Good day, and welcome to Intevac's Q1 2022 financial results conference call. A brief 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. As a reminder, this conference is being recorded. Please note that this conference is being recorded today, May 9, 2022. At this time, I'd like to turn the call over to Claire McAdams, Investor Relations for Intevac. Please go ahead. Thank you, Devin, and good afternoon, everyone. Thank you for joining us today to discuss Intevac's financial results for the Q1 of 2022, which ended on April 2. In addition to discussing the company's recent results, we will discuss our outlook looking forward. Joining me on today's call are Nigel Hunton, President and Chief Executive Officer, and Jim Moniz, Chief Financial Officer. Nigel will begin with his prepared remarks, and then Jim will review our financial results 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 remain 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 contents of this May ninth call include 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 Nigel. Thanks, Claire, and good afternoon. Thank you for joining us today and hearing more about the new Intevac. It's now been just over 100 days since I started with Intevac, and that has been a very exciting and productive period of time for both me and the company. We have eliminated a layer of top management, consolidated our development efforts, and stopped programs that wouldn't deliver a positive return. I have started to develop the new management team. I've traveled to Singapore, and I've met with our employees, major customers, and suppliers. A busy and very active start to the year. We've also announced record bookings in our core HDD business and identified how to focus our growth initiatives to expand our business beyond the HDD market areas. I will get into all of these in a moment, but first, let me quickly recap on our financial results for the quarter, which came in as expected. We had some upside in HDD upgrade business, resulting in total revenues of $4.4 million. Our non-GAAP results excluded $2.7 million of restructuring related costs, including severance and disposal of fixed assets. The resulting non-GAAP loss was $0.20 per share, so better than forecast. The primary highlights of the quarter center on orders and backlog, both of which achieved new 12-year record highs. New orders in the quarter totaled $67 million, which enabled us to grow backlog to over $87 million as of quarter end. The $87 million of backlog includes nearly $60 million of 200 Lean systems. 200 Lean will ship in Q4 this year, and the systems ordered at the end of Q1 will ship over multiple quarters, beginning in mid-2023. The remaining $27 million of backlog at the end of Q1 consists of HDD upgrades, spares, and field service. Given this month's significant new order, we also expect to report a sequential increase in backlog for the end of Q2. In February, we announced a multi-year refurbishment and upgrade agreement with a major data storage company being deployed on the 200 Lean platform rather than on the incumbent equipment supplier's platform. Valued at over $20 million, orders released in this program will be added to backlog on a system-by-system basis over the 2022 to 2024 time frame. At the end of Q1, less than $5 million of the $20 million agreement was in backlog. Since November of last year, we have now announced 4 orders and agreements that firmly establish our 200 Lean system as a platform of choice for the entire industry's media capacity expansion plans being put into place for the next few years. To recap, November's announcement marked the very beginning of new 200 Lean capacity orders. February's announcements highlighted a major agreement with a leading data storage company to add capacity. The $54 million order received at the end of Q1 was the largest 200 Lean system order received since early 2010. Finally, our most recent press release includes an additional $11 million of 200 Lean system orders. As I mentioned on the last call, I'm happy to confirm we expect HDD revenue in 2022 will be similar to last year at around $35 million. Importantly, we already have the backlog in place in support of a $65-$70 million dollars a year in 2023, giving us confidence for the future. The key in 2023 will be achieving profitability and positive cash flow generation at this revenue level. Which brings me back to our priorities. First, assessing our growth potential in each of our end markets, which entails strengthening relationships with each of our key customers, both existing and prospective. I'm pleased to say that during my visit to Singapore, I met with our employees, suppliers, and customers, ensuring that in my first 90 days, as promised, I met with all key existing and prospective customers in the USA and Singapore. A great start to positioning Intevac as a customer-driven organization, and more importantly, understanding the potential future business opportunities. Next, I've worked internally on streamlining the cost structure and to align resources with our revenue growth prospects. In the Q1 of 2022, we made significant progress in support of our new business model with a focus on our core HDD media business and a vastly more targeted approach of pursuing any equipment growth opportunities outside of our core HDD market. As I mentioned earlier, we're also investing in the new management team to leverage the strengths of each person, supported by a focused leadership development program that can propel the company forward. We will still maintain an emphasis on cost control and managing our cash while selectively adding capabilities that support future growth. Third, positioning the company for a return to profitability as soon as possible while preserving the strength of the balance sheet. With prudent control of working capital in the quarter, we were able to limit