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Ichor Holdings, Ltd. Announces First Quarter 2024 Financial Results
First quarter 2024 highlights:
Revenues of $201 million; Gross margin of 11.4% on a GAAP basis and 12.2% on a non'GAAP basis; Earnings per share ("EPS") of $(0.30) on a GAAP basis and $(0.09) on a non-GAAP basis; and $117 million reduction in total debt outstanding at quarter end.
"As expected, our Q1 revenues remained similar to Q4 levels, reflecting the relatively stable demand environment within the wafer fab equipment market," commented Jeff Andreson, chief executive officer. "With expectations for industry demand in 2024 remaining relatively consistent year to date, we likewise have witnessed a stabilization in our revenue run rate around these levels. We remain optimistic for an improvement in second half revenue volumes as the demand profile begins to build in advance of a stronger 2025 spending environment. We see the current demand environment as an opportune period to make steady progress executing our strategy to deepen and expand our penetration of proprietary products. We have multiple opportunities to expand our revenue potential and continue to add breadth and diversification to our customer base, all of which builds a strong story for Ichor's revenue growth as the industry recovery accelerates."
Q1 2024 Q4 2023 Q1 2023
----------------------------------------------- ----------------------------------------------- -----------------------------------------------
(dollars in thousands, except per share amounts)
U.S. GAAP Financial Results:
Net sales $ 201,383 $ 203,481 $ 225,870
Gross margin 11.4 % 10.0 % 14.7 %
Operating margin (1.9 )% (3.9 )% 2.1 %
Net loss $ (8,989 ) $ (11,899 ) $ (5 )
Q1 2024 Q4 2023 Q1 2023
--------------------------- --------------------------- ----------------------------------------------
(dollars in thousands, except per share amounts)
Non-GAAP Financial Results:
Gross margin 12.2 % 10.4 % 15.5 %
Operating margin 1.2 % 0.0 % 6.1 %
Net income (loss) $ (2,712 ) $ (1,675 ) $ 11,128
U.S. GAAP Financial Results Overview ------------------------------------
For the first quarter of 2024, revenue was $201.4 million, net loss was $9.0 million, and net loss per diluted share ("diluted EPS") was $0.30. This compares to revenue of $203.5 million and $225.9 million, net loss of $11.9 million and $0.0 million, and diluted EPS of $(0.40) and $0.00, for the fourth quarter of 2023 and first quarter of 2023, respectively.
Non-GAAP Financial Results Overview -----------------------------------
For the first quarter of 2024, non-GAAP net loss was $(2.7) million and non-GAAP diluted EPS was $(0.09). This compares to non-GAAP net income (loss) of $(1.7) million and $11.1 million, and non-GAAP diluted EPS of $(0.06) and $0.38, for the fourth quarter of 2023 and first quarter of 2023, respectively.
Second Quarter 2024 Financial Outlook -------------------------------------
For the second quarter of 2024, we expect revenue to be in the range of $190 million to $205 million. We expect GAAP diluted EPS to be in the range of $(0.22) to $(0.10) and non-GAAP diluted EPS to be in the range of $(0.03) to $0.09.
This outlook for non'GAAP diluted EPS excludes amortization of intangible assets of approximately $2.1 million and share-based compensation expense of approximately $4.1 million, as well as the related income tax effects. Non-GAAP diluted EPS should be considered in addition to, but not as a substitute for, our financial information presented in accordance with GAAP.
Balance Sheet and Cash Flow Results -----------------------------------
We ended the first quarter of 2024 with cash and cash equivalents of $102.1 million, an increase of $22.2 million from the prior year ended December 29, 2023.
The increase of $22.2 million in the first quarter of 2024 was primarily due to net proceeds of $136.7 million from our issuance of 3.8 million ordinary shares in March 2024 in connection with an underwritten public offering and net cash provided by operating activities of $4.8 million, partially offset by net payments on credit facilities of $116.9 million and capital expenditures of $4.5 million.
Our cash provided by operating activities of $4.8 million during the first quarter of 2024 consisted of net loss of $9.0 million and net non-cash charges of $10.2 million, which consisted primarily of depreciation and amortization of $7.6 million, share-based compensation expense of $2.4 million, and a decrease in our net operating assets and liabilities of $3.6 million.
The decrease in our net operating assets and liabilities of $3.6 million during the first quarter of 2024 was primarily due to a decrease in inventories of $5.2 million, an increase in accounts payable of $3.4 million, and a decrease in prepaid expenses and other assets of $1.7 million, partially offset by an increase in accounts receivable of $6.7 million.
