Good day, and welcome to the Intevac 2nd quarter 2021 financial results conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference call is being recorded today, August 2nd, 2021. At this time, I would like to turn the call over to Claire McAdams, Investor Relations for Intevac. Please go ahead. Thank you, and good afternoon, everyone. Thank you for joining us today to discuss Intevac's financial results for the 2nd quarter of 2021, which ended on July 3rd. In addition to discussing our company's recent results, we will discuss our outlook looking forward. Joining me on today's call are Wendell Blonigan, President and Chief Executive Officer, and Jim Moniz, Chief Financial Officer. Wendell will start with a review of our business and our current outlook. Jim will review 2nd quarter results and provide further details regarding our financial outlook before turning the call over to Q&A. I'd like to remind everyone that today's conference call contains certain forward-looking statements, including but not limited to, statements regarding financial results for the company's most recently completed fiscal quarter, which remains subject to adjustment in connection with the preparation of our Form 10-Q, as well as comments regarding future events and projections about the future financial performance of Intevac. These forward-looking statements are based upon our current expectations, and actual results could differ materially as a result of various risks and uncertainties relating to these comments and other risk factors discussed in documents filed by us with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q. The content of this August 2nd call includes time-sensitive forward-looking statements that represent our projections as of today. We undertake no obligation to update the forward-looking statements made during this conference call. I'll now turn the call over to Wendell. Thanks, Claire, and good afternoon. Today, we reported 2nd quarter revenue that exceeded our guidance, primarily as a result of an acceleration of technology upgrades by our hard disk drive or HDD customers. In June, we announced a record HDD upgrade order of $10 million, which we began shipping against before the end of June, providing upside to our Q2 revenue. This order also drove the majority of the $15 million increase in backlog in our thin film equipment, or TFE business, during the quarter. In Photonics, we announced two new development awards in June, bringing our new IVAS Phase 1 development award count to three as of today. These latest awards are targeted at improving the night vision performance of the IVAS headset. During the quarter, IVAS-related investments exceeded our forecast by approximately $1 million, which resulted in Q2 gross margins coming in about 450 basis points below guidance. However, we successfully managed our cash and discretionary spending during this challenging period, and our net loss per share was a little better than expected. Notably, we improved upon our already strong balance sheet, generating positive cash flow from operations and ending the 2nd quarter with $54.1 million in total cash and investments, an increase of $3.8 million since year-end 2020. During the quarter, we, as most companies, began to feel the impact of semiconductor component shortages, as well as supply chain constraints. These factors are impacting lead times in our equipment business and volume production levels in Photonics. We exited Q1 knowing that the next couple of quarters would be our most challenging in over five years, but the major initiatives underway in both TFE and Photonics position us for growth ahead in 2022. In Q2, we continued to make progress on a number of fronts. Which brings me to a review of each of our businesses, starting with our TFE hard drive media business. For the fourth straight quarter, market demand for hard drives in Q2 again well outpaced expectations, with close to 4 million additional drives shipping in the quarter versus the TRENDFOCUS forecast from May. In their preliminary Q2 report published on July 14th, they said the extremely active nearline market resulted in record unit and capacity shipments for this category, totaling approximately 19 million units and 240 exabytes respectively. They also reported that entering Q2, hyperscale expansion was well underway at some of the major cloud companies, and OEM demand for traditional IT was trending ahead of earlier forecasts, creating a demand environment which HDD vendors scrambled to meet. At that point, channel demand for high-capacity drives spiked as the hype surrounding the Chia cryptocurrency launch threw the nearline market into extreme allocation. While TRENDFOCUS hasn't yet published a revised short-term forecast for the next four quarters or a long-term forecast for the next five years, their July report did indicate that demand for nearline HDDs should continue to improve through the 3rd and fourth quarters. While the initial hype around Chia has cooled somewhat, channel demand for nearline hard drives remains strong. The supply is tight. Importantly for Intevac, the discussions with our customers to add media capacity resumed during the 2nd quarter. Whereas earlier in the year, we reported on delays in our customers' capacity expansion plans. Those discussions ramped up again in Q2. The delivery schedule for 200 Lean in the 2022 and 2023 timeframe is now beginning to take shape. Keep in mind, our