Identiv, Inc. (NASDAQ:INVE) Q4 2022 Earnings Call Transcript

Craig Ellis: Yes, and just within that, Steve, before we go over to Justin, where do you feel like you’ve got the most confidence in this year’s growth versus things that may either be timing related as we always see with enterprise-related IoT projects and periods of macro uncertainty or things that might be more source of supply or supply dependent.

Steven Humphreys: We think we’ve factored all those in now, and that’s why we tried to give the underlying growth as well as some of the things that we’re rotating out underneath that growth. So the 25% growth overall, we have built up project by project, and there’s a couple of customers that were low margin that we know we want to rotate out of, and we have that factory in is very specific. So we think we have it pretty well built up. Amir, do you want to add any color commentary to that?

Amir Khoshniyati: Yes. I would say we’re very well positioned and again, goes down really to the products that we’re offering. We’re in alternate technologies, and they’re both very well positioned both in RFID and MBL. And then it positions us very well in the prominent segments that are fast growing. So within health care, smart packaging, specialty retail applications, they get embedded into products and live with the life cycle of the products, so they’re not commoditized. It gives us a really good mix and a balance, and that’s very high probability and puts us in a good position.

Craig Ellis: Got it. And then any thoughts on the contour of gross margin Justin, yes, thanks.

Justin Scarpulla: Sure, absolutely. We’re very specific in our guidance that we gave the full year annual revenue guide. But we were clear as well coming out of this quarter and what we’ve done for 2023 from a bottoms-up perspective. We do expect margin expansion without giving an exact number, I’d say in the 1% to 2% range, somewhere around there would be a good number for 2023. It is a key focus as we talked about, we are trying to move out of some of our lower-margin products, and that’s going to be a key for us. So we’ve done it. I think you were here, Q4 of 2021, where we had the big message. We’ve been able to maintain a stable margin profile for all of 2022 right in line with what we wanted and we expect that to continue into 2023.

Craig Ellis: Great. Thanks for the help guys. I’ll hop back in the queue.

Justin Scarpulla: Sure. Thanks.

Operator: Our next question comes from Brian Ruttenbur with Imperial Capital. Please proceed.

Brian Ruttenbur: Yes, thank you very much. Let me dig down now into the cash burn in the period. I know that you inventory, working capital, a variety of things happened in the fourth quarter. What do you anticipate for the year in 2023 in terms of cash burn, cash generation, give us a ballpark?

Justin Scarpulla: What we think we’ll do for the year will actually be flat to exiting 2022. We’ll be up possibly $1 million or $2 million in exiting 2023 as well. We do feel €“ like I said, in Q1 and Q2, we’ll have some cash burn for Thailand expansion, some CapEx that we’re going to be doing over the next four to five months, and getting that facility up and running. So the first half, you could expect it to possibly decline a little, but we will get that back plus more by the end of 2023.

Brian Ruttenbur: Great. And then, I think the one question was asked a couple of times in your confidence in where we are right now. I guess, the question at this point is what could go wrong that you haven’t factored in. It seems like you’ve taken a lot into consideration thought this through, but where are the holes in the theory for growth going forward? What could go wrong that you haven’t factored in?