SkyWater Technology, Inc. (NASDAQ:SKYT), a semiconductor manufacturing company, has amended its loan and security agreement with Siena Lending Group LLC, extending the maturity date and increasing the facility amount. The amendment, effective November 19, 2024, extends the revolving loan commitment's scheduled maturity from December 28, 2025, to December 31, 2028.
The maximum revolving facility amount has been increased from $100 million to $130 million, with lenders each holding a 50% commitment percentage. An additional $30 million incremental facility is available, contingent on meeting certain conditions. The amendment also introduces a revised borrowing base calculation, allowing the Borrowers to take out capex loans based on the cost of new equipment.
Changes to the applicable margin, which is tied to the fixed charge coverage ratio, have been made. The "Tier III" applicable margin now stands at 4.25% for term SOFR and 3.25% for the base rate, effective immediately until the first adjustment date following the amendment's effective date.
The agreement also includes a modified definition of EBITDA, with specific amounts added to net income. However, the sum of these additions is capped at 17.5% of EBITDA for any measurement period, unless otherwise agreed by the lenders.
This financial restructuring is part of SkyWater Technology's broader strategy to secure long-term financial stability and support its growth in the semiconductor industry. The company's business address is in Bloomington, MN, and it operates under the industrial classification of semiconductors and related devices.
The information provided here is based on the company's SEC filing, which details the terms of the amendment and its implications for SkyWater Technology's financial arrangements.
In other recent news, SkyWater Technology reported a record revenue of $94 million for Q3 2024, marking a significant milestone with a positive non-GAAP earnings per share (EPS) of $0.08. The record revenue was driven by a combined $63 million from Advanced Technology Services (ATS) and Wafer Services, and an all-time high of $31 million from the tools segment. This financial success was credited to operational efficiencies and a significant recovery from a previous cost accrual.
The company also projected Q4 revenue to be between $72 million and $76 million, with an estimated 18% to 20% revenue growth for the full year of 2024. Despite a 9% decline from Q2 in ATS development revenue due to funding constraints among aerospace and defense customers, the company's gross margin stood at 22%.
In addition, SkyWater Technology announced a multiyear supply agreement with NanoDx, positioning the company for future growth through significant customer co-investment and new tooling capabilities. Despite a sequential decline in ATS development revenue, the company's overall financial health and future projections remain strong. These are recent developments that have shaped the company's financial trajectory.
InvestingPro Insights
SkyWater Technology's recent loan amendment aligns with its growth trajectory, as evidenced by the company's robust revenue growth. InvestingPro data shows that SKYT's revenue grew by 26.89% over the last twelve months as of Q3 2024, with an even stronger quarterly growth of 30.99% in Q3 2024. This growth trend supports the company's decision to increase its revolving facility amount.
However, investors should note that despite the revenue growth, SkyWater faces profitability challenges. An InvestingPro Tip highlights that the company is not expected to be profitable this year, which is reflected in its negative P/E ratio of -32.31 for the last twelve months.
On a positive note, another InvestingPro Tip suggests that the stock's valuation implies a strong free cash flow yield, which could be attractive to value-oriented investors. This aspect might have played a role in the company's ability to secure favorable loan terms.
For a comprehensive analysis, InvestingPro offers 12 additional tips for SKYT, providing deeper insights into the company's financial health and market position.
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