(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 26, 2021 OR ☐ 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ICHOR HOLDINGS, LTD. (Exact Name of Registrant as Specified in its Charter) Cayman Islands Not Applicable ( State or ...

Ichor Holdings Ltd. (NASDAQ:ICHR) Q1 2021 Earnings Conference Call May 4, 2021 4:30 PM ET Company Participants Claire McAdams - Investor Relations Jeffrey Andreson - Executive Director & Chief Executive Officer Larry Sparks - Chief Financial Officer Conference Call Participants Quinn Bolton - Needham & Company Tom Diffely - D.A. Davidson & Co. Patrick Ho - Stifel Craig Ellis - B. Riley Securities Krish Sankar - Cowen and Company Operator Good day, ladies and gentlemen, and welcome to Ichor's First Quarter 2 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) For the fiscal year ended December 25, 2020 or (State or other jurisdiction of incorporation) ☐ 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 ICHOR HOLDINGS, LTD. Cay ...

Ichor Holdings Ltd (NASDAQ:ICHR) Q4 2020 Earnings Conference Call February 2, 2021 4:30 PM ET Company Participants Claire McAdams - IR Jeffrey Andreson - Executive Director & CEO Larry Sparks - CFO Conference Call Participants J. Ho - Stifel, Nicolaus & Company Craig Ellis - B. Riley Securities Mitch Steves - RBC Capital Markets Quinn Bolton - Needham & Company Sidney Ho - Deutsche Bank Tom Diffely - D.A. Davidson & Co. Krish Sankar - Cowen and Company David Duley - Steelhead Securities Operator Good day, ...

PART I [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) The unaudited consolidated financial statements detail the company's financial position, operations, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Metric | September 25, 2020 | December 27, 2019 | | :-------------------------------- | :------------------- | :------------------ | | Total assets | $605,441 | $566,555 | | Total current assets | $326,200 | $276,947 | | Total liabilities | $350,774 | $345,139 | | Total shareholders' equity | $254,667 | $221,416 | - Total assets increased by **$38.886 million (6.86%)** from December 27, 2019, to September 25, 2020, primarily driven by increases in cash, accounts receivable, and inventories[9](index=9&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $227,678 | $154,456 | $669,270 | $431,482 | | Gross profit | $32,506 | $20,693 | $90,542 | $60,449 | | Operating income | $12,532 | $3,322 | $27,336 | $9,271 | | Net income | $10,548 | $923 | $20,758 | $2,777 | | Basic EPS | $0.46 | $0.04 | $0.91 | $0.12 | | Diluted EPS | $0.45 | $0.04 | $0.89 | $0.12 | - Net sales for the three months ended September 25, 2020, increased by **47.4% year-over-year**, and net income surged by **1042.8% to $10.548 million**[11](index=11&type=chunk) - For the nine months ended September 25, 2020, net sales grew by **55.1% year-over-year**, and net income increased by **647.5% to $20.758 million**[11](index=11&type=chunk) [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' Equity Changes (in thousands) | Metric | September 25, 2020 | December 27, 2019 | | :-------------------------------- | :------------------- | :------------------ | | Total Shareholders' Equity | $254,667 | $221,416 | | Additional Paid-In Capital | $254,811 | $242,318 | | Retained Earnings | $91,432 | $70,674 | - Total shareholders' equity increased by **$33.251 million** from December 27, 2019, to September 25, 2020, primarily due to net income of **$20.758 million** and share-based compensation expense of **$7.423 million**[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(1,878) | $25,003 | | Net cash used in investing activities | $(8,291) | $(16,495) | | Net cash provided by (used in) financing activities | $28,476 | $(22,167) | | Net increase (decrease) in cash | $18,307 | $(13,659) | | Cash at end of period | $78,919 | $30,175 | - Cash at the end of the period increased significantly to **$78.919 million** as of September 25, 2020, from $30.175 million in the prior year, driven by financing activities[18](index=18&type=chunk) - Operating activities resulted in a net cash outflow of **$1.878 million** for the nine months ended September 25, 2020, a decrease from a **$25.003 million** inflow in the prior year, primarily due to changes in working capital[18](index=18&type=chunk)[93](index=93&type=chunk) [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 financial statements are prepared in accordance with U.S. GAAP, with certain information condensed or omitted as permitted for interim reporting[19](index=19&type=chunk) - The company uses a 52- or 53-week fiscal year ending on the last Friday in December; the third quarters of 2020 and 2019 were both 13 weeks[20](index=20&type=chunk) - Revenue is recognized when control of promised goods or services is transferred to customers, primarily for fluid delivery subsystems, weldments, and other components, generally upon delivery[22](index=22&type=chunk)[24](index=24&type=chunk) - Adoption of ASU 2016-13 (Credit Losses) and ASU 2018-15 (Cloud Computing Arrangements) in Q1 2020 did not significantly impact financial statements, though **$3.0 million** in ERP implementation costs were capitalized[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2 – Inventories](index=9&type=section&id=Note%202%20%E2%80%93%20Inventories) Inventories (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :------------------------ | :------------------- | :------------------ | | Raw materials | $88,791 | $85,329 | | Work in process | $37,345 | $31,825 | | Finished goods | $23,471 | $17,700 | | Excess and obsolete adjustment | $(12,024) | $(7,817) | | Total inventories | $137,583 | $127,037 | - Total inventories increased by **$10.546 million (8.3%)** from December 27, 2019, to September 25, 2020, with a notable increase in the excess and obsolete adjustment[29](index=29&type=chunk) [Note 3 – Property and Equipment and Other Noncurrent Assets](index=9&type=section&id=Note%203%20%E2%80%93%20Property%20and%20Equipment%20and%20Other%20Noncurrent%20Assets) Property and Equipment, Net (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :-------------------------------- | :------------------- | :------------------ | | Total property and equipment, net | $44,574 | $44,541 | | Accumulated depreciation | $(35,373) | $(27,600) | | Construction-in-process | $4,828 | $3,760 | - Depreciation expense for the third quarter of 2020 was **$3.0 million**, up from $2.2 million in 2019; for the nine months, it was **$8.0 million** in 2020, up from $6.3 million in 2019[30](index=30&type=chunk) Capitalized Cloud Computing Implementation Costs (in thousands) | Metric | Amount | | :----------------------------------------- | :------- | | Capitalized costs as of December 27, 2019 | $0 | | Costs capitalized during the period | $3,042 | | Capitalized costs as of September 25, 2020 | $3,042 | [Note 4 – Intangible Assets](index=10&type=section&id=Note%204%20%E2%80%93%20Intangible%20Assets) Definite-Lived Intangible Assets, Net (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :---------------------- | :------------------- | :------------------ | | Trademarks | $1,212 | $1,940 | | Customer relationships | $31,891 | $40,365 | | Developed technology | $8,916 | $9,722 | | Total intangible assets | $42,019 | $52,027 | - Total definite-lived intangible assets, net, decreased by **$10.008 million (19.2%)** from December 27, 2019, to September 25, 2020, primarily due to amortization[32](index=32&type=chunk)[34](index=34&type=chunk) [Note 5 – Leases](index=10&type=section&id=Note%205%20%E2%80%93%20Leases) Lease