the decline in our cash balance to solely transaction-related costs related to the sale of the Photonics business, which were about $4 million. We ended Q1 with a total of $117 million of total cash and investments, a great achievement by the management team. We effectively eliminated an entire area of executive management as we significantly simplified our operating structure. We now have a strong foundation for growth and profitability in our core HDD media business. We redeployed the investment into our supply chain and made targeted R&D investments in support of our additional growth initiatives, enabling us to move forward with a customer-focused structure in support of our most significant prospects for revenue growth and profitability. Our sole activities outside of our core HDD media business today are focused on very specific applications where we believe Intevac offers a compelling and differentiated solution at the right price point to disrupt the market in pursuit of what could become large revenue opportunities. We believe these are centered on our unique capability to provide cost-effective, optically clear ballistic coatings. Our new tool approach that addresses these specific market needs is the Trio, which is a brand-new concept and importantly, a very cost-effective machine based on recent feedback from our prospective customers. The TRIO also leverages our 200 Lean expertise in producing advanced films at high productivity on a small substrate platform. We are pursuing strategic partnerships from several companies that I have approached since I began as CEO in order to validate this growth opportunity for Intevac, and we look forward to providing you with updates on our progress each quarter. This customer-focused approach is enabling the company to move forward with a clear vision, and we have stopped the initiatives that no longer fit with our revamped strategy. We believe the combination of Intevac's ballistic coating and the TRIO technology provides scratch-resistant protection and enhanced durability for multiple applications due to its superior hardness, strength, surface adhesion, and thin film properties when compared to existing technologies and with improved optical transmission. Before turning the call to Jim, I'll provide a few more comments around what we see in our core HDD media market. The headlines are rife with debate over signs of near-term pockets of softening demand, the trajectory of mass capacity derived growth for data centers, the impact of supply chain challenges, and much more. These are bound to result in increased volatility and speculation around the particular dynamics of the HDD market. There are a few trends in the industry, however, which drive Intevac's HDD media business that are worth highlighting. First, while overall HDD units are in decline, HDD media returned to being a growth industry in 2020 and is expected to remain a growth industry for the foreseeable future. Second, media unit growth is being driven by nearline demand for mass capacity drives, which contain as many as 8-10 disks each. This growth in data center storage needs, which is estimated at upward of 35% annually, cannot be fully served by the solid-state drive market. In fact, expectations for exabytes shipped on SSDs over the next 5 years are still a small fraction of those being shipped on hard drives. 7-to-1 cost advantage of HDDs in terms of price per bit has not narrowed and is not expected to narrow meaningfully in the coming years. Third, the industry is effectively maxed out with its current media capacity, and the leading drive manufacturers are working with Intevac to add capacity solely on the 200 Lean platform. While near-term fluctuations, supply chain challenges, and volatility of the hard drive market are certainly making headlines, the growth foundation for our core media business is firmly established, and the visibility and backlog we have today provide the confidence for future revenues. In combination with our restructuring program, plus orders secured for volume shipments, we're on track for a return to profitability by mid-2023. Lastly, I look forward to continue working with our customers, our suppliers, our stockholders, our board, the management team, and the entire organization as we build a new Intevac. That completes my prepared remarks. With that, I will now turn the call over to Jim. Thank you, Nigel. Turning to the Q1 results. Consolidated Q1 revenues totaled $4.4 million, above our guidance of $4 million, and consisted of HDD upgrades, spares, and service. Q1 gross margin was 16.3%, below our guidance of 25% due to inventory reserves of $755,000, mainly attributed to reserving our engineering solar inventory and older generations of our display cover panel inventory where we will no longer focus our efforts. Without these reserves, gross margin would have been 32% above guidance. Q1 R&D and SG&A expenses were $8.4 million, which included $1.5 million dollar charge to dispose of certain lab equipment, as well as $1.2 million in severance, which was largely offset by stock grant forfeitures in the quarter. Net of these adjustments, operating expenses would have been just below our guidance of $7 million. The Q1 net loss was $7.9 million or $0.32 per share. The non-GAAP net loss was $5 million or $0.20 per share and excludes the impact of restructuring charges and discontinued operations from the Photonics division. Our backlog was $87 million at quarter end, reflecting the $67 million of new orders booked in the quarter. Post quarter close, we announced an additional $11 million of systems orders, which builds backlog for the current quarter. We ended the quarter with cash and investments, including restricted cash of $117 million, equivalent to $4.71 per share based on 24.9 million shares at quarter end. The net decrease in cash from year-end 2021 was limited to the