Operator: Thank you. We go next now to Natalia Winkler at Jefferies.
Natalia Winkler: Congratulations on the strong results. One of the things I wanted to confirm was I think back in ’21, you guys had this kind of longer-term CapEx program that was around $56 million, I believe. Can you help us figure out where you guys are with that program? And I appreciate it’s probably running over multiple years but just kind of how is that helping support your expansion and your growth ?
Steve Manko: Yes. That’s a continuing process and investment like we talked about previously. That was a combination of supporting our move into offering GaN technology just as well as further building out our capacity in SkyWater, Minnesota. So as you mentioned, we’re moving along the way. A lot of the investment that you saw coming through our balance sheet this year and cash flow statement on the investments we made from the CapEx side do go against that investment that we committed to back in 2021. So still will be a multiyear phase going through and that will continue over the course of 2023 and in fact, even into 2024.
Natalia Winkler: Understood. That’s very helpful. And I guess, Steve, the other question is really also about this idea of your model being kind of CapEx light, right? And Tom has mentioned this goal of reaching $1 billion by kind of 2030. So I’m curious to kind of think like what’s the right way for us to think about the capacity expansion, if any, you guys would kind of need to see in your model to really ramp up revenues to 2025 and really beyond that?
Steve Manko: Yes. So I’ll talk about 2025, first because we’ll focus on that in the near term. Really, our model with what we’re currently doing with our CapEx plan that we have in place which you alluded to a portion of it as well as the investments that we’re getting from our customers. I think that will allow us to grow to those 2025 levels that we’ve been talking about. Clearly, from there to go to what Tom alluded to by the end of the decade, would take additional investment coming through. And that’s where we talk about some of the larger investments, partnering with various states on growing capacity would likely be needed to grow to those levels by the end of the decade. But focusing on what we can control, focusing on the near term over the next couple of years, we think our current model lends very well with what we’ve already invested in. But we haven’t received a complete return on to really grow to our 2025 levels that we continue to communicate.
Thomas Sonderman: And just to add, the CapEx-light model essentially means the capital is still required but we partner with our customers to enable that investment to come into our facilities. So part of the way we will achieve that longer-term second half decade growth is through continued exploitation, frankly, of the model that we’ve created. We will be leveraging our customers’ investments and our technical and manufacturing capabilities to bring that combination together to get our customer products to market.
Natalia Winkler: That’s very helpful. And Steve, I just wanted to clarify one little thing from the prepared remarks. I think you mentioned that you have the start-up costs, right, like still in the model at the moment which are around $7 million to $9 million is up per quarter related to the ramp of Florida and the RadHard. Did I catch that right? And I think in the past, you also provided sort of a split between the different lines? Is there a way for us to kind of think about that number going forward?
Steve Manko: Yes. The $7.9 million would not be related to the start-up costs. I don’t know exactly which one you’re referring to. I know that we talked about there are about $8 million to $9 million of quarterly costs that are flowing through that will either fall off or be absorbed within the next couple of years. But I did prepare in my comments, an expectation for some of the quarterly ranges on the various components of our operating expenses but it wasn’t in relation to the $7.9 million. So that may be something that we can listen to the replay or cover at a different time.
Natalia Winkler: Understood. Thank you very much and congrats, again.
Operator: We go next now to Harsh Kumar at Piper Stanley.
Harsh Kumar: My congratulations as well. Excellent quarter and guide. So Tom, I wanted to understand where the majority of the upside might have come from. Even if I take out the $4.7 million that you got, that’s nonrecurring onetime revenues, was it, I guess, more coloring — was it more business as an existing customer? Or was it 1 or 2 customers stepping up? Or just any kind of color you can provide would be helpful.
Thomas Sonderman: Yes. Overall, I think it was the RadHard program clearly was a big driver. We announced that program, the Phase 2 award and the team just stepped up and was able to execute at a very high level to hit the milestones that were needed to trigger the revenue back into the company. And so I think that was certainly a big component and driver in the second half of last year. And then also just our overall execution in the fab. I’ve said before that we’re running a very complicated model, doing volume manufacturing for a company like Infineon while running 50 development programs. And the team has really stepped up and done a great job of integrating and institutionalizing a lot of the behaviors that we want to be able to grow and scale the model that we’ve created.
And I think we’re seeing the efficiencies, the productivity, a lot of those capabilities, the investments that we have talked about in the automation side are beginning to pay dividends. And no one’s ever really done this type of high-level R&D and a volume manufacturing facility before. And I think we’re all very excited about the potential we’re seeing from this model as we continue to grow and scale it.
Harsh Kumar: Fair enough. And then a very similar question for the $60 million base that you cited as a starting base going forward. And I think, Steve, you even went on the record in the guidance that it will start in the low 60s and kind of finish in the high 60s as the year goes on. Is that also being helped by the RadHard program? Or is that just kind of productivity and customers having confidence in stepping up and giving you more business. So I was just curious and — and then also, is that in backlog at this point in time? Or is that being driven by sort of conversations you’re having?
Thomas Sonderman: No, I mean, I think, again, RadHard will continue to play an important role this year and into ’24, as we prepare to start actually making products in 2025. The other is just the continued ramp of other programs that we’ve talked before as programs go through various phases, various gates. The spending tends to increase and a lot of the programs we were talking back in 2021 now have gotten larger and continue to grow. And I think both of those components, plus just the productivity improvements I just discussed, give us confidence that where we exited Q4, we think will really become a baseline as we grow throughout this year. The other thing is that we do have a lot of, I’ll just call it, maturing of the business and how we not only predict revenue but how we bring customers into the business, as I discussed earlier and then how we work with them to take advantage of the semi industry is in a correction right now.
And there’s a lot of customers that are really excited about getting their products to market for the next upturn. And so that is really taking advantage of our model in a unique way and it allows us to show what our capabilities are in a unique way. And I think that combination is what gives us confidence in 2023 that we can continue to grow at the 25% level or close to it.
Harsh Kumar: That’s great, guys. Thank you so much. Congratulations again.
Operator: We’ll take our next question now from Richard Shannon of Craig Hallum.
Richard Shannon: I’ll echo my congratulations on some nice numbers end of the year here. Let’s see here. Tom used the language here on some of your growth expectations for this year talking about funded programs. And I think it’s fair to understand that with the U.S. government type programs and customers here. But what about the commercial programs? To what degree do you have confidence if the ones that you’re expecting to grow nicely here are actually funded and they won’t be pulled in any way? Just help us kind of put this together and give us a little more confidence on that, please.
Thomas Sonderman: Yes. So I’ll start and Steve can give any additional color. Obviously, one of the things that we have learned over our life as a company is not only who we want to engage with to take advantage of our model but how do we make sure that they are able to deliver on the financial side as we deliver on the technology enablement side. And I think we feel very strongly and as I put in my prepared remarks that the engagements we have, the R&D investments our customers are making into our company are very much in a high confidence level not only because of the companies involved but also the maturity of the technologies and the commitment of the investors in those technologies to get those products to market. So we do a lot more vetting when we bring a customer into the business.
We obviously have a couple of scars where we didn’t do that as well as we should have in our earlier days. And so I think we feel like as we enter this year and go into next year and really bring some of these technologies to fruition that the partners that we’re choosing are maybe in a better place than some of the ones that we’ve had before. Steve, anything to add?
Steve Manko: That’s good. Thanks, Tom.
