Fremont, CA and Sydney, Australia; 30 October 2019 — Pivotal Systems Corporation (“Pivotal” or the “Company”) (ASX: PVS), a leading provider of innovative gas flow control (GFC) solutions to the semiconductor industry, is pleased to release a Quarterly update and Appendix 4C Report for the period ending 30 September 2019.
- During the quarter, Pivotal made substantial customer and product progress:
- Successfully shipped the first prototype of the new high flow standard GFC to a leading Japanese OEM
- The High Temperature GFC continued to perform well in both a Korean IDM and a leading
- Taiwanese IDM
- Conducted live product demonstrations at SEMICON West in San Francisco
- Conducted Technology Roadmap Review Meetings with both Top IDMs and OEMs.
Unaudited Revenue of US$0.9 million for Q3 2019 was in line with our expectations based on continued reduced capital expenditure by leading Korea IDMs.
Net cash outflows from operating and investing activities of US$3.4 million reflects the building of inventory for the new High Flow GFC and in preparation for Q4 shipments and investment in customer-led product development initiatives
Backlog (confirmed orders not yet shipped) at 30 September 2019 was US$5.2 million.
September 2019 Quarter Cash Flow
The Company finished the Q3 2019 quarter with a cash balance of US$9.3 million which included US$3.0 million in a term loan drawn against the credit facility with Bridge Bank announced to the market in August 2019. The credit facility also has US$7.0 million revolving line of credit. There is currently no borrowing against the revolving line of credit.
Cash receipts from customers for the period were US$4.3 million, which was significantly higher than our Q3 shipments reflecting a decrease in our Accounts Receivable balance for the quarter.
Cash payments for Product Manufacturing were US$4.7 million as we built inventory during the quarter in preparation for increased shipments scheduled for Q4. We also continue to invest in Product Development during the downturn.
This investment has been undertaken to deliver into four customer-led product initiatives, together with building inventory levels of the new High Flow GFC. This will enable the Company to respond quickly to any increase in capital expenditure purchases from IDM and OEM customers that have qualified the High Flow products.
The standard low flow GFC, commonly used for etch applications, continued its qualification with a leading Japanese OEM. The Company was also notified that both the standard GFC and the High Flow GFC were qualified on two additional deposition product platforms at a leading US based IDM.
The recently introduced Flow Ratio Controller (FRC) continues to perform well in beta site production tests at a leading Korean memory company.
At SEMICON West, the Company once again demonstrated a new architecture for the existing etch gas stick commonly used by OEMs. This architecture is called SmartStik as it leverages all of the intelligent signals of the standard GFC, while operating at the microsecond. This design also includes the insertion of a Teflon coating to the GFC valve, enabling a positive shutoff capability. This architecture potentially enables the elimination of costly components used on traditional etch gas sticks as the SmartStik makes them redundant.
Pivotal has also introduced the Remote GFC used for high temperature gas boxes commonly found in the most demanding process applications for both etch and deposition. The initial beta sites for this product are currently installed in Korean Memory factories as well as a leading Taiwanese foundry.
During Q3, full-time Headcount decreased from 46 to 45 employees.
During Q3 the Company reported that it will end the manufacturing agreement between Pivotal and Compart Systems (“Compart”) Korean factory where software is loaded on to its products. Pivotal has capacity in Fremont, where this function was previously performed, and is in the process of putting in place parallel capabilities in Korea. Pivotal does not expect this new manufacturing arrangement to impact its product deliveries, nor lead times to its customers. Pivotal will continue to engage Compart China for the majority of the Company’s contract manufacturing requirements.
Pivotal’s growth strategy continues to be to successfully leverage established IDM customer acceptance of its GFC technology into new semiconductor processes while gaining increased acceptance by the major OEMs into new applications or tool sets. We continue to move positively towards our market penetration and fan out objectives for FY2019 based on the rapid acceptance of the High Flow GFC.
The Third Quarter unaudited revenue of US$0.9 million was in line with expectations as announced in the Company’s half year results on 30 August 2019. We continue to expect that 2H 2019 revenue will be weighted towards Q4. We will keep the market informed of any updates to 2H 2019 guidance. Based on current feedback from customers around their spending plans, together with Pivotal’s increasing market share, we continue to expect 2H 2019 revenue to be higher than for 1H 2019. Currently, we are seeing signs of a recovery in the Flash Memory market and optimism for a recovery in the DRAM market in 2020.
Investor Conference Call
Audio of the investor conference call can be downloaded HERE.
For further information:
Investor Relations & Media (Australia):
Dr Thomas Duthy
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Company Matters Pty Ltd
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