Record Revenues for both Q4 and Fiscal Year

BLOOMINGTON, Minn. — (BUSINESS WIRE) — February 13, 2023 — SkyWater Technology (NASDAQ: SKYT), the trusted technology realization partner, today announced financial results for the fourth quarter and full year 2022, ended January 1, 2023.

Highlights for Q4 2022:

• Revenue increased 69% year-over-year to a record $65.1 million.
• Gross margin increased to 25.4% on a GAAP basis, compared to (43.1)% in Q4 2021, and increased to 26.2% on a non-GAAP basis, compared to (6.1)% in Q4 2021.
• Net loss to shareholders of $3.0 million, or $(0.07) per share on a GAAP basis, and net loss to shareholders of $1.5 million, or $(0.03) per share on a non-GAAP basis.
• Adjusted EBITDA of $10.3 million, or 15.9% of revenue.

Highlights for Fiscal 2022:

• Revenue increased 31% year-over-year to a record $212.9 million.
• Gross margin increased to 12.2% on a GAAP basis, compared to (4.6)% in 2021, and increased to 13.7% on a non-GAAP basis, compared to 2.0% in 2021.
• Net loss to shareholders of $39.6 million, or $(0.97) per share on a GAAP basis, and net loss to shareholders of $30.3 million, or $(0.74) per share on a non-GAAP basis.
• Adjusted EBITDA of $7.7 million, or 3.6% of revenue.

“We are pleased to enter 2023 with growing momentum,” said Thomas Sonderman, SkyWater president and chief executive officer. “2022 was a year in which we achieved a number of our key strategic objectives, including strong revenue growth exceeding our long-term target of 25%, the significant expansion and improved visibility of our pipeline of ATS programs and partnerships and improved operational execution. As these materialized in 2022, we were able to demonstrate the significant operating leverage of our model, generating strong gross margin flow-through and positive adjusted EBITDA.”

Sonderman continued, “As we look ahead, we have a new expected baseline for quarterly revenues of approximately $60 million from which to grow. This is a significant achievement compared to this time last year, a testament to the team’s improved execution driving increased factory efficiency and productivity, along with better pricing in our Wafer Services business. This new baseline, as we enter a challenging macroeconomic environment in 2023, provides the foundation for yet another strong growth year in which we believe we can again achieve revenue growth approaching our long-term target of 25% annually. We believe the growth we expect to achieve in 2023 is largely de-coupled from areas of macroeconomic weakness, as we expect to expand our revenue base above the $60 million level with established, funded and relatively secure ATS programs.”

2022 Business Highlights:

• Significant progress on the RH90 program, including completion of the base prototype phase, receipt of the $99 million Phase 2 award for productization and qualification, and the securing of additional options and partnerships that firmly establish SkyWater’s role in the important RadHard ecosystem.
• Landmark partnership announced with the State of Indiana and Purdue University to build advanced $1.8 billion semiconductor fab.
• Receipt of a $36 million grant awarded to Osceola County by the U.S. Economic Development Administration to complete facilitization of our Florida facility, with SkyWater the only semiconductor company beneficiary of this Build Back Better award.
• Strong momentum toward building a stronger domestic semiconductor ecosystem through the CHIPS Act, which successfully passed in August, and for which SkyWater expects to be a key beneficiary for years to come.
• The execution of more favorable terms with our largest historical customer, including increased pricing, improved predictability and visibility and a larger, more profitable base of business from which to grow.
• Important new customer partnerships and progress announced with Google, NanoDX, Weebit Nano, Trusted Semiconductor, Quicklogic, and others as well as in heterogeneous integration programs such as IBAS and our partnerships with DECA and Adeia.
• Conclusion of a fixed revenue government program in Q4, ahead of the original schedule, resulted in a one-time non-cash revenue recognition event of $4.7 million, driving upside in ATS revenue and, given no associated cost of revenue, flowed through directly to gross profit and EBITDA for Q4.
• Record results for both ATS and Wafer Services, driving revenues to $213 million for the year, with a significantly expanded gross margin profile and positive adjusted EBITDA generation.
• Expansion of our access to capital through $250 million shelf registration (with $19 million in net equity proceeds raised to date) and new $100 million senior secured revolving credit facility that expands our available borrowing capacity.

Q4 2022 Summary: