Ichor Holdings, Ltd. (NPO) Q2 2024 Earnings Conference Call August 6, 2024 4:30 PM ET Company Participants Claire McAdams - Investor Relations & Strategic Initiatives Jeff Andreson - Chief Executive Officer Greg Swyt - Chief Financial Officer Conference Call Participants Brian Chin - Stifel Krish Sankar - TD Cowen Charles Shi - Needham & Co. Craig Ellis - B. Riley Securities Christian Schwab - Craig-Hallum Tom Diffely - D.A. Davidson Operator Good day, ladies and gentlemen and welcome to Ichor's Second Quar ...

Company Performance - Ichor Holdings reported quarterly earnings of $0.05 per share, exceeding the Zacks Consensus Estimate of $0.03 per share, and up from $0.02 per share a year ago, representing an earnings surprise of 66.67% [1] - The company posted revenues of $203.23 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 2.77%, compared to year-ago revenues of $185.01 million [2] - Over the last four quarters, Ichor Holdings has surpassed consensus revenue estimates four times, but has only beaten EPS estimates once [2] Stock Performance - Ichor Holdings shares have declined approximately 16.2% since the beginning of the year, while the S&P 500 has gained 8.7% [3] - The current Zacks Rank for Ichor Holdings is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $202.85 million, and for the current fiscal year, it is $0.28 on revenues of $816.03 million [7] - The outlook for the Electronics - Semiconductors industry, where Ichor Holdings operates, is currently in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8] Industry Context - Broadcom Inc., another company in the same industry, is expected to report quarterly earnings of $1.20 per share, reflecting a year-over-year change of +14.3%, with revenues anticipated to be $12.9 billion, up 45.4% from the year-ago quarter [9][10]

Financial Performance - Revenue for Q2 2024 was $203.2 million, an increase from $201.4 million in Q1 2024 and $185.0 million in Q2 2023[2]. - Net loss for Q2 2024 was $5.1 million, improving from a net loss of $9.0 million in Q1 2024 and $20.7 million in Q2 2023[2][4]. - Non-GAAP net income was $1.8 million with a non-GAAP diluted EPS of $0.05, compared to a loss of $2.7 million and an EPS of $(0.09) in Q1 2024[5]. - Operating loss for the quarter was $(2.262) million, an improvement from $(3.741) million in the previous quarter[17]. - The company reported a net loss of $(5.112) million for the quarter, compared to a net loss of $(20.656) million in the same quarter last year, showing a significant reduction of 75.3%[17]. - Ichor Holdings reported a net loss of $5,112 thousand for the three months ended June 28, 2024, an improvement from a net loss of $8,989 thousand in the previous quarter[19]. - Ichor Holdings' diluted EPS for the three months ended June 28, 2024, was $(0.15), while the non-GAAP diluted EPS was $0.05[25]. Cash Flow and Liquidity - Free cash flow for Q2 2024 was $15 million, supported by net cash provided by operating activities of $17.5 million[1][7]. - Cash and cash equivalents at the end of Q2 2024 were $114.3 million, an increase of $12.2 million from the prior quarter[7]. - Cash at the end of the period was $114,349 thousand, an increase from $102,124 thousand at the end of the previous quarter[19]. - For the three months ended June 28, 2024, net cash provided by operating activities was $17,492 thousand, with capital expenditures of $2,847 thousand[28]. - For the six months ended June 28, 2024, net cash provided by operating activities was $22,296 thousand, with capital expenditures of $7,337 thousand[28]. Inventory and Assets - The company reported a decrease in inventories of $9.2 million and accounts receivable of $8.2 million during Q2 2024[7]. - Total current assets were $418.636 million, slightly down from $421.221 million in the previous quarter[14]. - Cash and cash equivalents increased to $114.349 million as of June 28, 2024, up from $79.955 million at the end of December 29, 2023[14]. - Total liabilities decreased to $252.813 million from $260.156 million in the previous quarter, reflecting a reduction of 2.6%[15]. - The company maintained goodwill at $335.402 million, unchanged from the previous reporting periods[14]. - Total shareholders' equity was $694.876 million, a slight decrease from $697.232 million in the previous quarter[14]. Margins and Profitability - Gross margin was 12.6% on a GAAP basis and 13.0% on a non-GAAP basis, compared to 11.4% and 13.9% respectively in the previous year[2][4]. - Gross profit for the quarter was $25.557 million, compared to $25.742 million in the previous year, indicating a slight decrease of 0.7%[17]. - U.S. GAAP gross profit for the three months ended June 28, 2024, was $25,557 thousand, representing a gross margin of 12.6%, up from 11.4% in the previous quarter[20]. - Non-GAAP gross profit for the same period was $26,434 thousand, with a non-GAAP gross margin of 13.0%[20]. - Ichor Holdings' U.S. GAAP operating loss for the three months ended June 28, 2024, was $(2,262) thousand, while the non-GAAP operating income was $4,495 thousand[22]. Future Outlook - The company expects Q3 2024 revenue to be in the range of $195 million to $210 million, with GAAP diluted EPS projected between $(0.17) and $(0.06)[6]. - The company is seeing signs of recovery in customer demand for wafer fab processing equipment, anticipating a stronger second half of 2024[1]. - New proprietary product introductions and customer qualifications are underway, contributing to positive momentum[1]. Research and Development - Research and development expenses for the quarter were $5.926 million, up from $5.188 million in the same quarter last year, indicating an increase of 14.2%[17]. Tax and Valuation - A valuation allowance of $11.1 million was recorded against U.S. federal and state deferred tax assets during the second quarter of 2023[26]. - The company recorded a tax expense on a GAAP and non-GAAP basis reflecting the valuation allowance from the first quarter of 2024 onward[26]. - The valuation allowance against U.S. deferred tax assets reflects an assessment of both positive and negative evidence[26]. - The company projected being in a three-year cumulative loss position in the U.S. by the end of 2023, impacting future taxable income assessments[26]. - The company incurred $0.5 million in severance costs related to global reduction-in-force programs for the three and six months ended June 28, 2024[26].