Expense (in thousands) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating lease cost | $1,363 | $1,722 | $4,015 | $5,015 | - Operating lease costs decreased for both the three-month and nine-month periods year-over-year[34](index=34&type=chunk) Future Minimum Lease Payments (in thousands) | Year | Amount | | :------------------------ | :------- | | 2020, remaining | $1,409 | | 2021 | $4,929 | | 2022 | $4,149 | | 2023 | $1,179 | | 2024 | $243 | | Thereafter | $26 | | Total lease liabilities | $11,207 | - The weighted-average remaining lease term for operating leases is **2.5 years**, with a weighted-average discount rate of **4.5%** as of September 25, 2020[35](index=35&type=chunk) [Note 6 – Income Taxes](index=11&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) Income Tax Benefit and Effective Tax Rate | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income tax benefit | $(310) | $(221) | $(363) | $(1,687) | | Effective income tax rate | -3.0% | -31.5% | -1.8% | -154.8% | - The CARES Act is expected to generate an additional income tax refund of approximately **$1.0 million** from NOL carryback provisions[38](index=38&type=chunk) - The effective tax rate for the three and nine months ended September 25, 2020, differs from the statutory rate due to foreign income taxes (including a Singapore tax holiday), stock option exercises, and return-to-provision adjustments[39](index=39&type=chunk) [Note 7 – Employee Benefit Programs](index=12&type=section&id=Note%207%20%E2%80%93%20Employee%20Benefit%20Programs) 401(k) Matching Contributions (in thousands) | Period | 2020 | 2019 | | :---------------------- | :----- | :----- | | Three Months Ended Sep | $500 | $400 | | Nine Months Ended Sep | $1,500 | $1,100 | - Matching contributions to the 401(k) plan increased for both the three-month and nine-month periods year-over-year[42](index=42&type=chunk) [Note 8 – Long-Term Debt](index=12&type=section&id=Note%208%20%E2%80%93%20Long-Term%20Debt) Long-Term Debt (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :------------------------------------ | :------------------- | :------------------ | | Term loan | $155,312 | $161,875 | | Revolving credit facility | $49,162 | $19,162 | | Total principal amount of long-term debt | $204,474 | $181,037 | | Total long-term debt, net | $202,217 | $178,054 | | Current portion of long-term debt | $8,750 | $8,750 | - Total principal amount of long-term debt increased by **$23.437 million (12.9%)** from December 27, 2019, to September 25, 2020, primarily due to increased borrowings on the revolving credit facility[43](index=43&type=chunk) - The term loan and revolving credit facility bore interest at Eurodollar rates of **3.50%** and **2.78%**, respectively, as of September 25, 2020[44](index=44&type=chunk) [Note 9 – Share‑Based Compensation](index=13&type=section&id=Note%209%20%E2%80%93%20Share%E2%80%91Based%20Compensation) Share-Based Compensation Expense (in thousands) | Period | 2020 | 2019 | | :---------------------- | :----- | :----- | | Three Months Ended Sep | $2,400 | $1,800 | | Nine Months Ended Sep | $7,400 | $4,600 | - Share-based compensation expense increased for both the three-month and nine-month periods year-over-year[47](index=47&type=chunk) Stock Option Activity (as of Sep 25, 2020) | Metric | Number of Stock Options | Weighted Average Exercise Price | | :-------------------------- | :---------------------- | :------------------------------ | | Outstanding | 1,479,543 (time vesting) + 65,908 (performance vesting) | $22.24 | | Exercisable | 652,976 (time vesting) + 65,908 (performance vesting) | $20.92 | Restricted Share Unit (RSU) Activity (as of Sep 25, 2020) | Metric | Number of RSUs | Weighted Average Grant Date Fair Value | | :------------------------ | :------------- | :------------------------------------- | | Unvested | 561,303 (time vesting) + 17,730 (performance vesting) | $23.84 | | Granted during period | 354,496 | $24.22 | [Note 10 – Segment Information](index=14&type=section&id=Note%2010%20%E2%80%93%20Segment%20Information) - The company operates in one operating segment, with key resources and performance assessed on a company-wide level[52](index=52&type=chunk) Net Sales by Geographic Area (in thousands) | Geographic Area | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | United States of America | $125,538 | $77,997 | $364,071 | $231,529 | | Singapore | $73,196 | $53,806 | $220,732 | $134,083 | | Europe | $18,191 | $13,225 | $51,686 | $38,115 | | Other | $10,753 | $9,428 | $32,781 | $27,755 | | Total net sales | $227,678 | $154,456 | $669,270 | $431,482 | - Sales in the U.S. and Singapore showed significant increases for both the three-month and nine-month periods year-over-year[53](index=53&type=chunk) [Note 11 – Earnings per Share](index=14&type=section&id=Note%2011%20%E2%80%93%20Earnings%20per%20Share) Earnings Per Share (EPS) Reconciliation | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $10,548 | $923 | $20,758 | $2,777 | | Basic weighted average ordinary shares outstanding | 23,051,994 | 22,454,408 | 22,875,186 | 22,373,181 | | Diluted weighted average ordinary shares outstanding | 23,347,460 | 22,718,882 | 23,199,618 | 22,629,855 | | Basic EPS | $0.46 | $0.04 | $0.91 | $0.12 | | Diluted EPS | $0.45 | $0.04 | $0.89 | $0.12 | - Diluted EPS increased significantly from **$0.04 to $0.45** for the three months ended September 25, 2020, and from **$0.12 to $0.89** for the nine months ended September 25, 2020, reflecting strong net income growth[54](index=54&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=15&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, operational results, COVID-19 impacts, and liquidity analysis [Overview](index=15&type=section&id=Overview) - Ichor Holdings, Ltd. is a leader in designing, engineering, and manufacturing critical fluid delivery subsystems for semiconductor capital equipment, including gas and chemical delivery subsystems, weldments, and precision machined components[57](index=57&type=chunk) - The company benefits from an industry trend where semiconductor OEMs increasingly outsource fluid delivery subsystem design and manufacturing to specialized suppliers[58](index=58&type=chunk) - Ichor has a global footprint with production facilities in Malaysia, Singapore, South Korea, and various U.S. states; its two largest customers are Lam Research and Applied Materials[59](index=59&type=chunk) [COVID-19 Pandemic and Market Conditions Update](index=16&type=section&id=COVID-19%20Pandemic%20and%20Market%20Conditions%20Update) - The COVID-19 pandemic has caused significant volatility and uncertainty, leading to temporary facility shutdowns and reduced factory capacity due to social distancing guidelines[63](index=63&type=chunk) - Increased direct costs for PPE, facility cleaning, layout changes, logistics, and labor, along with operating inefficiencies, have resulted in **lower revenues and operating margins**[63](index=63&type=chunk) - The company implemented a Business Continuity Plan (BCP) with measures such as providing PPE, temperature screening, social distancing, remote work for non-manufacturing employees, reduced business travel, and increased facility cleaning[64](index=64&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) Key Financial Performance (in thousands, except percentages) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $227,678 | $154,456 | $669,270 | $431,482 | | Gross profit | $32,506 | $20,693 | $90,542 | $60,449 | | Gross margin | 14.3% | 13.4% | 