Intevac (IVAC): Market Leader in Thin Film Equipment with Upside Defense Play

Edward Kim  |

We received a question the other day from one of our readers about how we pick companies to follow. The common driver behind all of our work is the desire to find those companies that we believe:

We've been following a company called Intevac (Nasdaq: IVAC) that we think hits all of our drivers. The company announced today that it will report results for its fiscal Q2 at the market close on on Monday, July 31, 2017. Management will host a conference call at 4:30pm ET on July 31, which investors can access by calling (877) 334-0811 (international callers may dial 408-427-3734) or by visiting the company's website.

The company derives revenue from two distinct segments: thin film equipment and photonics - each of which represent market opportunities exceeding $1 billion globally. Intevac has more than doubled its revenue over the past year through the growth of its thin film business. The company designs and manufactures thin film processing systems designed for high volume manufacturing of substrates with precise thin film properties. According to the company, it's the world's leading supplier of magnetic media processing systems, having shipped more than 220 manufacturing systems to its hard disk drive (HDD) customers. More than 60% of the world’s magnetic media is produced on Intevac systems.



Source: Intevac Form 10-K and 10-Q filings


In addition to hard drive media, Intevac has developed two additional markets for its thin film technology. Intevac VERTEX is a vertical in-line sputtering system optimized to apply thin-film coatings onto small substrates, utilizing a modular design to minimize factory floor footprint while protecting operator investment with future process scalability. Intevac MATRIX uses the company's advanced linear scanning magnetic array (LSMA) physical vapor deposition (PVD) source technology to sputter deposit thin-film materials onto a variety of substrates in high volume manufacturing with low cost of ownership. Market applications include crystalline silicon photovoltaic cells, energy storage, and advanced packaging.

Source: Intevac Corporate Presentation, June 2017

While the growth in thin film equipment has driven the stock's move over the past year, future growth could be driven by the photonics segment as Intevac continues to make progress providing compact, cost-effective, high-sensitivity digital-optical sensors, cameras and systems for the defense industry.


Source: Intevac Corporate Presentation, June 2017

Intevac’s extreme low-light imaging products include: LIVAR (Laser Illuminated Viewing and Ranging), a long range target identification camera; DNVG (Digital Night Vision Goggle), the world’s first digital image intensified (DI²) night vision viewing and recording system; and NightVista, a low-light level DI² camera and sensor module.

The company's military night vision products are based on its patented EBAPS sensor - Electron Bombarded Active Pixel - and Intevac is an acknowledged leader in the design, development and manufacture of near-eye and/or head-mounted display systems used in multiple markets for diverse applications.

In a world in which the leader of North Korea celebrates a missile launch with an interpretive tap dance and such memorable songs as "March of Rocket Artillery of the Republic," we'll be closely following companies like Intevac that are tied to increased defense spending and providing our troops with the latest technological advantages.

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