Ichor (US:ICHR)2023-05-10 13:16Financial Performance - Net sales for the three months ended March 31, 2023, were $225,870, a decrease of $67,276 or 22.9% compared to $293,146 for the same period in 2022[59][66] - Gross margin for the first quarter of 2023 was 14.7%, down from 15.0% in the first quarter of 2022, reflecting reduced factory utilization due to lower customer demand[59][69] - Operating income for the three months ended March 31, 2023, was $4,794, a decline of 54.1% from $10,465 in the same period of 2022[64] - The decrease in net income for the first quarter of 2023 was $5, compared to a net income of $8,039 in the first quarter of 2022[59][64] - Cost of sales for the first quarter of 2023 was $192,630, down 22.7% from $249,214 in the same period of 2022[68] Expenses - Research and development expenses decreased by 11.1% to $4,313 in the first quarter of 2023, down from $4,851 in the first quarter of 2022[70] - Selling, general, and administrative expenses fell by 13.3% to $20,167 in the first quarter of 2023, compared to $23,267 in the same period of 2022[73] - The company incurred severance charges of $1.3 million in the first quarter of 2023 as part of cost reduction initiatives[61] - Interest expense increased significantly to $4,550 in the first quarter of 2023, compared to $1,532 in the same period of 2022, due to rising borrowing rates[64][62] - Other expense, net increased to $784,000 from $84,000, reflecting an 833.3% increase primarily due to currency exchange rate fluctuations[79] Non-GAAP Metrics - Non-GAAP gross profit for the three months ended March 31, 2023, was $34,948,000, down from $46,975,000 in the prior year, with a non-GAAP gross margin of 15.5% compared to 16.0%[85] - Non-GAAP operating income decreased to $13,721,000 from $24,578,000, with a non-GAAP operating margin of 6.1% compared to 8.4%[85] - Non-GAAP net income for the three months ended March 31, 2023, was $11,128,000, down from $20,178,000, with non-GAAP diluted EPS of $0.38 compared to $0.70[88] Cash Flow and Indebtedness - Cash and cash equivalents at the end of Q1 2023 were $68.8 million, a decrease of $17.6 million from the prior year[93] - Cash used in operating activities was $10,873,000 for Q1 2023, compared to $36,278,000 in the prior year, with a net decrease in cash of $17,633,000[93][94] - Total indebtedness as of March 31, 2023, was $300.6 million, with $7.5 million due within 12 months[100] Interest Rate and Currency Risks - The weighted average borrowings outstanding rose to $302,479,000, a 2.5% increase from $294,959,000 in the prior year[77] - The weighted average borrowing rate increased by 427 basis points to 6.10% from 1.83% due to tightening monetary policy[77] - A hypothetical 100 basis point change in interest rates would result in a $0.8 million change to interest expense for the quarter, or $3.0 million on an annualized basis[100] - The company does not expect foreign currency exchange rate fluctuations to materially affect its results, as most sales and supplier arrangements are in U.S. dollars[98] - The company has not engaged in any foreign currency hedging transactions to date[99] Future Outlook - The company expects long-term growth in demand for semiconductors and semiconductor equipment despite current macroeconomic challenges[61] - The company does not anticipate being exposed to material risks due to changes in interest rates[100] - Increases in the value of the U.S. dollar could make products more expensive compared to competitors priced in other currencies, potentially impacting competitiveness[98] - Foreign suppliers may raise prices if the U.S. dollar decreases in value relative to other currencies[98]