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