying any supplies till we have really acquired decision on the receivables.
Dan Weston: Okay. Got it. And I suppose I imply, is there a manner you can predict what the timing could be to resolve that receivable situation?
Nigel Hunton: I feel it is best if we really depart that for me to resolve the receivable situation with out placing a timeline in opposition to that.
Dan Weston: Okay. Okay, truthful sufficient. I respect your candor and better of luck.
Nigel Hunton: Thank you.
Kevin Soulsby: Thank you.
Operator: Our subsequent query is a follow-up from Hendi Susanto with Gabelli Funds. Please proceed.
Hendi Susanto: Hi once more, Nigel. So, Nigel, when, for example, the negotiation of TRIO system has been concluded and you’ve got the agreements, how quickly can the gross sales of TRIO system happen? And then I’m additionally questioning, upon the completion of the negotiation whether or not or not the truth is will fill like an SEC submitting?
Nigel Hunton: So I feel when you full — as we stated, we’re in the midst of these negotiations. We are assured these negotiations will get concluded. We’re fairly clear that as we transfer ahead, we have now time to do updates on revenues and efficiency on a quarterly foundation. And subsequently, the subsequent earnings name, hopefully, we will share much more progress we have made. We have a really clear coverage in the case of the orders and system orders, after we get system orders. Normally, we’d really do press releases in opposition to orders when obtained within the firm, and that’s our fundamental buyer coverage that we have been following for a few years. So I do not see any change to that taking place. So my intention is to conclude the negotiations, safe orders for this firm, drive Intevac ahead profitably and into the longer term. And as we get orders to announce them underneath the form of current apply we have now as an organization as we did with all of the 200 Lean orders. So I do not see any change to that as a apply.
Hendi Susanto: Thank you, Nigel. And all one of the best.
Nigel Hunton: Thank you.
Operator: Thank you. With no additional questions right now. I wish to flip the decision again over to Nigel Hunton for closing remarks.
Nigel Hunton: Thank you, and thanks for all of the questions. I want to thank all of our staff in addition to their counterparts with our business companions for all of the exhausting work and dedication as we proceeded by a crucial milestone in 2023, which was attaining qualification for TRIO whereas on the identical time, attaining a major progress yr as a key expertise enabler within the HDD business’s transition to HAMR, so total a tremendous achievement. I additionally want to thank our traders for his or her ongoing assist. And as all the time, please attain out to Claire instantly if you want to comply with up with us and look ahead to updating you all on our Q1 name in early May. With that, I’ll conclude right now’s name.
Operator: Thank you. This does conclude right now’s convention. You could now disconnect.
This article was generated with the assist of AI and reviewed by an editor. For extra data see our T&C.