Use of Non-GAAP Financial Results ---------------------------------
In addition to U.S. GAAP ("GAAP") results, this press release also contains non-GAAP financial results, including non'GAAP gross profit, non'GAAP operating income, non'GAAP net income (loss), non'GAAP diluted EPS, and free cash flow. Management uses non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing investors' ability to view our results from management's perspective. Non-GAAP gross profit, operating income, and net income are defined as: gross profit, operating income (loss), or net income (loss), respectively, excluding (1) amortization of intangible assets, share-based compensation expense, and discrete or infrequent charges and gains that are outside of normal business operations, including transaction-related costs, contract and legal settlement gains and losses, facility shutdown costs, and severance costs associated with reduction-in-force programs, to the extent they are present in gross profit, operating income (loss), and net income (loss), respectively; and (2) the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items, including the impact of deferred tax asset valuation allowances. All non-GAAP adjustments are presented on a gross basis; the related income tax effects, including current and deferred income tax expense, are included in the adjustment line under the heading "Tax adjustments related to non-GAAP adjustments." Non-GAAP diluted EPS is defined as non-GAAP net income divided by weighted average diluted ordinary shares outstanding during the period. Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income, respectively, divided by net sales. Free cash flow is defined as cash provided by or used in operating activities, less capital expenditures. Tables showing these metrics on a GAAP and non-GAAP basis, with reconciliation footnotes thereto, are included at the end of this press release.
Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP. Other companies may calculate non-GAAP results differently or may use other measures to evaluate their performance, both of which could reduce the usefulness of our non-GAAP results as a tool for comparison.
Because of these limitations, you should consider non-GAAP results alongside other financial performance measures and results presented in accordance with GAAP. In addition, in evaluating non-GAAP results, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving non-GAAP results, and you should not infer from our presentation of non-GAAP results that our future results will not be affected by these expenses or other discrete or infrequent charges and gains that are outside of normal business operations.
Conference Call ---------------
We will conduct a conference call to discuss our first quarter 2024 results and business outlook today at 1:30 p.m. PT.
To listen to a live webcast of the call, please visit our investor relations website at https://ir.ichorsystems.com, or go to the live link at https://www.webcast-eqs.com/ichor050724/en.
To listen via telephone, please call (800) 343'4849 (domestic) or +1 (201) 518'9848 (international), conference ID: ICHOR. After the call, an on-demand replay will be available at the same webcast link.
About Ichor -----------
We are a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components primarily for semiconductor capital equipment, as well as other industries such as defense/aerospace and medical. Our primary product offerings include gas and chemical delivery subsystems, collectively known as fluid delivery subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices. Our gas delivery subsystems deliver, monitor and control precise quantities of the specialized gases used in semiconductor manufacturing processes such as etch and deposition. Our chemical delivery subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning. We also provide precision-machined components, weldments, e-beam and laser welded components, precision vacuum and hydrogen brazing, surface treatment technologies, and other proprietary products. We are headquartered in Fremont, CA. https://ir.ichorsystems.com.
We use a 52- or 53-week fiscal year ending on the last Friday in December. Our fiscal years ended December 29, 2023 and December 30, 2022 are each 52 weeks. References to 2024 and 2023 relate to the fiscal years then ended. The three-month periods ended March 29, 2024, December 29, 2023, and March 31, 2023 were each 13 weeks. References to the first quarter of 2024, fourth quarter of 2023, and first quarter of 2023 relate to the three-month periods then ended.
Safe Harbor Statement ---------------------
Certain statements in this release are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "anticipate," "believe," "contemplate," "designed," "estimate," "expect," "forecast," "goal," "guidance," "intend," "may," "outlook," "plan," "predict," "project," "see," "seek," "target," "would" and similar expressions or variations or negatives of these words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, but are not limited to, statements regarding our outlook for our second fiscal quarter of 2024, statements regarding the current business environment, revenue levels in 2024, manufacturers' investment in water fabrication equipment, our investment in research and development of new products, acquiring new business, and company and industry growth and performance in 2024 and 2025, as well as any other statement that does not directly relate to any historical fact. Such forward-looking statements are based on our management's current expectations about future events as of the date hereof and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Our actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including, but not limited to: geopolitical, economic and market conditions, including high inflation, changes to fiscal and monetary policy, high interest rates, currency fluctuations, challenges in the supply chain and any disruptions in the global economy as a result of the conflicts in Ukraine and the Middle East; dependence on expenditures by manufacturers and cyclical downturns in the semiconductor capital equipment industry; reliance on a very small number of original equipment manufacturers ("OEMs") for a significant portion of sales; negotiating leverage held by our customers; competitiveness and rapid evolution of the industries in which we participate; keeping pace with developments in the industries we serve and with technological innovation generally; designing, developing and introducing new products that are accepted by original equipment manufacturers in order to retain our existing customers and obtain new customers; managing our manufacturing and procurement process effectively; defects in our products that could damage our reputation, decrease market acceptance and result in potentially costly litigation; and our dependence on a limited number of suppliers. Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission (the "SEC"), including other risks, relevant factors, and uncertainties identified in the "Risk Factors" section of our Annual Report on Form 10'K for the year ended December 29, 2023 and any other periodic reports that we may file with the SEC.
