Intevac, Inc. :IVAC-US: Earnings Analysis: Q2, 2017 By the Numbers : August 3, 2017

Intevac, Inc. reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of Intevac, Inc. – Western Digital Corporation, Rockwell Collins, Inc., Canon Inc. Sponsored ADR, Raytheon Company and Titanium Corporation Inc. (WDC-US, COL-US, CAJ-US, RTN-US and TIC-CA) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 30.96 million, Net Earnings of USD 1.10 million.
  • Gross margins narrowed from 41.07% to 37.04% compared to the same period last year, operating (EBITDA) margins now 7.35% from -18.08%.
  • Year-on-year change in operating cash flow of -38.02% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 30.96 30.39 28.98 22.56 14.92
Revenue Growth (%YOY) 107.55 122.39 76.74 22.48 -27.08
Earnings (mil) 1.1 1.83 2.84 -0.48 -3.49
Earnings Growth (%YOY) 131.52 129.01 212.23 87.2 -29183.33
Net Margin (%) 3.55 6.02 9.78 -2.13 -23.39
EPS 0.05 0.08 0.13 -0.02 -0.17
Return on Equity (%) 1.42 2.44 3.96 -0.69 -4.96
Return on Assets (%) 3.97 6.74 10.61 -1.88 -14.88

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Market Share Versus Profits

Revenues History
Earnings History

IVAC-US‘s change in revenue this period compared to the same period last year of 107.55% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that IVAC-US is holding onto its market share. Also, for comparison purposes, revenues changed by 1.89% and earnings by -39.86% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from -18.08% to 7.35%. For comparison, gross margins were 42.93% and EBITDA margins were 9.96% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

IVAC-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 172.54 days from 299.50 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

IVAC-US‘s change in operating cash flow of -38.02% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -26.58% to 4.25% and (2) one-time items. The company’s pretax margins are now 4.73% compared to -24.94% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Intevac, Inc.

Company Profile

Intevac, Inc. designs, manufactures and markets lean systems and lean thinking platforms, which supplies magnetic media processing systems to the hard drive, solar and photonics industries. It also develops digital-optical products for the capture and display of low-light images and the optical analysis of materials. The company operates its business through following segments: Thin-film Equipment and Photonics. The Thin-film Equipment segment designs and develops high-productivity, thin-film processing systems such as the hard drive media, display cover panel and solar photovoltaic. The Photonics segment develops, manufactures and sells compact, high-sensitivity digital sensors, cameras and systems that primarily serve the defense industry. Intevac was founded by Norman H. Pond in October 1990 and is headquartered in Santa Clara, CA.

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