supply chain remains constrained, and lead times for 200 Lean have stretched from six to now eight months. This means that orders commencing in Q4 will see deliveries beginning in the 2nd half of 2022. These capacity expansion plans are with multiple customers, and our 200 Lean shipments through 2023 are currently expected to be at their highest level since 2010. Based on these expansion plans, we're forecasting strong growth ahead for our HDD media business in both 2022 and 2023. As for technology upgrades, we reported on the pull-in of upgrade sales into Q2, but for the year overall, our expectations have not changed. The takeaway is that the hard drive industry fundamentals are very strong, driven primarily by demand for mass capacity drives, and that while 2021 was a low point for us relative to the last five years, we have a very strong forecast for future growth in our HDD business. Now turning to the Vertex. As I reported last quarter, our primary objective in our Vertex initiative is to gain initial adoption of our DiamondClad protective coating and to convert the systems under evaluation into orders and revenue. We made progress on both fronts during Q2, and today we have increasing confidence that we'll be able to announce tool orders in 2021, and that the overall Vertex program continues to play an important role in our longer-term growth strategy. In our demo activity, we've been driving multiple programs. These include programs for cell phone cover glass protection, functional protective coatings for wearables, decorative back cover glass applications, and augmented reality component functionality. Furthest along at this point is our program to protect wearables. We are currently in the final stages of qualification prior to a decision of adoption. All the functional performance specifications have been met, and we are now focusing on optical adjustments. If adopted, we would anticipate tool bookings this year. Next, the protective cover glass project is proceeding well, and we have passed the 1st performance testing targeted to ensure that by adding our DiamondClad films to significantly improve the scratch resistance of the cover glass, there is no degradation in the breakage performance. I would call this phase of the testing as 1st, do no harm. We have validated that in ring-on-ring and four-point bend testing, our films, while significantly improving the scratch resistance, do not degrade the breakage resilience of the glass. While this project will take some time to move through the testing and qualification, we are optimistic as the handset maker engaged with us late last year after witnessing the impressive scratch resistance of our latest version of protective coatings. The augmented reality initiative continues to move along, and we delivered our first set of device samples in Q2. At this point in time, we are less focused on decorative back cover glass applications as the industry has trended to solid colors on the back glass following current iPhone designs. Turning now to the MATRIX. Last quarter, we discussed our first revenues in the advanced semiconductor packaging market, which was an important milestone in our efforts to expand our equipment business. In Q1, the tools qualified at our leading OSAT customer's R&D site, and its performance and cost of ownership benefits were validated. In Q2, our customer moved the MATRIX out of R&D and into the pilot manufacturing phase, which is an encouraging development in the roadmap to incorporate our solution for next-generation panel-level semiconductor manufacturing. Overall, our Q2 progress continues to indicate that the Vertex and MATRIX can add additional upside in revenue growth incremental to the strong long-term growth stories for HDD media and Photonics. Now turning to Photonics. For the past two years, our Photonics business has been heavily focused on the IVAS development program, and the final stage of that $32 million night vision camera development award was completed early in Q2. In 2021 to date, we have announced three Phase 1 incremental development awards for IVAS. The 1st targets continued operation of our current CMOS sensor, with the 2nd and 3rd targeting improved night vision performance of the IVAS headset. In mid-June, we attended the detection, recognition, and identification testing at Fort Pickett, Virginia, and had our 1st opportunity to wear an IVAS system with Intevac CMOS cameras fully integrated inside as observers of the tests. The experience was quite impressive and satisfying, culminating over two years of ground-up development work at breakneck pace. In Q2, we completed the shipment of cameras ordered beyond the initial cameras included in the development contract and have continued to work on optimizing our cameras integrated into the IVAS system. Today, the overarching questions are when IVAS will move into volume production, how the production ramp will scale, and the role Intevac Photonics will play in the overall IVAS program. We shed some light on the current status of our discussions in regards to the production program, starting with Soldier Touch Point 4 or STP 4, which was held in April, and at the time of our last call was under review. While details have been extremely limited, we think that additional challenges and hurdles of the overall program may remain to be resolved prior to a decision for volume deployment. The Army's FY 2022 budget plan indicates that an