Financial Performance - Net sales for the three months ended March 29, 2024, were $201,383 thousand, a decrease of 10.8% from $225,870 thousand in the same period of 2023[61][69]. - Gross margin decreased to 11.4% in Q1 2024 from 14.7% in Q1 2023, primarily due to reduced factory utilization and unfavorable product mix[61][71]. - The company reported a net loss of $8,989 thousand for Q1 2024, compared to a net loss of $5 thousand in Q1 2023[61][66]. - Operating margin for Q1 2024 was (1.9)%, down from 2.1% in Q1 2023, reflecting the impact of reduced sales and increased costs[61][68]. - Non-GAAP gross profit decreased from $34,948 thousand in Q1 2023 to $24,518 thousand in Q1 2024, while non-GAAP gross margin decreased from 15.5% to 12.2%[82]. - Non-GAAP operating income decreased from $13,721 thousand in Q1 2023 to $2,432 thousand in Q1 2024, with non-GAAP operating margin declining from 6.1% to 1.2%[83]. - Non-GAAP net loss increased from $11,128 thousand in Q1 2023 to $2,712 thousand in Q1 2024, with non-GAAP diluted EPS decreasing from $0.38 to $(0.09)[86]. Expenses and Costs - Research and development expenses increased by 24.5% to $5,370 thousand in Q1 2024, driven by higher employee-related expenses and costs related to new product development[61][72]. - Cost of sales decreased by 7.4% to $178,389 thousand in Q1 2024, compared to $192,630 thousand in Q1 2023[61][70]. - Selling, general, and administrative expenses decreased by 4.7% to $19,219 thousand in Q1 2024, mainly due to reduced employee-related expenses[61][73]. - Amortization of intangible assets decreased by $1,820 thousand, or 45.9%, from $3,966 thousand in Q1 2023 to $2,146 thousand in Q1 2024 due to certain intangible assets becoming fully amortized[74]. - Net interest expense decreased by $454 thousand, or 10.0%, from $4,550 thousand in Q1 2023 to $4,096 thousand in Q1 2024, primarily due to a decrease in weighted average borrowings outstanding by $58,544 thousand, or 19.4%[76]. - Other expense, net decreased by $545 thousand, or 69.5%, from $784 thousand in Q1 2023 to $239 thousand in Q1 2024, primarily due to currency exchange rate fluctuations[77]. - Income tax expense increased by $1,448 thousand, from a benefit of $535 thousand in Q1 2023 to an expense of $913 thousand in Q1 2024, due to increased taxable income in foreign jurisdictions[78]. Cash Flow and Liquidity - Cash and cash equivalents increased by $22.2 million from the prior year, totaling $102.1 million as of March 29, 2024, primarily due to net proceeds of $136.7 million from a public offering[93]. - Cash provided by operating activities was $4.8 million in Q1 2024, compared to cash used of $10.9 million in Q1 2023, reflecting favorable changes in accounts payable and accrued liabilities[95]. - The company has $250.0 million available to draw on its revolving credit facility as of March 29, 2024, supporting its liquidity needs[92]. - Cash provided by financing activities included net proceeds of $136.7 million from the issuance of 3.8 million ordinary shares in March 2024, offset by net payments on credit facilities of $116.9 million[99]. - Total indebtedness as of March 29, 2024, was $133.1 million, with $7.5 million due within 12 months, and no material risks anticipated from changes in interest rates[104]. - A hypothetical 100 basis point change in the interest rate on outstanding debt would have resulted in a $0.3 million change to interest expense during the quarter, or $1.3 million on an annualized basis[104]. Market Conditions and Future Outlook - The semiconductor industry is experiencing a cyclical downturn, impacting customer demand and spending on capital equipment[62][63]. - The company initiated labor and cost reduction initiatives starting in Q4 2022, incurring severance charges of $0.9 million in Q1 2024[62]. - Future growth is anticipated as demand for semiconductors and capital equipment is expected to return, driven by the need for increased semiconductor production capacity[63]. Foreign Currency and Risk Management - Foreign currency exchange risks are mitigated as substantially all sales arrangements are priced in U.S. dollars, reducing exposure to material exchange rate fluctuations[102]. - Operating expenses may be subject to fluctuations due to foreign currency exchange rates, particularly in currencies such as the Singapore dollar and euro, but transaction gains and losses have not been material[103]. - The company has not engaged in foreign currency hedging transactions to date[103]. Accounting Policies and Estimates - Critical accounting estimates and assumptions are evaluated on an ongoing basis, with actual results potentially differing from estimates impacting future financial statements[100]. - Significant accounting policies impacting consolidated financial statements are detailed in the 2023 Annual Report on Form 10-K[101].

