SkyWater Technology, Inc.

Good morning. My name is David and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Skywater Technology fourth quarter fiscal year 2021 earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one once again. Thank you, Heather Davis, Investor Relations. You may begin your conference.

Good morning, and welcome to Skywater's fourth quarter fiscal 2021 conference call. With me on the call today from Skywater are Thomas Sonderman, President and Chief Executive Officer of and Steve Manko, Chief Financial Officer. I'd like to remind you that our call is being webcast live on Skywater's Investor Relations website at ir.skywatertechnology.com. The webcast will be available for replay shortly after the call concludes. During the call, any statements made about our future financial results and business are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially. For discussion of these risks and uncertainties, please refer to our filings with the Securities and Exchange Commission, including our earnings release filed on Form 8K yesterday and our prospectus filed April 22nd, 2021. All forward-looking statements are made as of today, and we assume no obligation to update any such statements. During this call, we will discuss non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings release, which is available on our Investor Relations website. Unless noted, all comparables referenced today are versus the prior year, our fourth quarter of fiscal 2020. With that, let me turn the call over to Tom.

Thank you, Heather, and good morning to everyone on the call. Today, I will briefly cover our high-level Q4 financial results and then highlight the exciting dynamics we see in our business, including the progress we are making on some of the emerging technologies expected to drive our long-term growth. Total revenue in the fourth quarter was up 15% year-over-year, excluding the $2.5 million benefit of the extra operating leak in Q4 2020 and tool revenue in both Q4 this year and last year. On a reported basis, total revenue of $38.5 million decreased 3% year-over-year. Skywater continues to win new business, signing nine new advanced technology programs in the fourth quarter. Our customer count has increased by over 70% from our IPO in April. In addition, our sales pipeline grew by over 50% in 2021. Non-GAAP cost of revenue of $40.4 million increased 16% year-over-year. This increase was driven by more activities, labor inflation, supply chain constraints, and investments in our strategic platforms. As demand for our technology as a service model increases, we have continued to hire at our fabs to support increased activities. In addition to headcount increases, Skywater, like others in the semiconductor industry, is seeing wage inflation. The supply chain for substrates, equipment, chemicals, and gases remains congested with rising prices. In Q4, for both wafers and nitrogen, we added additional sources at a higher cost to complement the output from our primary suppliers. Our cost of revenue also contains strategic long-term investments in our radiation-hardened and heterogeneous integration platforms. In addition, we have continued R&D investments to build capabilities in our targeted growth platforms, including Power. We also continued to aggressively expand our sales team and transition to a public company, both of which increased SG&A. Adjusted EBITDA was negative $4.9 million in the fourth quarter. Now I will provide an update on our four growth areas. The six biohealth programs, one and Q2 of this year, continue to move rapidly through our task funnel in preparation for market entry. These programs are expected to enable novel innovations in rapid diagnostics, genetic sequencing, and various consumer and clinical medical device applications. Last month, Rockley Photonics announced the result of a study demonstrating their non-invasive wrist-worn sensor. This is a major milestone towards incorporation of Rockley's unique biomarker platform into consumer health wearables devices. Several of our other BioHealth customers have significant commercial and regulatory milestones planned for 2022. We remain highly enthusiastic about our strong pipeline for BioHealth as we continue to demonstrate Skywater's differentiated capabilities in this rapidly growing market. Earlier this year, we announced that through an ATS collaboration with our customer Applied Novel Devices, our A&D, we achieved an industry breakthrough in power MOSFET performance. By using a novel channel and gate structure that substantially reduces parasitic switching losses, we have co-created a new class of power MOSFETs that pushes the viability of silicon-based switching into a higher frequency range often written off as only serviceable by wide bandgap technologies. This new technology will deliver higher efficiency for voltage and signal conversion in a wide range of industrial power management applications, including switch mode power supplies. We are currently working with A&D and their initial customer to prepare for the production ramp of these new devices and the expected new revenue for our wafer services business. As part of our technology licensing agreement with A&D, Skywater is building a reference design platform using this new device class. With this capability, Skywater can directly engage with a host of other power management companies, allowing us to hasten the adoption of this exciting new green technology across the industry. We continue to make good progress in all three elements of our heterogeneous integration technology roadmap, which we previously referred to as advanced packaging. This includes silicon interposers, wafer bonding, and fan-out wafer-level packaging. We achieved first full-flow production earlier this month, an important customer milestone for our silicon interposer program. We expect to achieve the full qualification of our Phase I interposer in the first half of 2022. We are also planning for Phase II and Phase III milestones this year, which include TSV and RDL incorporation. The production readiness at our Florida facility, including the launch of our ISO 9000 and trusted accreditations, continues to rapidly advance after only one year of taking over the operation. A number of exciting new engagements are also progressing well through our customer onboarding process, driving additional revenue for the site in 2022. In November, we established our presence in Indiana at Westgate at Crane Technology Park, adjacent to Crane Naval Center. Navy Crane is a naval laboratory and a field activity of Naval Sea Systems Command. The center is responsible for multi-domain, multi-spectral, full lifecycle support of technologies and system enhancing capabilities while serving as the lead in the United States' trusted, assured microelectronics program. Our physical proximity to Navy crane at this growing epicenter for the Department of Defense's microeconomics community continues to cement Skywater's role as the trusted foundry partner. During the fourth quarter, we achieved an important milestone with our RH-90 technology platform by delivering encouraging radiation performance test results on our first fully integrated wafers with copper interconnects. The eventual production of these highly valued Rad Heart ASICs is of national importance for both space-based and defense applications, and Skywater continues to play a crucial role in its enablement. On Tuesday, January 25th, the United States House of Representatives took an important action in advancing the federal funding for reshoring in the semiconductor industry that had previously been passed by the U.S. Senate and referred to as the CHIPS Act. We are encouraged by the government's continued focus on incentives for domestic microchip fabrication, research and development, and heterogeneous integration. The Skywater team continued to assist the U.S. government by responding to the Department of Commerce's request for input and administering a CHIPS-like grant program. Additionally, we continue to enjoy increased support from our state leaders in Minnesota, Florida, and Indiana, where we have ongoing dialogues with the governors in these states to articulate Skywater's requirements for expanding in-state STEM talent and creating a vigorous high-tech business environment. We intend to be a leader in rebuilding our nation's manufacturing infrastructure for the advanced technologies that will be the major drivers in our industry for years to come. The amazing work being done by the employees of Skywater is critical to our customers, our shareholders, and our nation. We will continue to decisively invest in our rad-hard power and heterogeneous integration platforms to fuel future growth and further our ability to co-create the technologies of the future with our customers in a post-Moores Law era. For 2022, we expect revenue growth near our long-term goal of 25%. This is supported by 50% year-over-year growth in our sales pipeline, strong program design wins throughout 2021, and the expected movement of our radiation-hardened platform later this year to the prioritization phase. The expected revenue growth in 2022, coupled with the company's robust strategies to mitigate current supply chain dynamics, are expected to position us well for gross margin expansion later this year. I will now turn the call over to Steve for more information on Skywater's financial performance in our recently completed quarter. Steve?