SkyWater Technology (Nasdaq: SKYT) - August 2021
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SkyWater Technology (Nasdaq: SKYT) August 2021
Safe Harbor Disclosure
This presentation and the accompanying oral presentation contain “forward-looking” statements that are based on the Company’s current expectations or
forecasts of future events, rather than past, events and outcomes, and 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 involve risks and uncertainties, which may cause the Company’s actual results, performance or achievements to be
materially different from those expressed or implied by forward-looking statements. Key factors that could cause 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 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 ability to diversify our customer base and develop relationships in new
markets; the level of demand in our customers’ end markets; our ability to attract, train and retain key qualified personnel; changes in trade policies,
including the imposition of tariffs; the impact of the COVID-19 pandemic on our business, results of operations and financial condition; the impact of the
COVID-19 pandemic on the global economy; 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; and other factors discussed in the “Risk
Factors” section of the prospectus.
In light of these risks, uncertainties and assumptions, the forward-looking events and outcomes discussed in this presentation may not occur and our
actual results could differ materially and adversely from those expressed or implied in our forward-looking statements. You are cautioned not to place
undue reliance on forward-looking statements, which are inherently unreliable and speak only as of the date of this presentation. The Company cannot
guarantee that the future results, performance, or events and circumstances described in the forward-looking statements will be achieved or occur. The
Company undertakes no obligation, and the Company expressly disclaims any obligation, to update or alter any forward-looking statements for any
reason after the date of this presentation, whether as a result of new information, future events or otherwise, except as required by law.
In addition, statements that “we believe” and similar statements reflect the Company’s beliefs and opinions on the relevant subject. These statements are
based upon information available to the Company as of the date of this presentation, and while the Company believes such information forms a
reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that the
Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain,
and you are cautioned not to unduly rely upon these statements.
This presentation also contains estimates, projections and other statistical data made by independent parties and by the Company relating to market size
and growth and other data about the Company’s industry and its business. These data involve a number of assumptions and limitations, and you are
cautioned not to give undue weight to such data. The Company has not independently verified the accuracy and completeness of the information
obtained by third parties included in this presentation.
Proprietary 2
Investment Highlights
01
High-Margin ATS Combined with Wafers Services Creates a Scalable Business Model
02 Uniquely Positioned to Serve Megatrends:
Artificial Intelligence, Electrification, Medical Implants, Rapid Disease Screening, 5G/6G
Communications, Commercialization of Space
03
Seasoned Management Team with Decades of Industry Experience
04
Large, High-Growth Markets with Long-Term Secular Tailwinds
05 Multiple Levers to Drive Continued Growth:
Disruptive Technologies, Customer Driven Technology Development, Sticky Technology
Partnerships, Differentiated High Margin Volume Manufacturing
Proprietary
SkyWater’s Unique Model Accelerates Disruption
WHO WE ARE
Technology as a ServiceSM (TaaS)SM
Innovation as a Service Manufacturing as a Service
Advanced Technology Services (ATS) Wafer Services
enable co-creation of differentiated solutions supply customers with ICs and
which are the unique expression of the microdevices for commercial or mission
combined customer/SkyWater multi- ready products.
disciplinary technology teams.
OUR TaaS℠ MODEL
Co-creates disruptive Builds long relationships through Leverages world-class
technologies collaborative development capabilities
and manufacturing
Proprietary 4
We are the only U.S.-owned
pure-play foundry.
