skyt-20240331

2024Q10001819974December 29falsehttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrentFair Value Measurements

Fair value represents the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. To determine fair value, the Company uses a fair value hierarchy categorized into three levels based on inputs used. Generally, the three levels are as follows:

•Level 1 – Quoted prices in active markets for identical assets or liabilities;

•Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying values of accounts receivable, accounts payable, accrued liabilities, and other financial working capital items approximate fair values at March 31, 2024 and December 31, 2023 due to the short maturity of these items. The carrying amount of the borrowing under the Revolver approximates its fair value due to the frequency of the floating interest rate resets on the debt. The fair value of the Revolver was determined based on inputs that are classified as Level 2 in the fair value hierarchy.

The Company’s non-financial assets, such as property and equipment and intangible assets, are recorded at fair value upon acquisition and are remeasured at fair value only if an impairment charge is recognized.

As of March 31, 2024 and December 31, 2023, the Company did not have any assets or liabilities measured at fair value on a non-recurring basis.

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x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Delaware			37-1839853
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


		Page No.

Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION		4

Item 1.	Condensed Consolidated Financial Statements (unaudited)	4

	Condensed Consolidated Balance Sheets	4

	Condensed Consolidated Statements of Operations	5

	Condensed Consolidated Statements of Shareholders ’ Equity	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management ’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION		36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37


	March 31, 2024		December 31, 2023

	(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents	$	20,002	$	18,382
Accounts receivable (net of allowance for credit losses of $96 and $180, respectively)	57,895		65,961
Contract assets (net of allowance for credit losses of $62 and $99, respectively)	24,922		29,666
Inventory	15,558		15,341
Prepaid expenses and other current assets	24,528		16,853
Income tax receivable	82		172
Total current assets	142,987		146,375
Property and equipment, net	157,281		159,367
Intangible assets, net	6,320		5,672
Other assets	5,693		5,342
Total assets	$	312,281	$	316,756
Liabilities and shareholders’ equity
Current liabilities
Current portion of long-term debt	$	3,631	$	3,976
Accounts payable	25,919		19,614
Accrued expenses	30,512		48,291
Short-term financing, net of unamortized debt issuance costs	32,612		22,765
Contract liabilities	56,109		49,551
Total current liabilities	148,783		144,197
Long-term liabilities
Long-term debt, less current portion and net of unamortized debt issuance costs	35,665		36,098

Long-term contract liabilities	58,605		65,754
Deferred income tax liability, net	623		679
Other long-term liabilities	9,204		9,327
Total long-term liabilities	104,097		111,858
Total liabilities	252,880		256,055
Commitments and contingencies (Note 10)
Shareholders’ equity
Preferred stock, $0.01 par value per share (80,000,000 shares authorized; zero shares issued and outstanding as of March 31, 2024 and December 31, 2023)	—		—
Common stock, $0.01 par value per share (200,000,000 shares authorized; 47,338,069 and 47,028,159 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)	473		470
Additional paid-in capital	181,802		178,473
Accumulated deficit	(130,932)		(125,203)
Total shareholders’ equity, SkyWater Technology, Inc.	51,343		53,740
Noncontrolling interests	8,058		6,961
Total shareholders’ equity	59,401		60,701
Total liabilities and shareholders’ equity	$	312,281	$	316,756


	Three-Month Period Ended
	March 31, 2024		April 2, 2023

	(in thousands, except share and per share data)
Revenue	$	79,636	$	66,094
Cost of revenue	66,656		49,626
Gross profit	12,980		16,468
Research and development expense	4,012		2,668
Selling, general, and administrative expense	11,169		14,895

Operating loss	(2,201)		(1,095)


Interest expense	(2,390)		(2,471)

Loss before income taxes	(4,591)		(3,566)
Income tax expense	41		—
Net loss	(4,632)		(3,566)
Less: net income attributable to noncontrolling interests	1,097		707
Net loss attributable to SkyWater Technology, Inc.	$	(5,729)	$	(4,273)
Net loss per share attributable to common shareholders, basic and diluted	$	(0.12)	$	(0.10)
Weighted average shares used in computing net loss per common share, basic and diluted	47,098,519		43,817,417


