Core Viewpoint - Ichor Holdings is facing challenges in earnings performance despite showing strong revenue growth, leading to a cautious outlook from analysts [2][3][4]. Company Overview - Ichor Holdings specializes in the design, engineering, and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment, playing a vital role in semiconductor production [1]. Earnings Performance - The company reported quarterly earnings of $0.07 per share, missing the Zacks Consensus Estimate of $0.12 per share, and this represents a decrease from $0.12 per share reported in the same quarter last year [3]. - Ichor has consistently failed to exceed consensus EPS estimates over the past four quarters, with a significant earnings surprise of -41.67% reported recently [2][3]. Revenue Performance - Ichor Holdings reported revenues of $239.3 million for the quarter ending September 2025, exceeding the Zacks Consensus Estimate by 1.77% and showing an improvement from $211.14 million in revenues reported a year ago [4]. - The company has surpassed consensus revenue estimates in three of the last four quarters, indicating strong revenue growth despite challenges in meeting earnings expectations [4]. Stock Performance - The stock for Ichor Holdings is currently priced at $22.92, reflecting an increase of 1.06% or $0.24, with fluctuations between a low of $22.12 and a high of $23.30 during the trading day [5]. - Over the past year, the stock has reached a high of $36.48 and a low of $13.12, with a market capitalization of approximately $786.8 million [5].

Core Insights - Premarket trading is showing notable activity with significant price movements indicating potential trading opportunities before the market opens [1] Premarket Gainers - Denny's Corporation (DENN) is up 49% at $6.16 [3] - Cambium Networks Corporation (CMBM) is up 25% at $2.55 [3] - Tactile Systems Technology, Inc. (TCMD) is up 22% at $19.35 [3] - Upwork Inc. (UPWK) is up 19% at $18.60 [3] - Kforce Inc. (KFRC) is up 12% at $27.50 [3] - Super Group (SGHC) Limited (SGHC) is up 12% at $11.91 [3] - Innovex International, Inc. (INVX) is up 10% at $22.62 [3] - Sanmina Corporation (SANM) is up 9% at $154.03 [3] - Exact Sciences Corporation (EXAS) is up 8% at $72.69 [3] - OTG Acquisition Corp. I Class A Ordinary Share (OTGA) is up 7% at $10.77 [3] Premarket Losers - Sarepta Therapeutics, Inc. (SRPT) is down 40% at $14.44 [4] - JELD-WEN Holding, Inc. (JELD) is down 32% at $2.81 [4] - Ichor Holdings, Ltd. (ICHR) is down 29% at $16.05 [4] - Insperity, Inc. (NSP) is down 27% at $32.50 [4] - Prelude Therapeutics Incorporated (PRLD) is down 22% at $3.08 [4] - Forward Industries, Inc. (FORD) is down 20% at $11.11 [4] - Navitas Semiconductor Corporation (NVTS) is down 18% at $10.03 [4] - Diginex Limited (DGNX) is down 17% at $19.51 [4] - Atlas Energy Solutions Inc. (AESI) is down 16% at $10.58 [4] - Chijet Motor Company, Inc. (CJET) is down 15% at $3.24 [4]

Financial Data and Key Metrics Changes - Third quarter revenues reached $239 million, exceeding the midpoint of expectations and reflecting a 13% year-over-year increase [4][10] - Gross margin for Q3 was 12.1%, impacted by a one percentage point decline due to lower IMG revenue volumes [9][10] - Operating income for Q3 was $5.1 million, with net income per share at $0.07 [10] Business Line Data and Key Metrics Changes - The demand for etch and deposition applications remained strong, particularly for leading-edge investments, but there was a decline in non-semi end markets, notably in the IMG business [5][6] - IMG's business, which includes commercial space and aerospace and defense, did not recover as expected, leading to a forecast of continued lower revenue for the remainder of the year [6][12] Market Data and Key Metrics Changes - Year-to-date revenue growth of 18% was noted, driven by increased demand from the two largest customers, despite declines in EUV lithography and silicon carbide businesses [8] - The company anticipates Q4 revenues to range between $210 million and $230 million, with gross margins expected to be between 10% and 12% [12] Company Strategy and Development Direction - The company plans to realign its global footprint and cost structure to enhance long-term profitability, focusing on improving product margins across all verticals [15] - Strategic investments are aimed at transitioning products to volume and delivering new offerings to maintain a competitive edge [15][16] Management's Comments on Operating Environment and Future Outlook - Management indicated that Q4 2025 may be the trough quarter, with expectations for recovery in the first half of 2026 [25][57] - The company remains optimistic about long-term market fundamentals driven by AI, high-performance logic, and advanced packaging [15][16] Other Important Information - The company completed refinancing its credit facility, reducing borrowing costs and extending the term by five years [11] - Cash and equivalents totaled $92.5 million at the end of Q3, with $9 million generated from operations [10][11] Q&A Session Summary Question: Can you quantify the revenue shortfall from IMG in Q3? - The revenue shortfall was approximately $2.5 million, with expectations for a similar decline in Q4, stabilizing thereafter [18][19] Question: What type of optimism do you have regarding business levels improving in the first half of next year? - There is visibility for recovery into Q1, with expectations that Q4 will be the trough [25] Question: Were the Q3 pull-ins correlated with the revenue decline from the number three and four customers? - The pull-ins were largely unrelated and primarily offset the softness in IMG [34] Question: What are the specific contributors to gross margin expansion? - Continued improvements in proprietary products and rationalization of global operations are key contributors [40][41] Question: Is the aspirational goal of vertical integration driving a gross margin of 20% still in place? - Yes, that remains the long-range aspirational goal, with flow control being a significant enabler [59]

