SkyWater (SKYT) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $93.3 million, up 17% sequentially and 34% year-over-year, driven by strong ATS development and tool sales, with all revenue components exceeding forecasts.

• ATS development revenue reached $61.7 million, up 1% sequentially and 18% year-over-year, led by robust aerospace and defense demand.

• Tools revenue hit a record $25.9 million, exceeding expectations due to accelerated deliveries and improved equipment lead times.

• Wafer services revenue was $5.8 million, slightly above forecast but down 66% year-over-year due to industrial market weakness.

• Positive adjusted EBITDA, non-GAAP net income, and strong operating cash flow were achieved, supported by cost-control initiatives.

Financial highlights

• Q2 2024 revenue: $93.3 million (up 34% year-over-year); sequential increase of 17% from Q1 2024.

• GAAP gross margin was 18.3%, down from 23.9% in Q2 2023; non-GAAP gross margin was 18.9%.

• Adjusted EBITDA was $8.1 million (8.7% margin), up 65% sequentially but down from $10.3 million in Q2 2023.

• Net loss narrowed to $1.9 million ($0.04/share) from $8.6 million ($0.19/share) in Q2 2023; non-GAAP net income was $0.8 million ($0.02/share).

• Cash and cash equivalents at quarter end: $18.4 million; $74 million available on revolver.

Outlook and guidance

• Full-year 2024 revenue outlook for ATS and wafer services remains largely unchanged; ATS development revenue expected to grow 10%-20% over 2023.

• Wafer services revenue projected to decline 60%-65% for the year; tools revenue expected at ~$80 million in 2024.

• Q3 2024 revenue forecast in the mid-$90 million range, with ATS at ~$60 million, wafer services at $4-$5 million, and tools at ~$30 million.

• Customer-funded CapEx (tool revenue) for 2024 now expected at $80 million, with over $200 million in new tooling installations planned through 2026.

• Wafer services expected to remain soft for another quarter or two, with growth anticipated in 2025 from thermal imaging and medical diagnostics.