order for 5,000 IVAS units was placed in March of this year. An additional 1,500 units were planned after STP 4, which at this time we cannot confirm occurred. Future orders covering the next 12 months of deliveries include only another 8,700 units after the operational testing has passed. Typically, the Army desires multiple sources for critical components on key programs. Given the small initial volumes, the cost of standing up and qualifying two production lines appears to be prohibitive, and at this time, we believe the initial units will be delivered by another company. Looking ahead, we believe the funding of the two recent phase I IVAS development programs are evidence that improved night vision performance is desired for the IVAS program. To reiterate from last quarter's call, Phase 1 awards are to take the project into the detailed design phase for down selection of the complete program execution phase. Our 1st Phase 1 award was to continue optimization of the existing CMOS sensor technology. However, the 2nd award is to develop a new higher performance CMOS sensor, and the 3rd is to enable Intevac's ISIE19 EBAPS technology to be integrated into the IVAS platform. Given the three development programs underway and the Army's investment in Intevac as a supplier for IVAS, we believe that we are an important long-term supplier for the IVAS program. For 2021, however, we're taking any meaningful IVAS production revenue out of our forecast. In programs outside of the IVAS initiative, our $5 million development contract for the U.S. Navy-funded Enhanced Visual Acuity program, or EVA, is running well, and we are meeting our milestones in support of the prime. This program supports the U.S. Navy and Marine Corps pilots in executing their missions more effectively under low light conditions. This program incorporates our latest ISIE19 sensor technology destined for rotary aircraft pilots applications beyond the Apache helicopter and can be a major growth driver in the future. The Delta-I program is also an important element of our Photonics business, where we are developing a fused digital night vision goggle incorporating advanced augmented reality capabilities. The program also incorporates our most advanced ISIE19 night vision sensor and supports the Coalition Warfare program for the special operation forces of the United States, Australia, Canada, and the United Kingdom. This program has pulled in due to the acquisition of critical components that are on allocation, and we should also have 1st operational units this year. In our volume production products, we continue to execute well on the Joint Strike Fighter contract. However, due to lead times of microcontrollers now surpassing 52 weeks, we have temporarily reduced shipment volumes until we can acquire the component or receive our next scheduled shipment to ensure there's no break occur in our production line. The key takeaway from Photonics is that we believe Intevac will be a key technology provider for the U.S. Army's IVAS platform, and that we are on multiple critical military programs providing the best digital night vision technology available. Beyond 2021, success in the IVAS program, as well as the multiple other key night vision programs underway, will become the major drivers of revenue growth for Photonics for years to come. With that, I'll turn the call over to Jim. Thank you, Wendell. Turning to the 2nd quarter results. Consolidated 2nd quarter revenues totaled $13.8 million, above our guidance of $12.5 million-$13 million. Thin Film Equipment revenues totaled $5.4 million and included upgrades, spares, and service. Photonics revenue of $8.4 million included $5.3 million of product revenues and $3.2 million of contract research and development revenues. Q2 consolidated gross margin was 22.5%, below our guidance of 27%. Thin Film Equipment gross margin was 18.7%, which was lower than forecast, primarily due to lower overall volume, which affected factory utilization and product mix due to less high margin upgrade revenue. Photonics gross margin was 24.9%, which was lower than forecast due to higher costs related to completing the integration of our camera into the IVAS platform. Q2 operating expenses were $9.4 million, below our guidance due to tight control of development spending. We expect quarterly operating expenses to remain at or below the $10 million level for the remainder of 2021. This resulted in a net loss of $6.1 million, or $0.25 per share, within our guidance of $0.25-$0.27 per share loss. Our backlog was $51.7 million at quarter end. Thin Film Equipment backlog of $18.9 million included non-systems HDD backlog. The backlog in our Photonics business was $32.7 million. We ended the quarter with cash and investments, including restricted cash, of $54.1 million, equivalent to approximately $2.22 per share, based on 24.4 million shares at quarter end. Cash flow generated by operations was $832,000 during Q2. Q2 capital expenditures were $122,000, and depreciation and amortization was $895,000 for the quarter. Guidance for Q3, we see revenue in the range of $12 million-$13 million. At this range, we would forecast gross margins to be around 35%. OpEx should come in around $10 million. Income tax expense around $500,000. We therefore are forecasting a loss in the quarter of around $0.25 per share, using 24.6 million shares outstanding. Now turning to the current outlook for 2021. Our full-year view is