transaction costs related to the sale of the Photonics business, as cash flow used by operations was $4.1 million during the quarter. Q1 capital expenditures were $618,000, and depreciation and amortization were $445,000 for the quarter. Now moving to Q2 2022 guidance. We are projecting consolidated revenues to be in the range of $8 million-$8.5 million, reflecting a higher level of HDD upgrades, spares, and field service revenue than we reported in Q1. For the first half of 2022, this represents about a 20% increase in the HDD business versus what we reported in the first half of 2021. Given the higher Q2 revenues and favorable mix of upgrades, we expect Q2 gross margins to be around 45%. Q2 operating expenses are expected to be around $6.7 million-$7 million. We expect interest income of around $20,000 and GAAP tax expense of around $500,000 in the quarter. Most of the tax expense will be non-cash. We are projecting a net loss in the range of $0.13-$0.15 per share based on 25 million shares outstanding. For the full year, as Nigel mentioned, we continue to expect hard drive revenues will be similar to last year at around $35 million. This includes 1 200 Lean system and therefore a slightly lower mix of upgrades. Given the timing of deliveries during the year, we expect over 60% of 2022 revenue will be recognized in the second half. At this revenue level and expected mix, we anticipate gross margins for the year will be in the high 30s. We expect ongoing cash-based operating expenses will decrease compared to last year. Finally, we expect to end fiscal 2022 with a total balance of cash equivalents, and investments of at least $115 million. That completes the formal part of our presentation. Devin, we are ready for questions. Thank you. We will now be conducting a question and answer session. If you would 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 would 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 keys. One moment, please, while we poll for questions. Our first question comes from the line of Mark Miller with The Benchmark Company. Please proceed with your question. Congratulations on your cash management and also your orders. That's good news. Just was wondering, in terms of supply chain issues, how much of a headwind has that been for you? Yeah, I mean, the supply chain, as everyone knows, is extended out. If I look for 2022, we placed significant orders for inventory. We placed orders for the demand that was coming in. From a confidence level for 2022, we're at a pretty high confidence level that the numbers we've committed to, at $35 million, are achievable, and we can manage that within the supply chain constraints around. I think the team are doing a very good job around that. I think as we mentioned on the call, the big challenge really is around 2023. I think we are confident around the level of the sort of $65 million-$70 million. I think supply chain, if the supply chain opens up and deliveries come in, there's potential upside on that. I think being conservative at the moment based on the supply chain dates we have, we're pretty confident around the 2023 number as well. It is challenging if you try and push for additional revenue and actually drive higher volumes. In terms of you took a number of inventory reserve hits last quarter, which impacted margins. Are we done with this in the future quarters? Has the inventory been cleaned up? Yeah, Mark, as far as we're concerned, we are done with this. We took a big hit, as you know, in a lot of the excess finished goods in Q4, and then we did a more thorough look at some of the stockroom inventory and took that last hit in Q1. We believe we're done with any major hits. Yes, we are. Okay. The 200 Lean that's expected to ship this year, you mentioned this. Is that gonna be in the Q3? No, that will be in the Q4. Okay. As originally scheduled. Thank you. Thank you, Mark. Thank you. Our next question comes from the line of Peter Wright with Intro-act. Please proceed with your question. Great. Thank you for taking my question. Congratulations, Nigel, on an amazing first 100 days. My first question is understanding the backlog. $87 million, does that mean there's about $13 million of upgrades embedded in that if I'm backing out your $20 million refurb in your $54 million system? Yes, that's a good number, Peter. If I add the 11, you're just probably right around a $100 million backlog active-ish today. My question is not on the precision of that, but you know, if I look into the second half of this year, what is the opportunity to sell incremental business in 2023, and what would it come from? Would it come from the same customers that are in backlog today, or would it come from new customers? I think as we've sort of talked about, the sort of $65-$70 range we've given is HDD business around existing customers. You know, that is a number we feel pretty confident that we can actually revenue in the year. I mean, if the supply chain opened up, there could be upside, but I think realistically, we have to assume the supply chain constraints are gonna be around for the next, I think, 2-3 years being realistic. Some components have gone extending out sort of 2-year lead time. We have to make sure that we have put in a number that we know we're confident that we actually revenue in the year. If you were to look at those orders, do you think that they reflect kind of the best and full demand from those customers? Or for a period of time, are you starting to get visibility on the other side of kind of the mid 2023 deliveries? Yeah, I think the other thing I mentioned to Mark as well. One of the upgrade orders, which is $20 million, we've got less than $5 million of that already taken as orders. There'll be additional orders coming through for that as well. We see that the order book, as you rightly say, is just under $100 million today. We're confident that