Financial Data and Key Metrics Changes - Q1 2024 revenues were $201 million, consistent with Q4 levels, reflecting stable demand in the wafer fab equipment market [14][18] - Gross margin improved to 12.2%, up 180 basis points sequentially, but fell short of expectations due to product mix and higher costs [14][18] - Cash and equivalents increased by $22 million from Q4 to $102 million, with a free cash flow of roughly neutral after capital expenditures [9][40] - Net interest expense is expected to decline to approximately $9 million for the full year of 2024 [10] Business Line Data and Key Metrics Changes - The gas panel business remains a significant portion of revenue, accounting for about two-thirds of total business [26] - Proprietary products, including next-generation gas panels, are expected to drive margin expansion, with 80% proprietary content compared to 10% previously [37][38] - The IMG business is seeing improved demand forecasts and share gains in aerospace and defense markets [6] Market Data and Key Metrics Changes - The semiconductor market is experiencing a slowdown in EUV gas delivery build rates due to order delays in leading-edge logic [4][36] - Demand for NAND is anticipated to improve significantly in 2025, driven by technology upgrades and increased storage needs for AI applications [71] Company Strategy and Development Direction - The company aims to enhance gross margins through greater integration of proprietary components and cost reduction initiatives [4][6] - Future growth is expected to ramp revenues back towards $250 million to $300 million in 2025, with significant operating leverage as revenues grow [38] - The company is focused on expanding its proprietary content across various business lines, including components and gas panels [17][37] Management's Comments on Operating Environment and Future Outlook - Management noted that visibility into demand remains limited to approximately three months, with expectations for a stronger recovery in 2025 [90] - The current industry demand is stable, with some softness in specific areas like silicon carbide gas panels and EUV system build rates [36][42] - Management remains optimistic about revenue volumes improving in the second half of the year as demand begins to build [90] Other Important Information - An equity offering in March raised net proceeds of $137 million, significantly improving the company's capital structure and reducing interest expenses [5][40] - The company recorded its first revenue from next-generation gas panels during Q1, with ongoing evaluations expected to take about nine months [37] Q&A Session Summary Question: Does the company have exposure to semi equipment OEMs in China? - The company confirmed it does not sell directly to Chinese OEMs and expects China to remain strong in the first half of the year, but potentially slower in the second half [43] Question: What is the impact of inventory normalization on revenue? - Management indicated that they are carrying higher levels of safety stock, which should alleviate the need for OEMs to restock significantly [66] Question: How does the company view the recovery in NAND? - Management believes that the recovery in NAND will be beneficial, with expectations for significant improvement in 2025 as the market rebounds [71] Question: What is the timeline for orders and shipments related to EUV tools? - The company ships about five months before a tool is delivered by ASML, and recent reductions in build plans have affected their order flow [56] Question: What is the outlook for gross margins in the second half of the year? - Management expects to see incremental margin improvements as proprietary products are integrated and efficiencies are realized in production [92]

Ichor Holdings (ICHR) came out with a quarterly loss of $0.09 per share versus the Zacks Consensus Estimate of $0.01. This compares to earnings of $0.38 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -1,000%. A quarter ago, it was expected that this company would post earnings of $0.07 per share when it actually produced a loss of $0.06, delivering a surprise of -185.71%.Over the last four quarters, the company has surpassed ...

