Intevac Announces Appointment of Houlihan Lokey to Evaluate Strategic Options

Intevac, Inc. (Nasdaq: IVAC), a leading supplier of thin-film processing systems, announced today that the Company has retained investment banking firm Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) to advise management and the board of directors on strategic alternatives. Additionally, the board has formed a strategic committee comprised of independent directors David Dury and Kevin Barber to work with management and Houlihan Lokey in evaluating options to increase stockholder value.

“The ongoing challenges within the hard disk drive (HDD) industry resulted in the unprecedented cancellation of $54 million in 200 Lean system orders late last month,” commented Nigel Hunton, president and chief executive officer. “In our nearly 20 years of supplying these industry-leading media processing tools, this is the very first time one of our customers has elected to cancel an order. Our purchase order terms with this customer include very specific contractual protections related to our working capital exposure, and these include not only advanced deposits to fund the receipt of long-lead-time materials, but all inventory related to these systems. As we discussed on our Q1 earnings call, we previously made commitments to our suppliers that are resulting in continued material receipts for HDD systems year-to-date. These material receipts will continue through the second quarter, which will further increase our HDD inventory levels from Q1 levels, and therefore will have a temporarily negative impact on cash at the end of Q2, yet it is critical to communicate that any material receipts not already funded by advanced deposits will be funded by our customer, and not by Intevac.”

Given that Intevac expects to have no exposure to inventory risk related to these cancelled systems, today the Company has reaffirmed its prior outlook reported on the Company’s earnings call held on May 3, 2023 that the expected balance of cash, restricted cash, and investments at its fiscal 2023 year-end will be in the range of $75 to $80 million. Furthermore, today the Company is providing updated guidance for full-year 2023 revenue, which is now expected to be in the range of $43 to $48 million, and is expected to be comprised of one 200 Lean system, HDD service, and HAMR upgrades. This revised revenue outlook for fiscal 2023 does not include any customer payments for inventory, as the accounting treatment will require these payments to be recorded as pass-through revenue.