	Preferred Stock	Common Stock		Additional Paid-in Capital			Accumulated Deficit	Total Shareholders’ Equity, SkyWater Technology, Inc.			Noncontrolling Interests		Total Shareholders’ Equity
			Shares			Amount				Shares					Amount
Balance at January 1, 2023			—	$	—		43,705	$	437		$	147,304	$	(94,072)		$	53,669	$	308	$	53,977
Adoption of new accounting principle			—	—			—	—			—		(375)			(375)		—		(375)
Issuance of common stock under the ATM			—	—			245	3			2,693		—			2,696		—		2,696
Issuance of common stock pursuant to equity compensation plans			—	—			330	3			2,914		—			2,917		—		2,917
Equity-based compensation			—	—			—	—			1,853		—			1,853		—		1,853
Net distribution to VIE member			—	—			—	—			—		—			—		(30)		(30)
Net (loss) income			—	—			—	—			—		(4,273)			(4,273)		707		(3,566)
Balance at April 2, 2023			—	$	—		44,280	$	443		$	154,764	$	(98,720)		$	56,487	$	985	$	57,472

Balance at December 31, 2023			—	$	—		47,028	$	470		$	178,473	$	(125,203)		$	53,740	$	6,961	$	60,701




Issuance of common stock pursuant to equity compensation plans			—	—			310	3			1,257		—			1,260		—		1,260
Equity-based compensation			—	—			—	—			2,072		—			2,072		—		2,072

Net (loss) income			—	—			—	—			—		(5,729)			(5,729)		1,097		(4,632)
Balance at March 31, 2024			—	$	—		47,338	$	473		$	181,802	$	(130,932)		$	51,343	$	8,058	$	59,401


	Three-Month Period Ended March 31, 2024
	Topic 606 Revenue
	Point-in-Time		Over Time		Lease Revenue Per Topic 842		Total Revenue

ATS development
Time and materials contracts	$	—	$	42,496	$	—	$	42,496
Fixed price contracts	—		17,522		—		17,522
Other	—		—		1,167		1,167
Total ATS development	—		60,018		1,167		61,185
Tools	8,459		—		—		8,459
Wafer Services	1,145		8,847		—		9,992
Total	$	9,604	$	68,865	$	1,167	$	79,636


	Three-Month Period Ended April 2, 2023
	Topic 606 Revenue
	Point-in-Time		Over Time		Lease Revenue Per Topic 842		Total Revenue

ATS development
Time and materials contracts	$	—	$	27,295	$	—	$	27,295
Fixed price contracts	—		19,308		—		19,308
Other	—		—		1,167		1,167
Total ATS development	—		46,603		1,167		47,770
Tools	536		—		—		536
Wafer Services	3,950		13,838		—		17,788
Total	$	4,486	$	60,441	$	1,167	$	66,094


	March 31, 2024						December 31, 2023
	Contract Deferred Revenue (1)		Lease Deferred Revenue		Total Contract Liabilities		Contract Deferred Revenue (1)		Lease Deferred Revenue		Total Contract Liabilities

Current	$	51,441	$	4,668	$	56,109	$	44,883	$	4,668	$	49,551
Long-term	57,828		777		58,605		63,810		1,944		65,754
Total	$	109,269	$	5,445	$	114,714	$	108,693	$	6,612	$	115,305


	Three-Month Period Ended
		March 31, 2024		April 2, 2023

United States		$	76,224	$	58,202
Canada		2,233		2,388
Hong Kong		47		3,019
United Kingdom		285		104
All others		847		2,381
Total		$	79,636	$	66,094


	Three-Month Period Ended
	March 31, 2024		April 2, 2023

Balance at beginning of period	$	115,305	$	96,153
Revenue recognized included in the balance at the beginning of the period	(12,686)		(6,020)
Increase due to payments received, excluding amounts recognized as revenue	12,095		775
Balance at end of period	$	114,714	$	90,908


	Three-Month Period Ended
Allowance for credit losses - Accounts receivable		March 31, 2024		April 2, 2023

Balance at beginning of period		$	180	$	1,638
Add
Adoption of Credit Loss Standard (Topic 326)		—		168
Provision for credit losses		(84)		2,102
Deduct
Accounts written-off		—		—
Less recoveries of accounts charged-off

SEC Form 10-Q filed by SkyWater Technology Inc.