thin-film equipment revenues of approximately $38 million, relatively consistent with our view from last quarter. We now expect Photonics revenues to be at the lower end of the $30 million-$34 million range, for a combined ± $68 million. At this revenue level and expected mix, we expect full-year gross margins between 30% and 31%. As mentioned, our OpEx run rate is below $10 million per quarter, and thus expected to be around $30 million for the year. We are forecasting interest income of around $100,000 for the year, and income tax expense of around $1 million for the year. While our operational results will be challenged in 2021, we will continue to prudently manage our cash and retain our strong balance sheet. This completes the formal part of our presentation. Operator, we are ready for questions. At this time, we will have a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Your 1st question comes from Peter Wright with Intro-act. Please proceed with your question. Great. Thank you guys for taking my question. My 1st question is on the Vertex. If orders are to materialize in the 2nd half of this year, when do you think that revenue opportunity will happen? Is it any different from the Lean systems that you forecasted out? For the wearable project, we would intend to revenue the eval systems that are already out there. There is some opportunity, depending on what that timing is, that they could revenue. We have to get them through their final test and acceptance before we can take revenue. The tools are actually already built. We have opportunity near-term with those. That's two systems, is that correct? Those two evals right now are the ones that we're targeting, correct. If I understood it correctly, you're suggesting orders as well on top of that could materialize in the 2nd half of this year for Vertex on top of that? Did I understand that correctly? No, the tools out there are evaluation tools at this point. Once in the evaluation terms, they accept it, there's an order for it, and then. I got it. That all generates instantly, yeah. Fantastic. Then, a couple of housekeeping ones that are quick. The cash projection at the end of the year and if you can clarify, I missed it, the OpEx, I thought you said 30 something, but I'm assuming it's $40 million. The OpEx for the full year, can you just repeat that number as well? Yeah, I'll answer that question first. The OpEx for the full year, we still expect to remain around $39 million, which is what we also said last quarter. Perfect. Our cash, we came into the year with $5 million, obviously we have $54 million I'm sorry, we came into the year with $50 million, excuse me. We ended this quarter at $54 million. We would expect that our cash will still remain above the $40 million. If you remember, we've been saying we want to keep it at a minimum of $40 million. We expect cash to still remain high. Some of that use will just depend on what happens with regards to any orders in the remainder of the year and any buildup of inventory or some late shipments of receivables still being not in collection. We expect to end the year with a strong amount of cash, Peter. Wonderful. I'll come back in if there's any more questions. Our next question comes from Mark Miller with The Benchmark Company. Please proceed with your question. Congratulations on your upgrade order. I assume that's what's pushing margins up next quarter. Is that coming from the upgrades compared to the June quarter? Yeah, that'll certainly be a contributor for sure. With the IVAS development deliveries, we would expect Photonics margin to go up again in Q3 as well. Okay. The fourth quarter looks strong again. Is that coming from Vertex, or what is the higher anticipated sales coming from? The majority of that's coming from the strong orders we got in Q2. We will ship some of those in Q3, but we'll have a stronger upgrade quarter in Q4. Oh, it's coming from upgrades. Okay. Just wanted to clarify something about interest expense. You said it was going to be $500,000 for this quarter, but a net of interest income of $100,000 for this year? No, I'm sorry. If I said that was a mistake. I didn't give a comment on Q3 interest income. I don't know, did you say interest income or income tax expense? I'm sorry, interest expense or income. Sorry. Yeah. Interest expense has only been running about $20,000-$30,000 a quarter. Year- to- date on income tax expense, we've actually had a credit in the 1st two quarters. We should see an expense based on the profitability in our international subsidiaries of about a half a million dollars in Q3, and then about $1 million for the year. You can think of interest income for the year at about $100,000. Okay. Finally, Vertex tools have moved into pilot production. Any idea when these will be revenued? They haven't moved into production. Are you talking about the MATRIX tool? MATRIX, I'm sorry, the MATRIX tool in public. Yeah. What they're doing is, they've qualified their process, now they're working to qualify their production line. We've already revenued that tool. We revenued it in Q1. Once they get through with all the qualification of their lines, I think the next step there is to upgrade that entire line for a higher volume operation. Right now, there's a lot of manual work being done on that. We are encouraged by the fact that that project continues to move forward and that they're looking at qualifying their actual production devices. We