Financial Performance - Net sales for the three months ended September 26, 2025, were $239,296,000, representing a 13.3% increase from $211,139,000 for the same period in 2024[71] - The company reported a net loss of $22,853,000 for the three months ended September 26, 2025, compared to a net loss of $2,776,000 for the same period in 2024[71] - Non-GAAP net income for the three months ended September 26, 2025, was $2,302,000, down from $4,020,000 in the same period of 2024[71] - Operating margin for the three months ended September 26, 2025, was (8.1)%, compared to (0.2)% for the same period in 2024[71] - The increase in net sales for the nine months ended September 26, 2025, was $108,297,000, or 17.6%, compared to the same period in 2024[78] - Non-GAAP operating income for the nine months ended September 26, 2025, was $17,867 thousand, up from $13,291 thousand in the same period of 2024[96] - U.S. GAAP net loss for the three months ended September 26, 2025, was $22,853 thousand, compared to a loss of $2,776 thousand for the same period in 2024[98] - Non-GAAP net income for the nine months ended September 26, 2025, was $7,635 thousand, compared to $3,127 thousand in the same period of 2024[98] Margins and Expenses - Gross margin decreased to 4.6% for the three months ended September 26, 2025, down from 13.2% in the same period of 2024, primarily due to increased inventory write-off costs of $16.7 million[79] - Gross margin decreased due to inventory write-off costs of $18.3 million related to the Consolidation Restructuring Plan and exit from Scotland operations[80] - Total operating expenses for the three months ended September 26, 2025, were $30,494,000, compared to $28,176,000 for the same period in 2024[75] - Research and development expenses increased by 1.8% from $17.168 million to $17.482 million for the nine months ended September 26, 2025, primarily due to fluctuations in material and service costs[81] - Selling, general, and administrative expenses rose by 15.6% from $59.253 million to $68.515 million for the nine months ended September 26, 2025, driven by increased exit disposal costs and employee-related expenses[83] - The company incurred restructuring plan costs of $17,586 thousand for the three months ended September 26, 2025[98] Cash Flow and Investments - Cash provided by operating activities for the nine months ended September 26, 2025, was $20,716 thousand, down from $30,368 thousand for the same period in 2024[104] - Cash used in investing activities for the nine months ended September 26, 2025, was $32,920 thousand, compared to $13,238 thousand in the same period of 2024[104] - The company ended the third quarter of 2025 with cash and cash equivalents of $92.5 million, a decrease of $16.2 million from the prior year[103] - The company believes that its cash and cash equivalents, along with available credit facilities, will be sufficient to fund its business for at least the next 12 months[101] Industry Outlook - The semiconductor capital equipment industry is expected to see growth in spending in 2025, particularly in etch and deposition markets, despite ongoing geopolitical uncertainties[72] - The company anticipates that long-term demand for semiconductors and semiconductor capital equipment will continue to grow, driven by the need for expanded manufacturing capacity[73] Debt and Taxation - Interest expense, net decreased by 35.0% from $7.592 million to $4.934 million for the nine months ended September 26, 2025, due to lower average borrowings and borrowing rates[86] - Income tax expense increased by 151.5% from $2.021 million to $5.083 million for the nine months ended September 26, 2025, primarily due to additional tax provisions in Singapore[89] - The effective income tax rate increased by 330 basis points to -16.0% for the nine months ended September 26, 2025[89] - Weighted average borrowings outstanding decreased by 25.8% from $169.430 million to $125.678 million for the nine months ended September 26, 2025[86] Inventory Management - The company incurred $16.7 million in inventory impairment as part of the Consolidation Restructuring Plan[93] - The company reported an increase in inventory of $8.3 million for the nine months ended September 26, 2025[105]