Financial Performance - Q1 2024 revenue was $201.4 million, a decrease of 1.1% from Q4 2023 ($203.5 million) and a decrease of 10.8% from Q1 2023 ($225.9 million) [2] - Q1 2024 GAAP gross margin was 11.4%, up from 10.0% in Q4 2023 but down from 14.7% in Q1 2023 [1] - Q1 2024 net loss was $9.0 million, an improvement from a net loss of $11.9 million in Q4 2023 and a net income of $0.0 million in Q1 2023 [2] - Q1 2024 diluted EPS was $(0.30), compared to $(0.40) in Q4 2023 and $0.00 in Q1 2023 [2] - Non-GAAP net loss for Q1 2024 was $(2.7) million, compared to $(1.7) million in Q4 2023 and $11.1 million in Q1 2023 [3] - Operating loss for the three months ended March 29, 2024, was $3.7 million, an improvement from a loss of $8.0 million in the previous quarter [32] - U.S. GAAP net loss for Q1 2024 was $8.989 million, an improvement from a loss of $11.899 million in Q4 2023 [36] - Non-GAAP net loss for Q1 2024 was $2.712 million, compared to a loss of $1.675 million in Q4 2023 and a profit of $11.128 million in Q1 2023 [36] - Non-GAAP operating income for the three months ended March 29, 2024, was $2.4 million, compared to $13.7 million in the same period last year [32] - U.S. GAAP diluted EPS for Q1 2024 was $(0.30), improving from $(0.40) in Q4 2023 [36] - Non-GAAP diluted EPS for Q1 2024 was $(0.09), slightly worse than $(0.06) in Q4 2023 [36] Cash Flow and Liquidity - Cash and cash equivalents at the end of Q1 2024 were $102.1 million, an increase of $22.2 million from the prior year [6] - Cash provided by operating activities in Q1 2024 was $4.8 million, consisting of a net loss of $9.0 million and net non-cash charges of $10.2 million [8] - Net cash provided by operating activities for Q1 2024 was $4.804 million, down from $37.574 million in Q4 2023 [38] - Free cash flow for Q1 2024 was $314 thousand, a significant decrease from $35.317 million in Q4 2023 [38] - Cash and cash equivalents increased to $102.1 million as of March 29, 2024, up from $80.0 million at the end of the previous quarter [27] Debt and Assets - The company reduced total debt outstanding by $117 million at the end of Q1 2024 [3] - Total current assets rose to $421.2 million, compared to $401.4 million in the previous quarter [23] - Total liabilities decreased significantly to $260.2 million from $373.8 million in the previous quarter [23] - The company issued ordinary shares, net of fees, amounting to $136.7 million during the quarter [27] Expenses and Investments - Research and development expenses for the three months ended March 29, 2024, were $5.4 million, slightly down from $5.5 million in the previous quarter [25] - Capital expenditures in Q1 2024 were $4.490 million, compared to $2.257 million in Q4 2023 [38] - Share-based compensation expenses were $2.375 million in Q1 2024, down from $4.672 million in Q4 2023 [36] - The company incurred transaction-related costs of $785 thousand in Q1 2024 related to acquisitions [36] Future Outlook - For Q2 2024, the company expects revenue to be in the range of $190 million to $205 million and GAAP diluted EPS to be between $(0.22) and $(0.10) [4] - The company aims to deepen and expand its penetration of proprietary products in the semiconductor capital equipment market [1] Valuation and Tax - The company recorded a valuation allowance against U.S. federal and state deferred tax assets starting Q1 2024 [37]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 _____________________________________________________________ FORM 10-K _____________________________________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______ to _______ Co ...

Ichor Holdings, Ltd. (NASDAQ:ICHR) Q4 2023 Results Conference Call February 6, 2024 4:30 PM ET Company Participants Claire McAdams - IR Jeff Andreson - CEO Greg Swyt - CFO Conference Call Participants Craig Ellis - B. Riley Securities Brian Chin - Stifel Charles Shi - Needham & Company Robert Mertens - TD Cowen & Company David Duley - Steelhead Securities Operator Good day, ladies and gentlemen. Welcome to Ichor Fourth Quarter 2023 Earnings Conference Call [Operator Instructions]. I would now like to turn t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 29, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __ to __ Commission File Number: 001-37961 _________________________________________________________________________________________________________________ ...