13.5% | 14.0% | | Operating income | $12,532 | $3,322 | $27,336 | $9,271 | | Net income | $10,548 | $923 | $20,758 | $2,777 | - Net sales increased by **47.4%** for the three months and **55.1%** for the nine months ended September 25, 2020, compared to the prior year, driven by increased demand in the global wafer fabrication equipment market and market share gains[69](index=69&type=chunk) - Gross margin improved by **90 basis points to 14.3%** for the three months ended September 25, 2020, due to higher operating leverage and favorable product mix, despite increased COVID-19 related costs and facility closure expenses[71](index=71&type=chunk) - Operating income for the three months ended September 25, 2020, surged by **277.2% to $12.532 million**, and for the nine months, it increased by **194.8% to $27.336 million**[66](index=66&type=chunk) [Net Sales](index=17&type=section&id=Net%20Sales) Net Sales Growth (in thousands) | Period | 2020 Net Sales | 2019 Net Sales | Amount Change | % Change | | :---------------------- | :--------------- | :--------------- | :------------ | :--------- | | Three Months Ended Sep | $227,678 | $154,456 | $73,222 | 47.4% | | Nine Months Ended Sep | $669,270 | $431,482 | $237,788 | 55.1% | - U.S. sales increased by **$47.5 million (60.9%)** for the three months and **$132.5 million (57.2%)** for the nine months, while foreign sales increased by **$25.7 million (47.7%)** and **$105.2 million (78.5%)** respectively[69](index=69&type=chunk) [Cost of Sales and Gross Profit](index=17&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) Cost of Sales and Gross Profit (in thousands) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :---------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of sales | $195,172 | $133,763 | $578,728 | $371,033 | | Gross profit | $32,506 | $20,693 | $90,542 | $60,449 | | Gross margin | 14.3% | 13.4% | 13.5% | 14.0% | - Gross margin for the three months ended September 25, 2020, increased by **90 basis points to 14.3%**, driven by higher operating leverage and favorable product mix, partially offset by COVID-19 related costs and Union City facility closure expenses[71](index=71&type=chunk) - Gross margin for the nine months ended September 25, 2020, decreased by **50 basis points to 13.5%**, primarily due to increased COVID-19 related operating costs, a **$1.4 million** contract settlement loss, and **$1.9 million** in Union City facility closure costs (inventory write-off, severance, accelerated depreciation)[72](index=72&type=chunk) [Research and Development](index=18&type=section&id=Research%20and%20Development) Research and Development Expenses (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $3,269 | $2,987 | $282 | 9.4% | | Nine Months Ended Sep | $10,100 | $8,012 | $2,088 | 26.1% | - The increase in R&D expenses for the three months was mainly due to **$0.4 million** in new product development costs[73](index=73&type=chunk) - The increase for the nine months was primarily due to **$1.8 million** in employee-related expenses from increased engineering headcount, including a team acquired in Q2 2019[74](index=74&type=chunk) [Selling, General, and Administrative](index=18&type=section&id=Selling,%20General,%20and%20Administrative) Selling, General, and Administrative Expenses (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $13,367 | $11,048 | $2,319 | 21.0% | | Nine Months Ended Sep | $43,098 | $33,491 | $9,607 | 28.7% | - The increase for the three months was driven by **$1.3 million** in employee-related expenses (including **$0.5 million** in share-based compensation), **$0.8 million** in legal and professional fees, and **$0.3 million** in occupancy costs[75](index=75&type=chunk) - The increase for the nine months was primarily due to **$1.8 million** in executive transition costs, **$5.6 million** in employee-related expenses (including **$2.5 million** in share-based compensation), **$1.7 million** in legal and professional fees, and **$0.9 million** in occupancy costs, partially offset by a **$0.7 million** indemnification asset release in 2019[76](index=76&type=chunk) [Amortization of Intangible Assets](index=19&type=section&id=Amortization%20of%20Intangible%20Assets) Amortization of Intangible Assets (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $3,338 | $3,336 | $2 | 0.1% | | Nine Months Ended Sep | $10,008 | $9,675 | $333 | 3.4% | - The increase in amortization expense for the nine months was primarily due to incremental amortization from developed technology assets purchased in Q2 2019[77](index=77&type=chunk) [Interest Expense](index=19&type=section&id=Interest%20Expense) Interest Expense (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $2,052 | $2,663 | $(611) | -22.9% | | Nine Months Ended Sep | $6,728 | $8,193 | $(1,465) | -17.9% | - The decrease in interest expense for the three months was primarily due to a lower weighted average interest rate (from **4.83% to 3.37%**), partially offset by a **$14.4 million** increase in average borrowed amount[78](index=78&type=chunk) - The decrease for the nine months was due to a lower weighted average interest rate (from **4.83% to 3.89%**) and a **$1.6 million** decrease in average borrowed amount[79](index=79&type=chunk) [Other Expense (Income), Net](index=19&type=section&id=Other%20Expense%20(Income),%20Net) Other Expense (Income), Net (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $242 | $(43) | $285 | n/m | | Nine Months Ended Sep | $213 | $(12) | $225 | n/m | - The increase in other expense, net, was primarily due to foreign currency transactions as the U.S. dollar fell against local currencies (Singapore dollar, Malaysian ringgit, British pound, euro, and South Korean won) during Q3 2020[80](index=80&type=chunk) [Income Tax Benefit](index=19&type=section&id=Income%20Tax%20Benefit) Income Tax Benefit (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $(310) | $(221) | $(89) | 40.3% | | Nine Months Ended Sep | $(363) | $(1,687) | $1,324 | -78.5% | - The increase in income tax benefit for the three months was due to increased excess tax benefits from stock option exercises, partially offset by higher U.S. taxable income[81](index=81&type=chunk) - The decrease in income tax benefit for the nine months was primarily due to fewer tax reserve releases in 2020 compared to 2019 and increased U.S. taxable income, partially offset by increased excess tax benefits from stock option exercises[82](index=82&type=chunk) [Non‑GAAP Results](index=20&type=section&id=Non%E2%80%91GAAP%20Results) Non-GAAP Net Income and Diluted EPS (in thousands, except per share amounts) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | U.S. GAAP net income | $10,548 | $923 | $20,758 | $2,777 | | Non-GAAP net income | $14,581 | $6,748 | $39,208 | $17,417 | | U.S. GAAP diluted EPS | $0.45 | $0.04 | $0.89 | $0.12 | | Non-GAAP diluted EPS | $0.62 | $0.30 | $1.69 | $0.77 | - Non-GAAP adjustments include amortization of intangible assets, share-based compensation, other non-recurring expenses (ERP implementation, SOX compliance, acquisition-related, executive transition), contract settlement losses, facility shutdown costs, and related tax impacts[83](index=83&type=chunk)[84](index=84&type=chunk)[88](index=88&type=chunk) - Non-GAAP net income for the three months ended September 25, 2020, increased by **116.1% year-over-year**, and for the nine months, it increased by **125.1%**[84](index=84&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash balance increased by **$18.3 million to $78.9 million** as of