Financial Performance - Third quarter 2025 revenue was $239.3 million, reflecting a year-over-year growth of 18% compared to $211.1 million in Q3 2024[1][2] - The net loss for Q3 2025 was $(22.9) million, compared to a net loss of $(2.8) million in Q3 2024[2][3] - Non-GAAP net income for Q3 2025 was $2.3 million, with a non-GAAP diluted EPS of $0.07, compared to $4.0 million and $0.12 in Q3 2024[3][4] - Operating loss for the three months ended September 26, 2025, was $19.425 million, compared to an operating loss of $0.385 million in the same period last year[25] - Net loss for the three months ended September 26, 2025, was $22.853 million, compared to a net loss of $2.776 million in the same period last year, representing an increase in loss of 720.5%[25] - U.S. GAAP net loss for Q3 2025 was $22.853 million, compared to a loss of $9.408 million in Q2 2025 and $2.776 million in Q3 2024[36] - Non-GAAP net income for Q3 2025 was $2.302 million, up from $1.097 million in Q2 2025 and $4.020 million in Q3 2024[36] Revenue and Sales - Net sales for the three months ended September 26, 2025, were $239.296 million, a 13.3% increase from $211.139 million in the same period last year[25] - For Q4 2025, the company expects revenue to be between $210 million and $230 million, with GAAP diluted EPS projected between $(0.33) and $(0.17)[5] Margins and Profitability - Gross margin for Q3 2025 was 4.6% on a GAAP basis and 12.1% on a non-GAAP basis, down from 13.2% and 13.6% respectively in Q3 2024[1][4] - Gross profit for the three months ended September 26, 2025, was $11.069 million, down from $27.791 million in the same period last year, reflecting a decrease of 60.2%[25] - U.S. GAAP gross profit for the three months ended September 26, 2025, was $11.07 million, with a gross margin of 4.6%, down from 11.3% in the previous quarter[29] - Non-GAAP gross profit for the same period was $28.91 million, resulting in a non-GAAP gross margin of 12.1%[29] Cash Flow and Liquidity - Cash and cash equivalents at the end of Q3 2025 were $92.5 million, a decrease of $16.2 million from the prior year[6][7] - Operating activities provided $9.2 million in cash during Q3 2025, despite a net loss of $(22.9) million[7][8] - The increase in cash was primarily due to net cash provided by operating activities, offset by capital expenditures of $7.1 million[7][8] - Cash flows from operating activities generated $9.25 million for the three months ended September 26, 2025, compared to a cash outflow of $7.51 million in the previous quarter[27] - The cash at the end of the period was $92.50 million, compared to $92.22 million at the end of the previous quarter[27] Expenses - Research and development expenses for the three months ended September 26, 2025, were $5.898 million, slightly up from $5.872 million in the same period last year[25] - Selling, general, and administrative expenses for the three months ended September 26, 2025, were $22.519 million, an increase from $20.227 million in the same period last year[25] - The company incurred restructuring plan costs of $16.71 million, primarily related to inventory impairment, for the three months ended September 26, 2025[29] - The company incurred $17.586 million in restructuring plan costs for the nine months ended September 26, 2025[37] Assets and Liabilities - Total current assets as of September 26, 2025, were $424.942 million, a decrease of 6.4% from $452.620 million as of December 27, 2024[23] - Total liabilities as of September 26, 2025, were $290.406 million, a slight decrease from $290.921 million as of June 27, 2025[23] - Total assets as of September 26, 2025, were $966.583 million, a decrease from $995.564 million as of December 27, 2024[23] Future Outlook - The company anticipates a recovery in other served markets, which is expected to provide revenue volume momentum and gross margin tailwinds moving into 2026[1] - The company is focused on the design and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment, with ongoing investments in research and development[16]

Group 1 - The semiconductor capital equipment industry is characterized by significant fluctuations, with companies like Ichor Holdings, Ltd. experiencing these cycles intensely due to their niche market position [1] - Ichor Holdings has achieved rapid growth primarily through acquisitions, indicating a strategic focus on expanding its market presence [1] Group 2 - The article does not provide additional relevant content regarding the industry or company beyond the initial insights [2]

PART I - FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents the unaudited consolidated financial statements, including balance sheets, operations, equity, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets and shareholders' equity slightly decreased due to a reduction in cash and accounts receivable Consolidated Balance Sheet Highlights (in thousands) | Metric | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $92,224 | $108,669 | | Accounts receivable, net | $80,821 | $86,619 | | Inventories | $259,373 | $250,102 | | Total current assets | $439,128 | $452,620 | | Property and equipment, net | $108,907 | $94,867 | | Total assets | $985,068 | $995,564 | | Total current liabilities | $136,423 | $135,670 | | Total liabilities | $290,921 | $297,228 | | Total shareholders' equity | $694,147 | $698,336 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales grew 18.2% year-over-year, but higher costs and taxes led to an increased net loss Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $240,285 | $203,227 | $484,750 | $404,610 | | Gross profit | $27,202 | $25,557 | $55,724 | $48,551 | | Operating loss | $(4,840) | $(2,262) | $(6,012) | $(6,003) | | Net loss | $(9,408) | $(5,112) | $(13,967) | $(14,101) | | Basic Net loss per share | $(0.28) | $(0.15) | $(0.41) | $(0.44) | | Diluted Net loss per share | $(0.28) | $(0.15) | $(0.41) | $(0.44) | [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity decreased slightly due to the net loss, partially offset by share-based compensation Changes in Shareholders' Equity (in thousands) | Metric | Balance at Dec 27, 2024 | Net Loss (6 months) | Share-based Compensation (6 months) | Ordinary Shares Issued (6 months) | Balance at Jun 27, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Additional Paid-In Capital | $606,060 | - | $8,350 | $1,430 | $615,838 | | Retained Earnings | $183,851 | $(13,967) | - | - | $169,884 | | Total Shareholders' Equity | $698,336 | $(13,967) | $8,350 | $1,430 | $694,147 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased significantly, while cash used in investing increased due to higher capital expenditures Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,469 | $22,296 | | Net cash used in investing activities | $(25,772) | $(7,337) | | Net cash provided by (used in) financing activities | $(2,142) | $19,435 | | Net increase (decrease) in cash | $(16,445) | $34,394 | | Cash at end of period | $92,224 | $114,349 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on accounting policies, asset breakdowns, debt, and income taxes [Note 1 – Basis of Presentation and Selected Significant Accounting Policies](index=8&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation%20and%20Selected%20Significant%20Accounting%20Policies) - The company changed its accounting estimate for CNC machinery useful lives from 7 to 10 years, effective Q2 2025, decreasing depreciation expense by **$1.0 million** and reducing Operating loss and Net loss by approximately **$1.0 million** for the three and six months ended June 27, 2025[24](index=24&type=chunk) - Revenue is recognized when control of promised goods or services is transferred to customers, primarily for products like fluid delivery subsystems and weldments, generally at the time of shipment[27](index=27&type=chunk)[29](index=29&type=chunk) - The FASB issued ASU 2023-09 (Improvements to Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), which the company is currently evaluating for potential impacts on its consolidated financial statements[31](index=31&type=chunk)[32](index=32&type=chunk) [Note 2 – Inventories](index=10&type=section&id=Note%202%20%E2%80%93%20Inventories) Inventories Breakdown (in thousands) | Category | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Raw materials | $200,954 | $197,975 | | Work in process | $49,641 | $45,075 | | Finished goods | $45,844 | $43,445 | | Excess and obsolete adjustment | $(37,066) | $(36,393) | | **Total inventories** | **$259,373** | **$250,102** | [Note 3 – Property and Equipment and Other Noncurrent Assets](index=10&type=section&id=Note%203%20%E2%80%93%20Property%20and%20Equipment%20and%20Other%20Noncurrent%20Assets) Property and Equipment, Net (in thousands) | Category | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Machinery | $140,086 | $123,509 | | Construction-in-process | $18,965 | $12,612 | | Total property and equipment, net | $108,907 | $94,867 | - Depreciation expense was **$5.5 million** for Q2 2025 (vs $5.3 million in Q2 2024) and **$11.1 million** for the six months ended June 27, 2025 (vs $10.4 million in the prior year period)[34](index=34&type=chunk)[35](index=35&type=chunk) - Capitalized cloud computing implementation costs, net of accumulated amortization, increased to **$13.3 million** as of June 27, 2025, from **$11.2 million** as of December 27, 2024[36](index=36&type=chunk) [Note 4 – Intangible Assets](index=11&type=section&id=Note%204%20%E2%80%93%20Intangible%20Assets) Definite-Lived Intangible Assets, Net (in thousands) | Category | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Customer relationships | $40,744 | $44,363 | | Developed technology | $3,816 | $4,353 | | **Total intangible assets** | **$44,560** | **$48,716** | [Note 5 – Leases](index=11&type=section&id=Note%205%20%E2%80%93%20Leases) - A **$1.3 million** non-cash impairment charge was recorded for an ROU lease asset due to the abandonment of Scotland operations, included in selling, general, and administrative expenses[40](index=40&type=chunk) Operating Lease Costs (in thousands) | Period | June 27, 2025 | June 28, 2024 | | :--- | :--- | :--- | | Three Months Ended | $2,885 | $2,492 | | Six Months Ended | $5,630 | $4,984 | Lease Liabilities and Terms | Metric | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Weighted-average remaining lease term of operating leases | 5.8 years | 6.1 years | | Weighted-average discount rate of operating leases | 4.9% | 4.7% | | Total lease liabilities, less current portion | $30,300 | $34,189 | [Note 6 – Income Taxes](index=12&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, enacting significant changes to U.S tax laws The company is evaluating its impact, expecting it to be included in Q3 2025 financial statements[42](index=42&type=chunk) - The increase in income tax expense and the change in effective tax rate are primarily due to additional tax expense provisioned in Singapore related to **Pillar Two minimum tax rules** and increased withholding taxes[43](index=43&type=chunk) Income Tax Expense and Effective Rate (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $2,740 | $942 | $4,400 | $1,855 | | Loss before income taxes | $(6,668) | $(4,170) | $(9,567) | $(12,246) | | Effective income tax rate | (41.1)% | (22.6)% | (46.0)% | (15.1)% | [Note 