think there's more opportunity there, it's probably out there probably towards the mid to back half of 2022. Thank you. Thank you, Mark. Thanks, Mark. Just as a reminder, if anyone has any questions, you may press star one on your telephone keypad. Doing so will ensure your spot in the question and answer queue. Our next question is from Peter Wright with Intevac. Please proceed with your question. Great. Two quick follow-ups, actually. Is there any update you can give us on the IVAS program of the way to think of market share, and is about a quarter of million or so camera units still a fair assumption to have out there on a five-year outlook? Well, there's really not a lot we can say about it, just because of the NDAs that are in place. What we did say is that these initial units that we've looked at, that we've been able to verify through public records, there's at least 5,000 on order and opportunity, maybe almost 10 over the next 12 months, that we won't be delivering cameras on that. It is too costly to scale up two volume production lines with very small initial volumes forecast and still some uncertainty, until you get through the operational testing, which would be in the August and September timeframe is where it was currently planned. Before you get through that stage of the program where there's some risk that it may need more work or move to the right. That was the decision that was made. Wonderful. That makes sense. Is it fair to assume that, if volumes were to ramp, you would be executing on some of that? You're the one walking away from the business because the volume isn't there for you to be able to profitably execute? No, we didn't walk away from the business. It's just the decisions that are being made by the prime on what their manufacturing chain's looking like. I don't know if that answered the question, but as the volumes come up, the need for more manufacturing capacity. We are one of the two companies that was actually brought from the original development programs and integrated into the IVAS units. Okay. That's clear. Thank you. My very last question is, any update on the strategic review? We're basically not going to talk about that. We announced it last quarter, so people knew what we were doing it. We won't be really talking much about that until at such time that the board has decided that there's some action that they're going to take. Great. Thank you guys so much. Thank you, Peter. Our next question is from Mark Miller with The Benchmark Company. Please proceed with your question. Just wondering what is driving the lead times for your Lean tool from six-eight months? Is that component supply? Yeah. I think the longest pole in the tent is turbo pumps because we use the same kind of pumps that the semiconductor guys do. We've seen this historically when there's a surge. The turbo pump guys don't put in extra capacity. They just pull out the lead time. We have to manage around that. That's one of the fundamental pieces that's driving lead times. Thank you. Proceed with your question. Our next question is from Gus Richard from Northland. Please proceed with your question. Yes, thanks for taking the question. Yes. Are you seeing any competitors in the deposition market for media at this point? Is Canon still in the game? Yes. Canon Anelva, they still have offerings. We're not aware of them selling much equipment over the last several years. Certainly when we're having discussions with hard drive customers, they're also looking for business as well. We feel really good about the way we're positioned, Intevac and our equipment is, as we go to these higher areal density media formats, that we're in a very leading position there. Okay, a follow-up on the inventory question. I believe you guys built up inventory for the Lean systems earlier in the year. Can you just talk about what the long lead time items were that you pulled in and how turbo pumps fit into that? Yeah, we did buy some long lead parts last year. As we look at that eight-week lead time, there are a couple systems worth. Eight months. What? Eight months. Eight months, sorry. As we look at that, for the first couple of tools, we'll be able to deliver those inside of that eight-month window because we'd already procured some inventory in Singapore to be able to react quickly. That was really last year when we were being pushed quite hard to have tools delivered in the middle of this year. What do you think the opportunity for deposition systems in 2022, 2023 is for Lean? I think- The round numbers of units. Sorry. I think in 2022, we're probably, just because of timing and lead times and some of those things, probably single digits. I think there's an opportunity in 2023 for double-digit deliveries. Got it. That's it for me. Thanks. Thanks, Gus. Thanks, Gus. Thank you. There are no further questions at this time. We will now turn the call back over to Mr. Blonigan. I want to again thank the dedicated employees of Intevac all around the world for continued resilience and dedication in this challenging operating environment. I also want to thank our customers and suppliers for their business and appreciated partnerships. Finally, I'd like to thank our stockholders for their continued support of Intevac. I thank all of you for joining us today, and I look forward to updating you again during our Q3 call in November. Until then, so long. This concludes today's teleconference. You may now disconnect.