Extending a legacy of manufacturing
excellence to meet the industry’s needs
in a post-Moore’s Law reality
Cypress SkyWater
2005 2008 2017 2018 2019 2020 2021
SkyWater SkyWater and MIT $170 M rad-hard 3-year anniversary Florida $112M IPO closed
65 nm qualified Technology
received DMEA selected for technology and of SkyWater Advanced April, 2021
foundry opens
Cat 1A Trusted DARPA 3DSoC building completion of Packaging
to non-Cypress
Accreditation program expansion Cypress ToP Facility integrated
customers
announced contract into operation
Proprietary
Fab
SkyWater Minnesota SkyWater Florida
Bloomington, MN Kissimmee, FL
OPERATION OPERATION
200 mm equipment
200 mm equipment
91,000 ft² Cleanroom
Size: 109,000 ft2 total
Class 10 + SMIF
26,000 ft2 of class 1000
10,000 30 ML CMOS wafers or 50,000 MOSFET wafers
9,400 ft2 of class 10,000
per month
90 nm+ feature geometries
CERTIFIED
ISO9001 / IATF16949 Automotive Certified Notes
ISO13485 Medical Certified Site added to operation Feb 2021
ISO14001 Environmental Certified DMEA Cat 1A Trusted – pending, planned late 2021
DMEA Cat 1A Trusted Facility will enable custom advanced packaging
ITAR and Secure Processing Supported solutions
Proprietary 6
SkyWater is Defining a New Category
Ability to Transition
“Frictionless Productization” to Volume
Manufacturing
Technology
Foundry
Specialty Conventional/
Advanced Technology
Foundry Services Specialty Foundry
Conventional + Target
Foundry Wafer Services
▪ Minimal ▪ Moderate ✓ High customization
customization customization
▪ Digital processors, ▪ Specialty ✓ Next-generation
CPUs, GPUs technologies technologies
▪ High volumes ▪ Medium volumes ✓ Variable volumes
▪ 300 mm substrates ▪ 200 mm and 300 mm ✓ 200 mm substrates
substrates
Proprietary 7
Model Enables Early Foundry Engagement
Technology as a Service
Advanced Technology Services (ATS) Wafer Services
Concept & Technology Process Product Volume
Product Design
Feasibility Demonstration Development Qualification Manufacturing
Mixed-Signal Custom Product
Process Flows Design
Kits
Superconducting 3DSoC
Co-Creation Photonics
IP Library Mixed-Signal
Rad-Hard &
Power Discrete
Optimization for Ecosystem MEMS
Manufacturing
Photonics MEMS
Power Discrete
Advanced
Packaging
Low Technology / Manufacturing Readiness Level High
✓ Efficient R&D ✓ Accelerated Time-to-Market ✓ Volume Manufacturing
Proprietary 8Partnership Pathways: Prototype to Production
Research Commercialization
Advanced
Wafer
Technology Qualification
Services
Services
R&d: r&D: r&d:
Primary Activity Proof of Concept Maturing & Qualifying Volume
Tech Demonstration Capabilities, Process Flows, and Production
Process Development Products for Scale
Technology Readiness &
TRL / MRL: 3~6 TRL / MRL: 6~8 TRL / MRL: 8~9
Manufacturing Readiness
Operating & • NRE • MPW • 1x Setup
• Tooling • NRE • Per Wafer
Business Model • Tooling
• Early Access Program
• Flow Transfer
Example Start Points
3DSoC 90nm Rad-Hard MEMS Photonics Mixed-Signal Power Discrete
Proprietary 9TaaSSM Accelerates Concepts to Market
Technology as a Service
Advanced Technology Services Wafer Services
Scientific Research Technology Development Product Development Manufacturing
Expanding boundaries of Co-dependent device and process Products designed on mature Qualified products produced
current principles of R&D process technologies – little to for commercial or mission
understanding no process R&D integration
University/
Government Lab
TaaSSM Customer Funded Device and
Process R&D $$$
PDK Driven Designs & Customer
Developed Process Flows
Technology and Product Level
Differentiation
Conventional Self Funded $$$ PDK Driven Designs
Predominantly Product Level
Differentiation
Foundry
Low Technology Readiness Level High
ProprietaryDiverse Vertical Markets
Served by Differentiated Platforms
Aerospace Industrial Automotive & Advanced
& Defense Bio- Computing Consumer
and IoT Transportation
Health
TaaSSM model supports disruptive trends across markets
TaaSSM feeds recurring revenue through differentiated engagements
Advanced Technology Services form “sticky” customer relationships
Proprietary 11Diverse Markets and Technologies
Enable Rapid Growth
Aerospace & Advanced Automotive &
Platform Bio-Health Consumer Industrial / IoT
Defense Computing Transportation
Mixed Signal ● ● ● ● ●
Rad-Hard ● ●
Discrete Power ● ● ● ●
Advanced
Packaging ● ● ● ● ● ●
Superconducting ● ●
3DSoCs ● ● ● ● ● ●
Silicon Photonics ● ● ● ●
MEMS ● ● ● ●
ProprietaryTechnology Categories
Mixed-Signal Rad-Hard MEMS Power Superconducting Photonics Carbon Advanced
CMOS Leading Microfluidics Discrete Foundry service Capabilities for Nanotubes Packaging &
Flexible Solutions Strategic Rad- MOSFET provider for quantum passive photonic CNT enabled Interposers
for Commercial & Hard Solutions Microbolometers Differentiated and supercomputing device integration 3DSoC for AI and Capabilities for
Defense Flows applications edge computing passive and active
Support for IGBTs, solutions for high
TVSs performance
applications
Connected Devices, Sensors and Sensor Integration Advanced Computing & Artificial Intelligence
Proprietary 13Select Partners & Customers
Strategic Technology Partners Customers
Proprietary 14Financial
Summary
Proprietary 15Demonstrated ATS Growth
ATS Revenue by Customer
43% Revenue growth in 2020