7 – Employee Benefit Programs](index=13&type=section&id=Note%207%20%E2%80%93%20Employee%20Benefit%20Programs) 401(k) Matching Contributions (in thousands) | Period | June 27, 2025 | June 28, 2024 | | :--- | :--- | :--- | | Three Months Ended | $700 | $600 | | Six Months Ended | $1,500 | $1,400 | [Note 8 – Long-Term Debt](index=13&type=section&id=Note%208%20%E2%80%93%20Long-Term%20Debt) - The credit agreement includes a **$150.0 million** term loan facility and a **$250.0 million** revolving credit facility, maturing on October 29, 2026 Term loan principal payments of **$1.9 million** are due quarterly[46](index=46&type=chunk) - As of June 27, 2025, credit facilities bore interest under the SOFR option at **6.07%**[47](index=47&type=chunk) Long-Term Debt, Net (in thousands) | Category | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Term loan | $125,625 | $129,375 | | Less unamortized debt issuance costs | $(620) | $(852) | | Total long-term debt, net | $125,005 | $128,523 | | Less current portion | $(7,500) | $(7,500) | | Total long-term debt, less current portion, net | $117,505 | $121,023 | [Note 9 – Share‑Based Compensation](index=13&type=section&id=Note%209%20%E2%80%93%20Share%E2%80%91Based%20Compensation) - The 2025 Omnibus Incentive Plan was approved by stockholders on May 14, 2025, allowing for the issuance of **2,963,471 shares** for awards, replacing the 2016 Plan[48](index=48&type=chunk) - Approximately **2.1 million** ordinary shares remain available for purchase under the 2017 Employee Stock Purchase Plan (ESPP)[54](index=54&type=chunk) Share-Based Compensation Expense (in thousands) | Period | June 27, 2025 | June 28, 2024 | | :--- | :--- | :--- | | Three Months Ended | $4,227 | $3,938 | | Six Months Ended | $8,350 | $6,313 | [Note 10 – Earnings per Share](index=15&type=section&id=Note%2010%20%E2%80%93%20Earnings%20per%20Share) - Potentially dilutive options and RSUs (ranging from **1.995 million to 2.492 million shares**) were excluded from the diluted EPS calculation because their inclusion would have been antidilutive due to the net loss[55](index=55&type=chunk) Net Loss Per Share | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $(0.28) | $(0.15) | $(0.41) | $(0.44) | | Diluted EPS | $(0.28) | $(0.15) | $(0.41) | $(0.44) | | Basic weighted average ordinary shares outstanding | 34,179,382 | 33,548,071 | 34,088,873 | 31,779,521 | | Diluted weighted average ordinary shares outstanding | 34,179,382 | 33,548,071 | 34,088,873 | 31,779,521 | [Note 11 – Segment Information](index=16&type=section&id=Note%2011%20%E2%80%93%20Segment%20Information) - The company operates as a single business operating segment, focusing on the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment[57](index=57&type=chunk) Net Sales by Geographic Area (in thousands) | Geographic Area | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | Singapore | $106,870 | $81,541 | $215,958 | $160,667 | | United States of America | $76,684 | $69,259 | $152,494 | $133,653 | | Europe | $25,279 | $21,307 | $50,412 | $52,656 | | Other | $31,452 | $31,120 | $65,886 | $57,634 | | **Total net sales** | **$240,285** | **$203,227** | **$484,750** | **$404,610** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=17&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial results, highlighting increased sales from semiconductor demand alongside a larger net loss from higher costs [Cautionary Statement Concerning Forward-Looking Statements](index=17&type=section&id=Cautionary%20Statement%20Concerning%20Forward-Looking%20Statements) - Forward-looking statements are subject to risks including geopolitical, economic, and market conditions (inflation, interest rates, currency fluctuations, supply chain disruptions, conflicts), dependence on semiconductor capital equipment industry cycles and OEMs, and challenges in attracting and retaining key personnel[60](index=60&type=chunk) [Overview](index=18&type=section&id=Overview) - The company specializes in designing, engineering, and manufacturing critical fluid delivery subsystems and components for semiconductor capital equipment, including gas and chemical delivery systems[64](index=64&type=chunk) - The company also provides precision-machined components and other proprietary products for commercial space, aerospace, defense, medical device, and general-industrial industries[64](index=64&type=chunk) - OEMs increasingly outsource fluid delivery subsystems due to specialized engineering, design, and production skills required, allowing them to reduce costs and development time[65](index=65&type=chunk) [Macroeconomic Conditions and Business Update](index=19&type=section&id=Macroeconomic%20Conditions%20and%20Business%20Update) - Overall semiconductor equipment spending in 2025 is anticipated to grow over 2024 levels, particularly in the primary markets of etch and deposition, where current demand remains healthy[68](index=68&type=chunk) - The company remains confident in the long-term demand for semiconductors, semiconductor capital equipment, and its products, driven by the increasing need for expanded productive capacity and advanced manufacturing process technologies[69](index=69&type=chunk) - Tariffs have not materially impacted demand for products or costs for materials to date, and current exclusions/exemptions (e.g, U.S-Mexico-Canada Agreement) remain applicable, but their indefinite