Record Net Sales of $48 Million

SkyWater Technology (NASDAQ: SKYT) today announced financial results for the first quarter of 2021, ended April 4, 2021.

• Net sales grew 30% year-over-year to $48.1 million
• Net loss to shareholders of $2.8 million, or (6%) of net sales
• Adjusted EBITDA of $5.6 million, or 12% of net sales

“SkyWater delivered record net sales in our first quarter driven by continued growth in our Advanced Technology Services (ATS) business,” said SkyWater Technology president and chief executive officer Thomas Sonderman. “Our Minnesota fab is ramping automotive and IoT-related production activities as we see significant increases in demand while continuing to transition customers from ATS into volume Wafer Services. During the quarter we also engaged with several new partners in both our ATS business and as part of our 130 nanometer (nm) mixed-signal offering.”

Mr. Sonderman continued, “The start-up of SkyWater’s Advanced Packaging fab in Florida is progressing as planned with the existing Department of Defense program commencement underway. Completing our initial public offering in April, while delivering a strong quarter, is a testament to the dedication and tenacity of SkyWater’s employees as we co-create the next generation of disruptive technologies with our customers.”

Q1 2021 Results:

• Net Sales: Net sales of $48.1 million increased 30% year-over-year. Advanced Technology Services sales of $38.1 million increased 61% and Wafer Services sales of $10.0 million decreased 25% compared to the first quarter of 2020.
• Gross Profit: Gross profit was $9.2 million, or 19% of sales, compared to $6.4 million, or 17% of sales, in the first quarter of 2020.
• Net Loss: Net loss to shareholders of $2.8 million, or (6%) of sales, compared to a net loss to shareholders of $1.4 million, or (4%) of sales, in the first quarter of 2020.
• Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was $5.6 million, or 12% of sales, compared to $5.3 million or 14% of sales in the first quarter of 2020.

A reconciliation between historical GAAP and non-GAAP information is contained in the tables below in the section titled "Non-GAAP Financial Measures."

Recent Business Highlights:

• Completed our initial public offering and began trading on the NASDAQ market on April 21, 2021. Net proceeds from the IPO were approximately $100 million.
• Our subsidiary, SkyWater Florida, launched operations of a state-of-the-art advanced packaging facility, through agreements with the government of Osceola County Florida, and ICAMR, Inc., a Florida non-profit, on January 25, 2021.
• Launched the first Google-sponsored open-source 130 nm multi-project wafer (MPW) shuttle.
• Expanded Wafer Services support for Leonardo DRS with an accelerated production ramp of thermal imaging products.
• Began processing copper interconnects in our newly commissioned fab in support of developing radiation-hardened process technology (RH90).

Investor Webcast

SkyWater will host a conference call on Wednesday, May 19, 2021, at 9:00 a.m. CT to discuss its first quarter financial results. A live webcast of the call will be available online at ir.skywatertechnology.com.

About SkyWater Technology

SkyWater is a U.S.-owned and U.S.-based pure play semiconductor foundry and is a DOD-accredited Trusted supplier, specializing in custom technology development services, volume manufacturing, and advanced packaging capabilities. Through its Technology Foundry model, SkyWater’s world-class operations in Bloomington, Minnesota and Kissimmee, Florida provide unique processing capabilities to enable quality production and advanced packaging for mixed-signal CMOS, power, rad-hard and ROIC solutions. SkyWater’s Advanced Technology Services empower development of superconducting and 3D ICs, along with carbon nanotube, photonic and MEMS devices. The company serves customers in growing markets such as aerospace & defense, automotive, biomedical, cloud & computing, consumer, industrial and IoT. Please visit www.skywatertechnology.com/ for more information.

Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements that are based on the Company’s current expectations or forecasts of future events, rather than past, events and outcomes, and such statements 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 are subject to risks, uncertainties and assumptions, which may cause the Company’s actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Key factors that could cause the Company’s 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 ability to continue operating our sole semiconductor foundry at full capacity; our ability to appropriately respond to changing technologies on a timely and cost-effective basis; 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; our expectations regarding dependence on our largest customer; the performance and reliability of our third-party suppliers and manufacturers; our ability to control costs, including our operating and capital expenses; the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets; the level of demand in our customers’ end markets; our ability to attract, train and retain key qualified personnel; adverse litigation judgments, settlements or other litigation-related costs; changes in trade policies, including the imposition of tariffs; our ability to raise additional capital or financing; our ability to accurately forecast demand; 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 the Company filed with the SEC on April 22, 2021 and in other documents that the Company files with the SEC, which are available at http://www.sec.gov. The Company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

Source String: SkyWater Technology

SKYT-IR

Non-GAAP Financial Measures

The following table presents a reconciliation of net loss to adjusted EBITDA, our most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Adjusted EBITDA

Adjusted EBITDA is not a financial measure determined in accordance with U.S. GAAP. 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 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.

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