Each color band is a distinct customer
ATS revenues exceed Wafer Services
revenues for first time in 2020
Average ATS program spend grew by
66% since March 2017
2017 2018 2019 2020
Proprietary 16Increasing Revenue Diversity
Reflects TaaSSM Adoption
Revenue Trend
Advanced Technology Services (ATS)
More customers developing technology
and existing programs expanding in scope
Wafer Services
Stronger mix of customers, full capacity
and higher margin products in production
Infrastructure
Customers invest in facilities and 2017 2018 2019 2020
equipment for technology and process 10 Mo
development Cypress/Infineon Non-Cypress/Infineon
Proprietary 17TaaSSM Model Addresses Strong Demand
2017 2020
At time of spin off
ATS
1% Wafer
Services
33%
Wafer
Services ATS
99% 67%
Proprietary 18Financial Model
2020 TTM Q2 2021
Sales $140M $162M $41M
Non-GAAP Gross
Margin % 17% 15% 7%
Adj EBITDA Margin % 10% 7% (2)%
Proprietary 19Q2 2021 Financial Summary
In USD millions Q2 21 Q2 20 Y/Y • Net Sales growth of 34% driven by
strong ATS and WS performance
ATS Sales $26.9 $19.9 35%
• Gross profit decreased due to ramping
Wafer Services Sales $14.3 $10.9 31% WS and investments in radhard and
advanced packaging
Net Sales $41.2 $30.8 34%
• Adjusted EBITDA declined reflecting
Non-GAAP Gross Profit $3.0 $5.6 (47) % gross profit flow through and increased
operating expenses
Non-GAAP Gross Margin 7.2% 18.1% (1,090) bps • Cash and equivalents of $64.6M
Adjusted EBITDA $(0.8) $2.5 (133)% • CapEx of $7.7M
• $28.9M remaining on $65M revolver
Adjusted EBIDTA margin (2.0)% 8.0% (1,000) bps
Proprietary 20Multiple Drivers of Future Revenue
and Margin Growth
Extreme Environment Point of Care Diagnostics High Performance Power
Advanced Packaging
Microelectronics & Genetic Sequencing Management & IoT
Execute on 90 nm FDSOI Execute existing programs; Increase penetration with TaaS Enable leading-edge power
technology commercialization for fill pipeline with ATS opportunities; Automotive
model & markets that
in high-value management and custom
rad-hard and high temperature drive customers into Wafer Transportation
require custom integration services connectivity solutions across
applications Service production projects markets
EXTEND A&D CORE MARKETS
into high-growth, high-margin commercial markets through strategic customer partnerships
Proprietary 21Investment Highlights
01
High-Margin ATS Combined with Wafers Services Creates a Scalable Business Model
02 Uniquely Positioned to Serve Megatrends:
Artificial Intelligence, Electrification, Medical Implants, Rapid Disease Screening, 5G/6G
Communications, Commercialization of Space
03
Seasoned Management Team with Decades of Industry Experience
04
Large, High-Growth Markets with Long-Term Secular Tailwinds
05 Multiple Levers to Drive Continued Growth:
Disruptive Technologies, Customer Driven Technology Development, Sticky Technology
Partnerships, Differentiated High Margin Volume Manufacturing
ProprietaryGAAP to Non-GAAP Reconciliation We provide supplemental non-GAAP financial information that our management utilizes to evaluate our ongoing financial performance and provide additional insight to investors as supplemental information to our U.S. GAAP results. We provide non-GAAP gross profit, non-GAAP gross margin, non-GAAP net loss to shareholders, and non-GAAP net loss per share. We provide these non-GAAP financial measures because we believe this non- GAAP presentation provides a baseline for analyzing trends in our business and to exclude certain items that may not be indicative of our core operating results and for the other reasons described in the footnotes to the tables below. 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 our non-GAAP measures are not determined in accordance with U.S. GAAP, these measures are susceptible to differing calculations, and not all comparable or peer companies may calculate their non-GAAP measures in the same manner. We also provide adjusted EBITDA and adjusted EBITDA margin as supplemental non-GAAP measurements. We define adjusted EBITDA as net income or loss before interest expense, income tax provision (benefit), depreciation and amortization, equity-based compensation and certain other items that we do not view as indicative of our ongoing performance, including Paycheck Protection Program loan forgiveness, corporate conversion and initial public offering costs, SkyWater Florida start-up costs, management transition expense, fair value changes in contingent consideration, fair value changes in warrants and management fees. We believe adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of our operating performance when compared to our peers, without regard to our financing methods or capital structure. We exclude the items listed above from net income or loss in arriving at adjusted EBITDA because these amounts can vary substantially within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income determined in accordance with U.S. 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 costs 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 presentation 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 U.S. GAAP, to our non-GAAP financial measures.
GAAP to Non-GAAP Reconciliation
ProprietaryGAAP to Non-GAAP Reconciliation
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