there'll be some more upgraded things coming through. For new 200 Lean sort of systems, I don't expect any significant orders coming through this year beyond that. Very last question is just the gross margin assumption. You know, if you look at the 2023 number with the system mix in there, you know, any thoughts on where margin would be and then is OpEx kind of mostly heavy lifting is behind you at this point, and kind of the $6-7 to $7-ish a quarter is a doable number as you know, sales ramp as an offset to the cost cuts as well? The first question, I would expect margins next year to be, you know, low 40s, 40%-45%, depending on the mix in any given quarter, but certainly in the low 40s. Your observation about OpEx, I think is a good observation. Keep in mind that included in this year's OpEx, you know, our run rate's gonna be around $7 million. We're not giving guidance beyond that. We still think there could be some room second half of the year to look at that. Could I just ask for clarification on your first question again? Because I think you gave a number like $11 million or $13 million for upgrades in backlog. Was that- Correct. Is that and there's another system in there. I got it. $13 million, how does that break down of upgrades versus non-200 Lean systems? Yeah. I think that number's low because I don't know, you know, the systems refurbishments that we talked about. Those are actually gonna be in upgrades. If you look at the $87 million in backlog at the end of Q1, there's probably closer to around $28 million that's upgrades, field service, and spares. How far out does that go? That. Is that a one? That goes out to, you know, covers this. As Nigel said, it covers most of 2023, but we still have somewhere around maybe $3 million or $4 million that we're booking in Q2 and Q3 that will result in terms business in the year. We did talk about, you know, there's, like I said, there's about $27 million of the backlog was the non-systems backlog, part of the $87 million. It's probably worth sort of reiterating the comment I made on the last call as well, where we felt that sort of $35 million was around the right for this year, $65 million next year. That over the 4 years that a $200 million number was absolutely achievable. As I touched on, I've sort of visited our existing customers. We've looked at prospective customers and other businesses, and that's given me a level of confidence. We've sort of said it in the sort of prepared remarks that we're confident about the demand now and the feedback that gives us the sort of visibility that says that that number is still a good number. $400 million, and just to clarify, that includes 200. 2022. $200 million is 2022, 2023, 2024, 2025. We did it over 4 years. If you remember on the last call, I said it really wasn't realistic to say that would be delivered in 3 years, but 4 years, I was relatively confident. I said, as I've touched on, we visited the customers, we're focusing very much on the customer focus, and that's an important part of the new strategy about being much more understanding of the customer requirements. That's not just about the future technologies, but about the existing HDD business and getting much closer to our customers. Great. Very last question. What about the strategic review? Is that now over at this point with the restructuring that you did, or is that still ongoing? If we're talking about the strategic review with Greenhill, I presume you're talking about. Yes. That engagement continues. We are always and regularly assessing our strategic opportunities and how absolutely, how do we increase stockholder, shareholder value. We believe, you know, that the Photonics was step one in that process, but we're still focusing very much on what is the real opportunities so we can turn the new Intevac into. I've said it's key for me to make sure we're actually putting the right R&D and the right focus on the potential future opportunities. That's why we focus very much around this ballistic coating and the opportunity for the sort of scratch-resistant technologies and leveraging our strengths. I believe, having the customers I've brought in and talked to already in the first 100 days, that we have an opportunity there, and it's gonna take. We've worked very hard to get that first TRIO tool up and running. Key now is to keep everyone updated on each of the subsequent calls, how those developments go, how the feedback comes from the customers. That for me is an opportunity for us to grow and develop and maintain our own focus independently and build a stronger Intevac in the future. That doesn't stop me from maintaining the sort of dialogue and engagement with Greenhill. Great. Thank you for answering my questions and congratulations again on, especially this market, doing what you've done in the last 100 days. Thank you, Peter. Thank you. There are no further questions at this time. I'd like to turn the floor back over to Nigel for his closing remarks. Thank you. You know, as I look at where we are today compared to 100 days ago, I feel we've made tremendous progress creating a new Intevac. We believe Intevac is a sound investment, and I'm eager to meet with as many interested investors as possible over the coming months. Therefore I want to highlight our upcoming investor events include the Virtual IDEAS Conference on June 23, and the Face to Face with the CEO Summit in San Francisco on July 13. Please, if anyone wants to talk to me face to face, please reach out to Claire directly and follow up with her, and then we can meet with you. We'll also be updating a new investor slide deck to our IR website within the next week. I invite you to also check back and download that. With that, I'll say thanks again for joining the call. Appreciate your support for Intevac. With that, I'll conclude today's call. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.