Peter Wright: I can infer from your last press release and the naming of your partner in it that clearly, they see your value in this equation. Can you help us understand in these negotiations, is there a certain element that you’re more excited about or has changed over the course of last year, whether it be from consumer electronics to consumer electronics plus, whether it be an evolution of the business model from equipment to equipment plus or are the negotiations at this point on the TRIO side, primarily about numbers?
Nigel Hunton: I think we’ve proven that we have great technology and the work we’ve done around the material science, what we’ve done developing the TRIO platform to meet the key market needs. They are showing me that we’ve got a capability to not just deliver high-quality coatings into consumer devices but into other sectors. So as we look in the negotiation, I don’t want — I do not want to get into details of that today because clearly, it’s very key time in the negotiation. It’s about making sure we do the right for the company, the right decisions end up with the right agreement for the long term that’s going to maximize value for Intevac and that’s my key focus is how do we actually ensure that we have an agreement that enables us to take Intevac forward on a much stronger growth trajectory and with key partners.
So I’m pretty excited about the opportunities with the existing partners, but I’m also equally excited about the opportunities we’re seeing outside of that.
Peter Wright: Fantastic. My last question is, it just seems that no matter what you do, the market is not giving you credit for your cash. What are the best uses of your cash when you look forward here, is it organic, inorganic? When you look at the balance sheet, even though it might be down a little bit on the collections, it’s still an extremely large number on the balance sheet. What is the uses in ’24 that you’ll be sharing with us that you’re most excited about?
Nigel Hunton: I think the opportunity to continue to protect this business and continue to protect the balance sheet is a key focus for me. We’ve done that pretty successfully through 2023. There are some minor uses we need to expand some of our capabilities around inspection and test equipment. I think one of the things that we’ve got to absolutely be expert at is as we do world-class coatings is have the capability in-house to do key testing and key understandings of the materials, whether that be into the optics, into the hardness, into the material science. So there will be some use of that cash, but not significant around enhancing our capability for in-house metrology. As we look at other feedback, our customers see the strength of our balance sheet as a key asset and therefore, a company our size, is maintaining that strong balance sheet is critical to protect the company moving forward.
We’ve got to look to how we actually grow the company. And as we actually think through what the key strategic moves we have to do to take the company forward, then we’ll think about how we actually optimize that cash and use it effectively. But the first focus at the moment is absolutely protecting the balance sheet and protecting that cash position.
Peter Wright: Fantastic. Thank you for the call.
Kevin Soulsby: Thanks, Peter.
Nigel Hunton: Thank you.
Operator: Our next question is from Dan Weston with West Capital Management. Proceed please.
Dan Weston: Yeah. Hi, thank you very much for taking the questions, most of which have been answered. Just some clarity relating to the receivables that you discussed. In that collection process, is there any dispute with your customer on what the receivable number is?
Nigel Hunton: There’s absolute clarity on what the number is, yes. And we have a long-term relationship. This was something that — this will be worked through with them. They’ve been a key partner of ours. We’ve helped enable a successful evolution to HAMR and there’s no dispute on the receivables.
Dan Weston: Okay. So this is what you would classify as more of a timing issue as opposed to a dispute of the number?
Nigel Hunton: Correct.
Dan Weston: Fine. I appreciate that. Also, Nigel, just to get some additional clarity, not to belabor the point, but I think you mentioned on your last call that the successful completion of evaluation would then trigger the shipment of the first system. So I assume that did not trigger the shipment of the first system, maybe you can just add a little color for us in terms of what took place. In other words, weren’t the terms already outlined in the JDA that would define exactly what the numbers were once the qualification was completed?
Nigel Hunton: The original JDA, the way that was written and that was completed successfully by the end of December. The next step within the JDA is one successful completion of the JDA was done. The next step is to then complete a formal agreement for TRIO tool shipments. We had hoped to conclude that as well, but before the end of December. However, those negotiations are still ongoing, probably I cannot say anything more at this stage or to confirm that we expect to still ship multiple tiers in 2024. But the process — it goes from JDA. There’s qualification, JDA completion, then we go into a formal agreement for sales and purchase. So that’s the key steps.
Dan Weston: Okay. Okay. Fine. And then back to your HDD business just to make sure I’m very clear here since there’s no guidance that you’re offering for the quarter. Did I hear you right in that your company will not be providing any upgrades until the receivables are collected? Just some clarity on that, please.
Nigel Hunton: Correct. So we will not be supplying any materials until we’ve actually got resolution on the receivables.
Dan Weston: Okay. Got it. And I guess I mean, is there a way that you can predict what the timing would be to resolve that receivable issue?
Nigel Hunton: I think it’s best if we actually leave that for me to resolve the receivable issue without putting a timeline against that.