September 25, 2020, from December 27, 2019[90](index=90&type=chunk) - The increase in cash was primarily due to **$23.4 million** in net proceeds from credit facilities and **$5.0 million** from share issuance under compensation plans, partially offset by **$8.3 million** in capital expenditures and **$1.9 million** cash used in operating activities[90](index=90&type=chunk) - Management believes current cash, revolving credit facility availability, and cash flows from operations will be sufficient to meet anticipated cash needs for at least the next 12 months, despite COVID-19 impacts[91](index=91&type=chunk) [Cash Flow Analysis](index=21&type=section&id=Cash%20Flow%20Analysis) Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Operating activities | $(1,878) | $25,003 | | Investing activities | $(8,291) | $(16,495) | | Financing activities | $28,476 | $(22,167) | | Net increase (decrease) in cash | $18,307 | $(13,659) | [Operating Activities](index=21&type=section&id=Operating%20Activities) - Cash used in operating activities was **$1.9 million** for the nine months ended September 25, 2020, compared to **$25.0 million** provided in the prior year[92](index=92&type=chunk)[93](index=93&type=chunk) - This shift was primarily due to a **$48.9 million** increase in net operating assets and liabilities, including a **$23.7 million** decrease in accounts payable, a **$19.3 million** increase in accounts receivable, and a **$10.5 million** increase in inventories[93](index=93&type=chunk) [Investing Activities](index=21&type=section&id=Investing%20Activities) - Cash used in investing activities was **$8.3 million** for the nine months ended September 25, 2020, consisting entirely of capital expenditures[94](index=94&type=chunk) [Financing Activities](index=21&type=section&id=Financing%20Activities) - Cash provided by financing activities was **$28.5 million** for the nine months ended September 25, 2020, primarily from **$23.4 million** in net proceeds from credit facilities and **$5.0 million** from share issuance under compensation plans[95](index=95&type=chunk) [Critical Accounting Policies](index=21&type=section&id=Critical%20Accounting%20Policies) - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, with significant estimates including inventory valuation, uncertain tax positions, fair value of stock options, and impairment analysis for intangible assets and goodwill[21](index=21&type=chunk)[96](index=96&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=22&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's exposure to market risks, primarily foreign currency exchange and interest rate fluctuations, is detailed [Foreign Currency Exchange Risk](index=22&type=section&id=Foreign%20Currency%20Exchange%20Risk) - Substantially all sales and third-party supplier arrangements are in U.S. dollars, limiting material exchange rate fluctuations[98](index=98&type=chunk) - Increases in the U.S. dollar's value could negatively impact competitiveness, while decreases could lead foreign suppliers to raise prices[98](index=98&type=chunk) - Operating expenses denominated in foreign currencies are subject to fluctuations, but foreign currency transaction gains and losses have not been material, and no hedging transactions have been used[99](index=99&type=chunk) [Interest Rate Risk](index=22&type=section&id=Interest%20Rate%20Risk) - Total indebtedness was **$204.5 million** as of September 25, 2020, with **$8.8 million** due within 12 months[100](index=100&type=chunk) - The company does not engage in trading or speculative investments and has not used derivative financial instruments for interest rate risk management[101](index=101&type=chunk) - A hypothetical **1% interest rate change** on outstanding debt would result in a **$0.5 million** change to interest expense for the third quarter of 2020, or **$2.0 million** on an annualized basis[101](index=101&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=22&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The evaluation of disclosure controls and procedures confirms their effectiveness with no material changes reported [Evaluation of Disclosure Controls and Procedures](index=22&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of September 25, 2020, the CEO and CFO concluded that the company's disclosure controls and procedures were effective, providing reasonable assurance of achieving control objectives[102](index=102&type=chunk) [Changes in Internal Control Over Financial Reporting](index=22&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There have been no changes in internal control over financial reporting during the nine months ended September 25, 2020, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[103](index=103&type=chunk) PART II—OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=23&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section confirms the absence of any material pending or threatened legal actions against the company - The company is not currently a party to any material pending or threatened litigation[104](index=104&type=chunk) [ITEM 1A. RISK FACTORS](index=23&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to previously disclosed risk factors, noting no material changes have occurred - No material changes have occurred in the company's risk factors from those disclosed in its 2019 Annual Report and prior Quarterly Reports[105](index=105&type=chunk) - Past financial results are not reliable indicators of future performance, and historical trends should not be used to anticipate future results due to known and unknown risks and uncertainties[105](index=105&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=23&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - There were no unregistered sales of equity securities or use of proceeds to report[106](index=106&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=23&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities - There were no defaults upon senior securities[107](index=107&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=23&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[108](index=108&type=chunk) [ITEM 5. OTHER INFORMATION](index=23&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that there is no other information to report - There is no other information to report[109](index=109&type=chunk) [ITEM 6. EXHIBITS](index=23&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 certifications from the Principal Executive Officer (31.1*, 32.1**) and Principal Financial Officer (31.2*, 32.2**) as required by the Securities Exchange Act and Sarbanes-Oxley Act[110](index=110&type=chunk) - Inline XBRL documents (101.INS*, 101.SCH*, 101.CAL*, 101.DEF*, 101.LAB*, 101.PRE*) and the Cover Page Interactive Data File (104) are also filed[110](index=110&type=chunk) SIGNATURES [SIGNATURES](index=24&type=section&id=SIGNATURES) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report - The report was signed on November 3, 2020, by Jeffrey S. Andreson, Chief Executive Officer, and Larry J. Sparks, Chief Financial Officer[111](index=111&type=chunk)[113](index=113&type=chunk)

ichor Investor Presentation Needham Virtual SemiCap & EDA Conference August 13, 2020 Proprietary 1 Forward-Looking Statements, Non-GAAP Financials and COVID-19 This Presentation and the accompanying oral presentation include "forward‐looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding Ichor Holdings, Ltd. and its subsidiaries ("Ichor" or the "Company"), its financial condition, its resu ...