continuation is not assured[68](index=68&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Sales increased 18.2% in Q2 2025, but gross margin fell and operating expenses rose, leading to a larger net loss [Net sales](index=20&type=section&id=Net%20sales) - The increase in net sales was primarily due to increased customer demand resulting from a stronger semiconductor capital equipment spending environment[74](index=74&type=chunk) Net Sales (in thousands) | Period | June 27, 2025 | June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended | $240,285 | $203,227 | $37,058 | 18.2% | | Six Months Ended | $484,750 | $404,610 | $80,140 | 19.8% | [Gross margin](index=21&type=section&id=Gross%20margin) - The decrease in gross margin was primarily due to increased material costs, unfavorable sales mix, and **$1.6 million** in inventory write-off costs associated with the planned exit from Scotland operations[75](index=75&type=chunk)[76](index=76&type=chunk) - The decrease was partially offset by reduced excess and obsolete inventory expense (**$1.3 million** for Q2, **$2.9 million** for six months)[75](index=75&type=chunk)[76](index=76&type=chunk) Gross Profit and Margin (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | $213,083 | $177,670 | $35,413 | 19.9% | | Gross profit | $27,202 | $25,557 | $1,645 | 6.4% | | Gross margin | 11.3% | 12.6% | -130 bps | | | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | Change Amount | Change % | | Cost of sales | $429,026 | $356,059 | $72,967 | 20.5% | | Gross profit | $55,724 | $48,551 | $7,173 | 14.8% | | Gross margin | 11.5% | 12.0% | -50 bps | | [Research and development](index=21&type=section&id=Research%20and%20development) - Fluctuations in R&D expenses were primarily due to changes in material and service costs from new product development programs and in employee-related expenses, inclusive of share-based compensation expense, and professional legal expenses[77](index=77&type=chunk) Research and Development Expenses (in thousands) | Period | June 27, 2025 | June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended | $5,710 | $5,926 | $(216) | (3.6)% | | Six Months Ended | $11,584 | $11,296 | $288 | 2.5% | [Selling, general, and administrative](index=21&type=section&id=Selling,%20general,%20and%20administrative) - Key drivers for the increase in SG&A include: **$2.0 million** in exit disposal costs for Scotland operations, **$1.3 million** (Q2) / **$1.5 million** (6 months) in employee health insurance claims, and increased software, IT services, and outside service provider costs[78](index=78&type=chunk)[79](index=79&type=chunk) Selling, General, and Administrative Expenses (in thousands) | Period | June 27, 2025 | June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended | $24,254 | $19,807 | $4,447 | 22.5% | | Six Months Ended | $45,996 | $39,026 | $6,970 | 17.9% | [Amortization of intangible assets](index=22&type=section&id=Amortization%20of%20intangible%20assets) Amortization of Intangible Assets (in thousands) | Period | June 27, 2025 | June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended | $2,078 | $2,086 | $(8) | (0.4)% | | Six Months Ended | $4,156 | $4,232 | $(76) | (1.8)% | [Interest expense, net](index=22&type=section&id=Interest%20expense,%20net) - The decrease in interest expense was primarily driven by the payoff of the revolving credit facility near the end of Q1 2024 and lower SOFR rates[81](index=81&type=chunk) Interest Expense, Net (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Interest expense, net | $1,635 | $1,858 | $(223) | (12.0)% | | Weighted average borrowings outstanding | $125,666 | $133,104 | $(7,438) | (5.6)% | | Weighted average borrowing rate | 6.06% | 7.45% | -139 bps | | | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | Change Amount | Change % | | Interest expense, net | $3,281 | $5,954 | $(2,673) | (44.9)% | | Weighted average borrowings outstanding | $126,614 | $188,520 | $(61,906) | (32.8)% | | Weighted average borrowing rate | 6.15% | 7.53% | -138 bps | | [Other expense, net](index=22&type=section&id=Other%20expense,%20net) - The change in other expense, net, was primarily due to currency exchange rate fluctuations related to local currency payables and cash holdings of foreign operations[82](index=82&type=chunk) Other Expense, Net (in thousands) | Period | June 27, 2025 | June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended | $193 | $50 | $143 | 286.0% | | Six Months Ended | $274 | $289 | $(15) | (5.2)% | [Income tax expense](index=22&type=section&id=Income%20tax%20expense) - The increase in income tax expense was primarily due to additional tax expense provisioned in Singapore in connection with **Pillar Two minimum tax rules** and increased withholding taxes[83](index=83&type=chunk) Income Tax Expense and Effective Rate (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Change Amount | Change % | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $2,740 | $942 | $1,798 | 190.9% | | Loss before income taxes | $(6,668) | $(4,170) | $(2,498) | 59.9% | | Effective income tax rate | (41.1)% | (22.6)% | -1,850 bps | | | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | Change Amount | Change % | | Income tax expense | $4,400 | $1,855 | $2,545 | 137.2% | | Loss before income taxes | $(9,567) | $(12,246) | $2,679 | (21.9)% | | Effective income tax rate | (46.0)% | (15.1)% | -3,090 bps | | [Non‑GAAP Financial Results](index=24&type=section&id=Non%E2%80%91GAAP%20Financial%20Results) Non-GAAP net income was $1.1 million in Q2 2025, excluding items like amortization and facility shutdown costs - Non-GAAP metrics exclude amortization of intangible assets, share-based compensation expense, and discrete or infrequent charges and gains (e.g, transaction-related costs, facility shutdown costs, severance costs), and related tax impacts[85](index=85&type=chunk) - Non-GAAP adjustments for Q2 2025 included **$2.078 million** for amortization of intangible assets, **$4.227 million** for share-based compensation, and **$4.296 million** for facility shutdown costs (including **$1.6 million** inventory write-off and **$1.3 million** ROU asset impairment related to Scotland operations exit)[90](index=90&type=chunk)[92](index=92&type=chunk) Non-GAAP Financial Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | U.S. GAAP net loss | $(9,408) | $(5,112) | $(13,967) | $(14,101) | | Non-GAAP net income (loss) | $1,097 | $1,819 | $5,333 | $(893) | | U.S. GAAP diluted EPS | $(0.28) | $(0.15) | $(0.41) | $(0.44) | | Non-GAAP diluted EPS | $0.03 | $0.05 | $0.16 | $(0.03) | | Non-GAAP operating margin | 2.6% | 2.2% | 2.6% | 1.7% | | Non-GAAP gross margin | 12.5% | 13.0% | 12.4% | 12.6% | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased by $16.4 million due to capital expenditures and debt repayments, offset by operating cash flow - The company believes that its cash and cash equivalents, the amounts available under its credit facilities, and its operating cash flow will be sufficient to fund its business and current obligations for at least the next 12 months and beyond[96](index=96&type=chunk) [Material Cash Requirements](index=27&type=section&id=Material%20Cash%20Requirements) - Primary liquidity requirements include working capital, business acquisitions, interest and principal payments under credit facilities, research and development investments and capital expenditures, payment of income taxes, and payments associated with noncancellable leases and related occupancy costs[95](index=95&type=chunk) [Sources and Conditions of Liquidity](index=27&type=section&id=Sources%20and%20Conditions%20of%20Liquidity) - Ongoing sources of liquidity are primarily derived from sales to customers and related changes in net operating assets and liabilities, and proceeds from credit facilities and equity offerings, when applicable[97](index=97&type=chunk) [Summary of Cash Flows](index=27&type=section&id=Summary%20of%20Cash%20Flows) - The decrease in cash provided by operating activities was primarily due to unfavorable changes in working capital of **$15.9 million**, partially offset by an increase in net non-cash charges and a decrease in net loss[100](index=100&type=chunk) - Cash used in financing activities decreased significantly year-over-year due to the prior year's **$136.7 million** proceeds from an ordinary share issuance, partially offset by the payoff of a **$115 million** revolving credit facility in Q1 2024[101](index=101&type=chunk) Summary of Cash Flows (in thousands) | Activity | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $11,469 | $22,296 | | Cash used in investing activities | $(25,772) | $(7,337) | | Cash provided by (used in) financing activities | $(2,142) | $19,435 | | Net increase (decrease) in cash | $(16,445) | $34,394 | | Cash at end of period | $92,224 | $114,349 | [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) - Significant estimates include inventory valuation, uncertain tax positions, valuation allowance on deferred tax assets, and impairment analysis for both definite-lived intangible assets and goodwill[23](index=23&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=28&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) There have been no material changes to market risk disclosures since the 2024 Annual Report on Form 10-K - No material changes to market risk disclosures since the 2024 Annual Report on Form 10-K[104](index=104&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were evaluated and found to be effective as of the end of the reporting period [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Disclosure controls and procedures were evaluated and deemed effective as of June 27, 2025, providing reasonable assurance of achieving control objectives[105](index=105&type=chunk) [Inherent limitations on Effectiveness of Controls and Procedures](index=28&type=section&id=Inherent%20limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) - Internal control over financial reporting has inherent limitations, including human error and circumvention, providing only reasonable assurance, not preventing or detecting all misstatements[106](index=106&type=chunk) [Changes in Internal Control Over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the reporting period[107](index=107&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=29&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently a party to any material legal proceedings - No material adverse legal proceedings are currently active against the company or its subsidiaries[108](index=108&type=chunk) [ITEM 1A. RISK FACTORS](index=29&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the risk factors detailed in the 2024 Annual Report on Form 10-K - Readers should refer to the risk factors in the 2024 Annual Report on Form 10-K, as this report does not identify all risks, and past financial results are not reliable indicators of future performance[109](index=109&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=29&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds to report during the period - None to report[110](index=110&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=29&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities to report during the period - None to report[111](index=111&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=29&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[112](index=112&type=chunk) [ITEM 5. OTHER INFORMATION](index=29&type=section&id=ITEM%205.