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 of Ichor Holdings, Ltd., including the balance sheets, statements of operations, statements of shareholders' equity, and statements of cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items for the periods ended June 26, 2020, and December 27, 2019 (or June 28, 2019, for comparative periods) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (dollars in thousands) | Metric | June 26, 2020 | December 27, 2019 | | :-------------------------- | :------------ | :---------------- | | Total Assets | $598,876 | $566,555 | | Total Liabilities | $360,686 | $345,139 | | Total Shareholders' Equity | $238,190 | $221,416 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (dollars in thousands, except per share amounts) | Metric | Three Months Ended June 26, 2020 | Three Months Ended June 28, 2019 | Six Months Ended June 26, 2020 | Six Months Ended June 28, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $221,564 | $139,195 | $441,592 | $277,026 | | Gross profit | $29,262 | $19,533 | $58,036 | $39,756 | | Operating income | $9,304 | $3,012 | $14,804 | $5,949 | | Net income | $6,811 | $336 | $10,210 | $1,854 | | Basic EPS | $0.30 | $0.02 | $0.45 | $0.08 | | Diluted EPS | $0.30 | $0.01 | $0.44 | $0.08 | [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total Shareholders' Equity (dollars in thousands) | Period | Total Shareholders' Equity | | :------------------- | :------------------------- | | Balance at June 26, 2020 | $238,190 | | Balance at December 27, 2019 | $221,416 | | Balance at June 28, 2019 | $203,731 | | Balance at December 28, 2018 | $198,326 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended, in thousands) | Cash Flow Activity | June 26, 2020 | June 28, 2019 | | :------------------------------------ | :------------ | :------------ | | Net cash provided by (used in) operating activities | $(25,183) | $20,660 | | Net cash used in investing activities | $(5,665) | $(14,264) | | Net cash provided by (used in) financing activities | $27,205 | $(8,774) | | Net decrease in cash | $(3,643) | $(2,378) | | Cash at end of period | $56,969 | $41,456 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [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) This note outlines the basis of presentation for the unaudited consolidated financial statements, including GAAP compliance, fiscal year definition, use of estimates, and key accounting policies such as revenue recognition, transaction price, performance obligations, and contract balances. It also mentions the adoption of new accounting pronouncements (ASU 2016-13 and ASU 2018-15) which had no significant impact - The company uses a 52- or 53-week fiscal year ending on the last Friday in December. The three months ended June 26, 2020, and June 28, 2019, were both **13 weeks**[19](index=19&type=chunk) - Revenue is recognized when control of promised goods or services is transferred to customers, primarily for fluid delivery subsystems, weldments, and other components, generally upon delivery[21](index=21&type=chunk)[23](index=23&type=chunk) - Adoption of ASU 2016-13 (Credit Losses) and ASU 2018-15 (Cloud Computing Implementation Costs) in Q1 2020 did not have a significant impact on financial statements[26](index=26&type=chunk)[27](index=27&type=chunk) [Note 2 – Inventories](index=9&type=section&id=Note%202%20%E2%80%93%20Inventories) This note details the composition of inventories, showing an increase in raw materials, work in process, and finished goods from December 2019 to June 2020, alongside an increase in the excess and obsolete adjustment Inventories, Net (dollars in thousands) | Category | June 26, 2020 | December 27, 2019 | | :---------------------- | :------------ | :---------------- | | Raw materials | $98,841 | $85,329 | | Work in process | $39,489 | $31,825 | | Finished goods | $21,427 | $17,700 | | Excess and obsolete adjustment | $(10,567) | $(7,817) | | **Total inventories, net** | **$149,190** | **$127,037** | [Note 3 – Property and Equipment](index=9&type=section&id=Note%203%20%E2%80%93%20Property%20and%20Equipment) This note provides a breakdown of property and equipment, net, showing a slight increase from December 2019 to June 2020, with machinery and leasehold improvements being the largest components. Depreciation expense also increased year-over-year for both the quarter and six-month periods Property and Equipment, Net (dollars in thousands) | Category | June 26, 2020 | December 27, 2019 | | :-------------------------------- | :------------ | :---------------- | | Machinery | $37,133 | $33,684 | | Leasehold improvements | $28,905 | $27,835 | | Computer software, hardware, and equipment | $6,250 | $5,796 | | Office furniture, fixtures and equipment | $1,037 | $1,040 | | Vehicles | $26 | $26 | | Construction-in-process | $4,793 | $3,760 | | Less accumulated depreciation | $(32,513) | $(27,600) | | **Total property and equipment, net** | **$45,631** | **$44,541** | - Depreciation expense was **$2.6 million** for Q2 2020 (up from $2.0 million in Q2 2019) and **$5.0 million** for the six months ended June 26, 2020 (up from $4.1 million in the prior year period)[29](index=29&type=chunk) [Note 4 – Intangible Assets](index=10&type=section&id=Note%204%20%E2%80%93%20Intangible%20Assets) This note details definite-lived intangible assets, which primarily include customer relationships, developed technology, and trademarks. The net carrying amount decreased from December 2019 to June 2020 due to amortization Definite-Lived Intangible Assets, Net (dollars in thousands) | Category | June 26, 2020 | December 27, 2019 | | :---------------------- | :------------ | :---------------- | | Trademarks | $1,456 | $1,940 | | Customer relationships | $34,716 | $40,365 | | Developed technology | $9,185 | $9,722 | | **Total intangible assets** | **$45,357** | **$52,027** | [Note 5 – Leases](index=10&type=section&id=Note%205%20%E2%80%93%20Leases) The company leases facilities under various non-cancellable operating leases expiring through 2025. Lease expense for operating leases was $1.3 million for Q2 2020 and $2.7 million for the six months ended June 26, 2020. The weighted-average remaining lease term is 2.7 years with a weighted-average discount rate of 4.5% Operating Lease Cost (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | | :------------------- | :------------ | :------------ | | Three Months Ended | $1,332 | $1,660 | | Six Months Ended | $2,652 | $3,293 | - As of June 26, 2020, the weighted-average remaining lease term for operating leases is **2.7 years**, and the weighted-average discount rate is **4.5%**[33](index=33&type=chunk) [Note 6 – Income Taxes](index=11&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) The CARES Act, enacted in March 2020, is expected to generate an additional income tax refund of approximately $0.7 million for the company due to NOL carryback provisions. The effective income tax rate for Q2 2020 was 2.7% and -0.5% for the six months ended June 26, 2020, differing from statutory rates due to foreign income, share-based compensation benefits, and the CARES Act impact - The CARES Act is expected to generate an additional income tax refund of approximately **$0.7 million** from NOL carryback provisions, with a **$0.2 million** benefit recognized in Q1 2020[35](index=35&type=chunk)[37](index=37&type=chunk) Income Tax Expense (Benefit) and Effective Income Tax Rate (dollars in thousands) | Period | Income Tax Expense (Benefit) | Income Before Income Taxes | Effective Income Tax Rate | | :------------------------------- | :--------------------------- | :------------------------- | :------------------------ | | Three Months Ended June 26, 2020 | $189 | $7,000 | 2.7% | | Three Months Ended June 28, 2019 | $(93) | $243 | -38.3% | | Six Months Ended June 26, 2020 | $(53) | $10,157 | -0.5% | | Six Months Ended June 28, 2019 | $(1,466) | $388 | -377.8% | [Note 7 – Employee Benefit Programs](index=12&type=section&id=Note%207%20%E2%80%93%20Employee%20Benefit%20Programs) The company sponsors a 401(k) plan for U.S. employees, offering a discretionary matching contribution of 50% of deferrals up to 4% of annual compensation. Matching contributions increased in Q2 2020 and for the six months ended June 26, 2020, compared to the prior year periods 401(k) Matching Contributions (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | | :------------------- | :------------ | :------------ | | Second Quarter | $500 | $400 | | Six Months Ended | $1,000 | $800 | [Note 8 – Long-Term Debt](index=12&type=section&id=Note%208%20%E2%80%93%20Long-Term%20Debt) Long-term debt totaled $206.7 million as of June 26, 2020, primarily consisting of a term loan and revolving credit facility. The term loan and revolving credit facility mature on February 15, 2023, with interest rates based on the Eurodollar rate option at 3.95% and 3.68% respectively as of June 26, 2020 Long-Term Debt (dollars in thousands) | Category | June 26, 2020 | December 27, 2019 | | :------------------------------------ | :------------ | :---------------- | | Term loan | $157,500 | $161,875 | | Revolving credit facility | $49,162 | $19,162 | | Total principal amount of long-term debt | $206,662 | $181,037 | | Less unamortized debt issuance costs | $(2,499) | $(2,983) | | Total long-term debt, net | $204,163 | $178,054 | | Less current portion | $(8,750) | $(8,750) | | **Total long-term debt, less current portion, net** | **$195,413** | **$169,304** | - As of June 26, 2020, the term loan and revolving credit facility bore interest at the Eurodollar rate option of **3.95%** and **3.68%**, respectively. Both facilities mature on **February 15, 2023**[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 9 – Share‑Based Compensation](index=12&type=section&id=Note%209%20%E2%80%93%20Share%E2%80%91Based%20Compensation) The 2016 Omnibus Incentive Plan allows for various share-based awards, generally vesting over four years. Share-based compensation expense increased significantly for both the three and six months ended June 26, 2020, compared to the prior year periods. The 2017 Employee Stock Purchase Plan allows employees to purchase shares at 85% of fair market value Share-Based Compensation Expense (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | | :------------------- | :------------ | :------------ | | Second Quarter | $2,141 | $1,475 | | Six Months Ended | $5,006 | $2,805 | - As of June 26, 2020, **1,760,278** time-vesting stock options and **65,908** performance-vesting stock options were outstanding, with a weighted average exercise price of **$20.84**[47](index=47&type=chunk) - As of June 26, 2020, **565,627** time-vesting RSUs and **17,730** performance-vesting RSUs were unvested, with a weighted average grant date fair value of **$23.74**[48](index=48&type=chunk) [Note 10 – Segment Information](index=14&type=section&id=Note%2010%20%E2%80%93%20Segment%20Information) The company operates in one operating segment, with the CEO reviewing results on a consolidated level. Principal markets include North America, Asia, and Europe. Sales by geographic area show significant growth in all regions for both the three and six months ended June 26, 2020, compared to the prior year - The company operates in a **single operating segment**, with key resources and performance assessed on a company-wide level[52](index=52&type=chunk) Net Sales by Geographic Area (dollars in thousands) | Geographic Area | 3 Months Ended June 26, 2020 | 3 Months Ended June 28, 2019 | 6 Months Ended June 26, 2020 | 6 Months Ended June 28, 2019 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States of America | $117,692 | $76,899 | $238,533 | $153,532 | | Singapore | $74,327 | $43,298 | $147,536 | $80,277 | | Europe | $18,536 | $9,797 | $33,495 | $24,890 | | Other | $11,009 | $9,201 | $22,028 | $18,327 | | **Total net sales** | **$221,564** | **$139,195** | **$441,592** | **$277,026** | [Note 11 – Earnings per Share](index=14&type=section&id=Note%2011%20%E2%80%93%20Earnings%20per%20Share) This note provides the computation of basic and diluted earnings per share, showing a significant increase in both basic and diluted EPS for the three and six months ended June 26, 2020, compared to the prior year periods Earnings Per Share (dollars in thousands, except per share amounts) | Metric | 3 Months Ended June 26, 2020 | 3 Months Ended June 28, 2019 | 6 Months Ended June 26, 2020 | 6 Months Ended June 28, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income | $6,811 | $336 | $10,210 | $1,854 | | Basic weighted average ordinary shares outstanding | 22,836,400 | 22,395,308 | 22,786,782 | 22,332,568 | | Diluted weighted average ordinary shares outstanding | 23,066,976 | 22,663,053 | 23,099,946 | 22,596,412 | | Basic EPS | $0.30 | $0.02 | $0.45 | $0.08 | | Diluted EPS | $0.30 | $0.01 | $0.44 | $0.08 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=15&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations, highlighting significant growth in net sales and net income driven by increased demand in the global wafer fabrication equipment market. It also details the impacts of the COVID-19 pandemic on operations and outlines the company's liquidity position [Overview](index=15&type=section&id=Overview) - Ichor Holdings is a leader in designing, engineering, and manufacturing critical fluid delivery subsystems (gas and chemical) for semiconductor capital equipment, along with components like weldments and precision machined parts[57](index=57&type=chunk) - The company benefits from an industry trend where semiconductor OEMs increasingly outsource fluid delivery subsystem design and manufacturing to specialized suppliers, leveraging their expertise and reducing OEM fixed costs and development time[58](index=58&type=chunk) Key Financial Information (dollars in thousands) | Metric | 3 Months Ended June 26, 2020 | 3 Months Ended June 28, 2019 | 6 Months Ended June 26, 2020 | 6 Months Ended June 28, 2019 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $221,564 | $139,195 | $441,592 | $277,026 | | Gross profit | $29,262 | $19,533 | $58,036 | $39,756 | | Gross margin | 13.2% | 14.0% | 13.1% | 14.4% | | Operating income | $9,304 | $3,012 | $14,804 | $5,949 | | U.S. GAAP net income | $6,811 | $336 | $10,210 | $1,854 | | Non-GAAP adjusted net income | $12,569 | $5,118 | $24,627 | $10,669 | [COVID-19 Pandemic and Market Conditions Update](index=15&type=section&id=COVID-19%20Pandemic%20and%20Market%20Conditions%20Update) - The COVID-19 pandemic has created significant volatility, uncertainty, and turmoil, leading to reduced factory capacity due to social distancing, increased direct costs (PPE, cleaning, logistics, labor), and potential for lower revenues and operating margins[60](index=60&type=chunk) - The company has implemented a Business Continuity Plan (BCP) with measures including providing PPE, temperature screening, altering production environments for social distancing, remote work for non-manufacturing employees, reduced travel, increased cleaning, and adjusted production shift schedules[61](index=61&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) [Net Sales](index=17&type=section&id=Net%20Sales) Net sales increased significantly by 59.2% for the three months and 59.4% for the six months ended June 26, 2020, compared to the prior year periods, driven by increased customer demand and market growth in global wafer fabrication equipment Net Sales Growth (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | Amount Change | % Change | | :------------------- | :------------ | :------------ | :------------ | :------- | | Three Months Ended | $221,564 | $139,195 | $82,369 | 59.2% | | Six Months Ended | $441,592 | $277,026 | $164,566 | 59.4% | - The increase in net sales was primarily due to increased demand from customers, growth in the global wafer fabrication equipment market, and market share gains at the company's largest customers[65](index=65&type=chunk) [Cost of Sales and Gross Profit](index=17&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) Cost of sales and gross profit increased due to higher sales volume. However, gross margin decreased for both the three and six months ended June 26, 2020, primarily due to increased COVID-19 related operating costs, unfavorable product mix, and facility shutdown costs, partially offset by higher operating leverage Cost of Sales, Gross Profit, and Gross Margin (dollars in thousands) | Metric | 3 Months Ended June 26, 2020 | 3 Months Ended June 28, 2019 | % Change | 6 Months Ended June 26, 2020 | 6 Months Ended June 28, 2019 | % Change | | :---------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Cost of sales | $192,302 | $119,662 | 60.7% | $383,556 | $237,270 | 61.7% | | Gross profit | $29,262 | $19,533 | 49.8% | $58,036 | $39,756 | 46.0% | | Gross margin | 13.2% | 14.0% | -80 bps | 13.1% | 14.4% | -130 bps | - Gross margin decrease in Q2 2020 was due to increased COVID-19 related operating costs, unfavorable product mix, and a **$1.5 million** impact from inventory write-off and severance costs related to the Union City, California facility closure[67](index=67&type=chunk) - Gross margin decrease for the six months ended June 26, 2020, was also impacted by a **$1.4 million** contract settlement loss recorded in Q1 2020[68](index=68&type=chunk) [Research and