%20OTHER%20INFORMATION) There is no other information to report under this item - None to report[113](index=113&type=chunk) [ITEM 6. EXHIBITS](index=30&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including certifications and Inline XBRL documents - Exhibits include forms of Performance Restricted Stock Unit Agreement and Restricted Stock Unit Agreement under the 2025 Omnibus Incentive Plan, certifications of principal executive and financial officers, and Inline XBRL documents[114](index=114&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) The report is duly signed by the Chief Executive Officer and Chief Financial Officer - The report was signed by Jeffrey S Andreson (CEO) and Greg Swyt (CFO) on August 5, 2025[119](index=119&type=chunk)

Group 1 - U.S. stock futures are higher, with Dow futures gaining around 0.1% [1] - Inspire Medical Systems, Inc. shares fell 25% to $98.00 in pre-market trading after reporting second-quarter results and cutting FY25 guidance below estimates [1] - Ichor Holdings, Ltd. declined 24.3% to $15.24 in pre-market trading due to worse-than-expected second-quarter adjusted EPS results and below-estimate third-quarter adjusted EPS guidance [3] Group 2 - Gartner, Inc. shares fell 15% to $287.20 after issuing soft FY25 guidance [3] - Vertex Pharmaceuticals Incorporated declined 14.5% to $403.85 following second-quarter financial results and Vx-993 Phase 2 trial results [3] - Semrush Holdings, Inc. fell 14.1% to $7.91 after reporting a second-quarter EPS miss [3] - Navitas Semiconductor Corporation shares dropped 14.1% to $6.92 after issuing third-quarter sales guidance below estimates [3] - Kyndryl Holdings, Inc. fell 12.2% to $32.21 after reporting a first-quarter revenue miss [3]

Core Insights - Ichor reported Q2 FY2025 GAAP revenue of $240.3 million, exceeding expectations, but non-GAAP earnings per share fell to $0.03, significantly below the $0.14 estimate, indicating profitability challenges due to margin pressure and operational inefficiencies [1][5][10] Financial Performance - Non-GAAP EPS for Q2 FY2025 was $0.03, down 40% from $0.05 in Q2 FY2024 [2] - GAAP revenue increased by 18.3% year-over-year from $203.2 million in Q2 FY2024 [2] - Non-GAAP gross margin decreased to 12.5% from 13.0% in the prior year [2] - Free cash flow turned negative at $(14.8) million, a decline of 201.4% compared to $14.6 million in Q2 FY2024 [2][7] Business Overview - Ichor specializes in precision fluid delivery systems essential for semiconductor manufacturing, serving major clients like Lam Research and ASML [3] - The company is focusing on increasing proprietary product content and operational flexibility, aiming to internalize more gas panel components to enhance margins and supply control [4] Operational Challenges - Despite strong revenue, profitability was impacted by a decline in gross margin from 12.6% in Q2 FY2024 to 11.3% in Q2 FY2025, attributed to slow internal production integration and reliance on external suppliers [6] - The company faced operational setbacks, including a strategic exit from its refurbishment operation in Scotland, which previously contributed approximately $10 million in annual revenue [5][6] Future Outlook - For Q3 FY2025, Ichor expects revenue between $225 million and $245 million, with a midpoint of $235 million, slightly below Q2 FY2025 actual revenue [10] - Non-GAAP EPS guidance for Q3 FY2025 is projected between $0.06 and $0.18, indicating potential recovery [10] - Management anticipates sequential improvement in gross margins, targeting 15% to 16% for the second half of FY2025, but has tempered expectations for full-year gross margins compared to prior years [10][11]

Group 1 - Ichor Holdings reported quarterly earnings of $0.03 per share, missing the Zacks Consensus Estimate of $0.14 per share, and down from $0.05 per share a year ago, representing an earnings surprise of -78.57% [1] - The company posted revenues of $240.29 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.04%, and up from $203.23 million year-over-year [2] - Ichor Holdings has surpassed consensus revenue estimates three times over the last four quarters, while it has only surpassed consensus EPS estimates once in the same period [2] Group 2 - The stock has underperformed, losing about 39.9% since the beginning of the year compared to the S&P 500's gain of 6.1% [3] - The current consensus EPS estimate for the coming quarter is $0.21 on revenues of $232.9 million, and for the current fiscal year, it is $0.71 on revenues of $950.18 million [7] - The Electronics - Semiconductors industry, to which Ichor Holdings belongs, is currently in the top 38% of the Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]