Development](index=18&type=section&id=Research%20and%20Development) Research and development expenses increased by 33.2% for the three months and 35.9% for the six months ended June 26, 2020, primarily due to increased employee-related expenses from higher engineering headcount, including a team acquired in Q2 2019 Research and Development Expenses (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | Amount Change | % Change | | :------------------- | :------------ | :------------ | :------------ | :------- | | Three Months Ended | $3,509 | $2,634 | $875 | 33.2% | | Six Months Ended | $6,831 | $5,025 | $1,806 | 35.9% | - The increase was mainly driven by **$0.7 million** (Q2) and **$1.4 million** (6M) in increased employee-related expenses due to higher engineering headcount, with approximately **$0.4 million** (Q2) and **$0.8 million** (6M) from an engineering team assumed in connection with the purchase of developed technology assets in Q2 2019[70](index=70&type=chunk)[71](index=71&type=chunk) [Selling, General, and Administrative](index=18&type=section&id=Selling,%20General,%20and%20Administrative) Selling, general, and administrative expenses increased by 22.7% for the three months and 32.5% for the six months ended June 26, 2020. Key drivers included increased employee-related expenses (including share-based compensation), legal and professional fees, and occupancy costs, with executive transition costs also contributing to the six-month increase Selling, General, and Administrative Expenses (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | Amount Change | % Change | | :------------------- | :------------ | :------------ | :------------ | :------- | | Three Months Ended | $13,113 | $10,685 | $2,428 | 22.7% | | Six Months Ended | $29,731 | $22,443 | $7,288 | 32.5% | - For the six months, the increase was primarily due to **$1.8 million** in executive transition costs, **$4.2 million** in increased employee-related expense (including **$2.0 million** in share-based compensation), **$0.9 million** in legal and professional fees, and **$0.5 million** in increased occupancy costs[73](index=73&type=chunk) [Amortization of Intangible Assets](index=18&type=section&id=Amortization%20of%20Intangible%20Assets) Amortization of intangible assets increased slightly by 4.2% for the three months and 5.2% for the six months ended June 26, 2020, primarily due to incremental amortization from developed technology assets purchased in Q2 2019 Amortization of Intangible Assets (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | Amount Change | % Change | | :------------------- | :------------ | :------------ | :------------ | :------- | | Three Months Ended | $3,336 | $3,202 | $134 | 4.2% | | Six Months Ended | $6,670 | $6,339 | $331 | 5.2% | - The increase was primarily due to incremental amortization expense from developed technology assets purchased during the second quarter of 2019[74](index=74&type=chunk) [Interest Expense](index=19&type=section&id=Interest%20Expense) Interest expense decreased by 16.7% for the three months and 15.4% for the six months ended June 26, 2020, mainly due to a decrease in the weighted average interest rate, partially offset by a slight increase in average borrowed amount for the quarter Interest Expense (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | Amount Change | % Change | | :------------------- | :------------ | :------------ | :------------ | :------- | | Three Months Ended | $2,302 | $2,762 | $(460) | -16.7% | | Six Months Ended | $4,676 | $5,530 | $(854) | -15.4% | - The decrease in Q2 2020 was due to a lower weighted average interest rate (**4.89% to 3.93%**), partially offset by a **$4.1 million** increase in average borrowed amount. For the six months, it was due to a lower weighted average interest rate (**4.83% to 4.17%**) and a **$9.7 million** decrease in average borrowed amount[76](index=76&type=chunk)[77](index=77&type=chunk) [Other Expense (Income), Net](index=19&type=section&id=Other%20Expense%20(Income),%20Net) Other expense (income), net, showed a change primarily due to exchange rate fluctuations on transactions denominated in foreign currencies, including the Singapore dollar, Malaysian ringgit, British pound, euro, and South Korean won Other Expense (Income), Net (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | Amount Change | | :-------------------------- | :------------ | :------------ | :------------ | | Three Months Ended | $2 | $7 | $(5) | | Six Months Ended | $(29) | $31 | $(60) | - The change was primarily due to exchange rate fluctuations on transactions denominated in the local currencies of foreign operations[78](index=78&type=chunk) [Income Tax Expense (Benefit)](index=19&type=section&id=Income%20Tax%20Expense%20(Benefit)) Income tax expense shifted from a benefit to an expense for the three months ended June 26, 2020, and the benefit decreased significantly for the six months, primarily due to increased taxable income in the U.S. and a decrease in tax reserve releases compared to the prior year Income Tax Expense (Benefit) (dollars in thousands) | Period | June 26, 2020 | June 28, 2019 | Amount Change | % Change | | :-------------------------- | :------------ | :------------ | :------------ | :------- | | Three Months Ended | $189 | $(93) | $282 | -303.2% | | Six Months Ended | $(53) | $(1,466) | $1,413 | -96.4% | - The decrease in income tax benefit was primarily due to increased taxable income in the U.S. in 2020 and a decrease in releases of certain tax reserves related to statute of limitation expirations or settlements in Q1 2020 compared to Q1 2019[79](index=79&type=chunk)[80](index=80&type=chunk) [Non‑GAAP Results](index=20&type=section&id=Non%E2%80%91GAAP%20Results) - Management uses non-GAAP metrics (net income and diluted EPS) to evaluate operating and financial results, excluding amortization of intangible assets, share-based compensation, non-recurring expenses (contract settlement losses, facility shutdown costs), and related tax impacts[81](index=81&type=chunk)[84](index=84&type=chunk) Non-GAAP Net Income and Diluted EPS (dollars in thousands, except per share amounts) | Metric | 3 Months Ended June 26, 2020 | 3 Months Ended June 28, 2019 | 6 Months Ended June 26, 2020 | 6 Months Ended June 28, 2019 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | U.S. GAAP net income | $6,811 | $336 | $10,210 | $1,854 | | Non-GAAP net income | $12,569 | $5,118 | $24,627 | $10,669 | | U.S. GAAP diluted EPS | $0.30 | $0.01 | $0.44 | $0.08 | | Non-GAAP diluted EPS | $0.54 | $0.23 | $1.07 | $0.47 | - Non-recurring expenses for Q2 2020 and 6M 2020 included a **$1.8 million** bonus to the former CEO, acquisition-related expenses, and non-capitalizable ERP/SOX implementation costs. Additionally, 6M 2020 included a **$1.4 million** contract settlement loss and **$1.5 million** in facility shutdown costs (inventory write-off and severance) related to the Union City, California facility closure[82](index=82&type=chunk)[84](index=84&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) - The company ended Q2 2020 with **$57.0 million** in cash, a **$3.6 million** decrease from December 27, 2019. Management believes current cash, revolving credit facility availability, and operating cash flows will be sufficient to meet anticipated cash needs for at least the next 12 months despite COVID-19 impacts[86](index=86&type=chunk)[87](index=87&type=chunk) [Cash Flow Analysis](index=21&type=section&id=Cash%20Flow%20Analysis) Net Decrease in Cash (Six Months Ended, in thousands) | Metric | June 26, 2020 | June 28, 2019 | | :------------------------------------ | :------------ | :------------ | | Cash provided by (used in) operating activities | $(25,183) | $20,660 | | Cash used in investing activities | $(5,665) | $(14,264) | | Cash provided by (used in) financing activities | $27,205 | $(8,774) | | **Net decrease in cash** | **$(3,643)** | **$(2,378)** | [Operating Activities](index=21&type=section&id=Operating%20Activities) Cash used in operating activities was $25.2 million for the six months ended June 26, 2020, primarily due to an increase in net operating assets and liabilities, driven by higher inventories and accounts receivable, partially offset by net income and non-cash charges - Cash used in operating activities for the six months ended June 26, 2020, was **$25.2 million**, primarily due to a **$52.9 million** increase in net operating assets and liabilities (driven by increased inventories of **$22.2 million** and accounts receivable of **$20.0 million**), partially offset by **$10.2 million** net income and **$17.5 million** in non-cash charges[89](index=89&type=chunk) [Investing Activities](index=21&type=section&id=Investing%20Activities) Cash used in investing activities was $5.7 million for the six months ended June 26, 2020, consisting solely of capital expenditures - Cash used in investing activities for the six months ended June 26, 2020, was **$5.7 million**, entirely attributable to capital expenditures[90](index=90&type=chunk) [Financing Activities](index=21&type=section&id=Financing%20Activities) Cash provided by financing activities was $27.2 million for the six months ended June 26, 2020, mainly from net proceeds from credit facilities, partially offset by share-based compensation plan proceeds - Cash provided by financing activities for the six months ended June 26, 2020, was **$27.2 million**, primarily from **$25.6 million** in net proceeds from credit facilities, partially offset by **$1.6 million** from share-based compensation plans[91](index=91&type=chunk) [Critical Accounting Policies](index=21&type=section&id=Critical%20Accounting%20Policies) - The preparation of financial statements requires significant estimates and assumptions, which are evaluated on an ongoing basis, and actual results may differ. Critical accounting policies are detailed in the company's Annual Report on Form 10-K[92](index=92&type=chunk)[93](index=93&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=22&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section discusses the company's exposure to market risks, specifically foreign currency exchange risk and interest rate risk. The company currently has minimal material exposure to foreign currency fluctuations due to U.S. dollar-denominated sales, but acknowledges potential impacts on operating expenses. Interest rate risk exists due to variable-rate debt, with a hypothetical 1% rate change impacting annual interest expense by $2.1 million [Foreign Currency Exchange Risk](index=22&type=section&id=Foreign%20Currency%20Exchange%20Risk) - Substantially all sales and third-party supplier arrangements are in U.S. dollars, limiting material exchange rate fluctuations. However, operating expenses in foreign currencies (SGD, MYR, GBP, EUR, KRW) are subject to fluctuations, though transaction gains/losses have not been material to date[94](index=94&type=chunk)[95](index=95&type=chunk) [Interest Rate Risk](index=22&type=section&id=Interest%20Rate%20Risk) - As of June 26, 2020, the company had **$206.7 million** in total indebtedness. A hypothetical **1%** interest rate change on outstanding debt would result in a **$0.5 million** change to interest expense during Q2 2020, or **$2.1 million** on an annualized basis[96](index=96&type=chunk)[97](index=97&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=22&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 26, 2020. There have been no material changes in internal control over financial reporting during the six months ended June 26, 2020 [Evaluation of Disclosure Controls and Procedures](index=22&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 26, 2020, providing reasonable assurance of achieving control objectives despite inherent limitations[98](index=98&type=chunk) [Changes in Internal Control Over Financial Reporting](index=22&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There have been no changes in internal control over financial reporting during the six months ended June 26, 2020, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[99](index=99&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=23&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently a party to any material pending or threatened litigation - The company is not currently involved in any material pending or threatened legal proceedings[101](index=101&type=chunk) [ITEM 1A. RISK FACTORS](index=23&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section updates the risk factors, specifically highlighting the significant and ongoing adverse impacts of the COVID-19 pandemic. Risks include disruptions to operations, customer demand, and supply chains, increased costs, reduced workforce availability, and the potential for a global economic slowdown, all of which could materially affect the business, financial condition, and operating results - The COVID-19 pandemic continues to pose significant risks, including disruptions to operations, customer demand, and supplier capabilities, leading to potential material adverse impacts on business, financial condition, operating results, and cash flows[102](index=102&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Measures taken in response to COVID-19, such as work-from-home and social distancing, introduce operational risks like cybersecurity and affect product development, customer support, and other activities. The extent and duration of these impacts remain highly uncertain[106](index=106&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=24&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 - No unregistered sales of equity securities or use of proceeds to report[110](index=110&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=24&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities to report - No defaults upon senior securities to report[111](index=111&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=24&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Mine safety disclosures are not applicable to the registrant[112](index=112&type=chunk) [ITEM 5. OTHER INFORMATION](index=24&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information to report under this item - No other information to report[113](index=113&type=chunk) [ITEM 6. EXHIBITS](index=24&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and various Inline XBRL documents List of Exhibits | Exhibit Number | Description | | :------------- | :---------- | | 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002. | | 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002. | | 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002. | | 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002. | | 101.INS* | Inline XBRL Instance Document | | 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) | | * | Filed herewith. | | ** | Furnished herewith and not filed. | [SIGNATURES](index=25&type=section&id=SIGNATURES) - The report was signed by Jeffrey S. Andreson, CEO, and Larry J. Sparks, CFO, on August 4, 2020[117](index=117&type=chunk)

Ichor Holdings, Ltd. (NASDAQ:ICHR) Q2 2020 Earnings Conference Call August 3, 2020 4:30 PM ET Company Participants Claire McAdams - Investor Relations Jeff Andreson - Chief Executive Officer Larry Sparks - Chief Financial Officer Conference Call Participants Quinn Bolton - Needham Sidney Ho - Deutsche Bank Mitch Steves - RBC Capital Markets Tom Diffely - D.A. Davidson Craig Ellis - B Riley Patrick Ho - Stifel Operator Good day, ladies and gentlemen, and welcome to the Ichor Second Quarter 2020 Earnings Conf ...

Investment Highlights - Ichor is a leading supplier of fluid delivery systems for the semiconductor capital equipment industry[6] - The company's revenue has outperformed the industry with a 20% Compound Annual Growth Rate (CAGR) from 2014 to 2019, compared to approximately 9% for Wafer Fab Equipment (WFE)[6] - Strategic acquisitions have expanded Ichor's capabilities and served available market (SAM) by approximately $2.5 billion[6] - Ichor experienced approximately 100% Earnings Per Share (EPS) growth in the first half of 2020 compared to the first half of 2019, with revenue growth of 52% year-over-year[6] Market and Growth Strategy - Ichor is expanding its footprint and market share in weldments and precision machining[15] - The company is focused on gaining share in gas delivery, liquid delivery, and precision machining[15] - Ichor's served available market (SAM) is expanding to $4 billion with multiple opportunities for growth[16] - Share gains contributed $70 million of incremental revenues in 2019, with an annualized run-rate above $100 million entering 2020[15] Financial Performance - Ichor's target model includes a gross margin of 19%-20%, operating margin of 13%-14%, and Non-GAAP net margin of 12%+[19] - The company completed $91.4 million in share repurchases from 2018-2019 at an average price of $20.64[18] - Q2'20 guidance includes revenues of $180-$220 million and EPS of $0.32-$0.54[18]

{{ichor Investor Presentation Cowen Virtual Technology, Media & Telecom Conference May 27, 2020 Proprietary 1 Forward-Looking Statements, Non-GAAP Financials and COVID-19 This Presentation and the accompanying oral presentation include "forward‐looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding Ichor Holdings, Ltd. and its subsidiaries ("Ichor" or the "Company"), its financial conditio ...