All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. We undertake no obligation to update or revise any forward-looking statements contained herein, whether as a result of actual results, changes in our expectations, future events or developments, or otherwise, except as required by law.
ICHOR HOLDINGS, LTD.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
March 29, December 29, March 31,
2024 2023 2023
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Assets
Current assets:
$ 102,124 $ 79,955 $ 68,837
Cash and cash equivalents
73,371 66,721 122,693
Accounts receivable, net
240,679 245,885 271,538
Inventories
5,047 8,804 6,530
Prepaid expenses and other current assets
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
421,221 401,365 469,598
Total current assets
Property and equipment, net 92,792 92,755 101,481
Operating lease right-of-use assets 37,202 36,611 40,609
Other noncurrent assets 12,621 11,912 12,660
Deferred tax assets, net 3,008 3,148 12,345
Intangible assets, net 55,142 57,288 68,056
Goodwill 335,402 335,402 335,402
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
$ 957,388 $ 938,481 $ 1,040,151
Total assets
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
Liabilities and Shareholders' Equity
Current liabilities:
$ 61,320 $ 60,490 $ 68,030
Accounts payable
15,452 14,871 21,417
Accrued liabilities
7,051 6,638 11,821
Other current liabilities
7,500 7,500 7,500
Current portion of long-term debt
9,926 9,463 9,457
Current portion of lease liabilities
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
101,249 98,962 118,225
Total current liabilities
Long-term debt, less current portion, net 124,424 241,183 291,459
Lease liabilities, less current portion 28,339 28,187 31,988
Deferred tax liabilities, net 1,169 1,169 29
Other non-current liabilities 4,975 4,303 4,986
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
260,156 373,804 446,687
Total liabilities
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Shareholders' equity:
-- -- --
Preferred shares ($0.0001 par value; 20,000,000 shares authorized; zero shares issued and outstanding)
3 3 3
Ordinary shares ($0.0001 par value; 200,000,000 shares authorized; 33,467,846, 29,435,398, and 29,034,946 shares outstanding, respectively; 37,905,285, 33,872,837, and 33,472,385 shares issued, respectively)
593,125 451,581 437,388
Additional paid in capital
(91,578 ) (91,578 ) (91,578 )
Treasury shares at cost (4,437,439 shares)
195,682 204,671 247,651
Retained earnings
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
697,232 564,677 593,464
Total shareholders' equity
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
ICHOR HOLDINGS, LTD.
Consolidated Statement of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 29, December 29, March 31,
2024 2023 2023
-------------------------------------------------- -------------------------------------------------- --------------------------------------------------
Net sales $ 201,383 $ 203,481 $ 225,870
Cost of sales 178,389 183,136 192,630
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Gross profit 22,994 20,345 33,240
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Operating expenses:
5,370 5,534 4,313
Research and development
19,219 19,601 20,167
Selling, general, and administrative
2,146 3,169 3,966
Amortization of intangible assets
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
26,735 28,304 28,446
Total operating expenses
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Operating income (loss) (3,741 ) (7,959 ) 4,794
Interest expense, net 4,096 4,663 4,550
Other expense (income), net 239 (109 ) 784
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Loss before income taxes (8,076 ) (12,513 ) (540 )
Income tax expense (benefit) 913 (614 ) (535 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net loss $ (8,989 ) $ (11,899 ) $ (5 )
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
Net loss per share:
$ (0.30 ) $ (0.40 ) $ 0.00
Basic
$ (0.30 ) $ (0.40 ) $ 0.00
Diluted
Shares used to compute net loss per share:
30,010,971 29,404,548 28,984,878
Basic
ICHOR HOLDINGS, LTD.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 29, December 29, March 31,
2024 2023 2023
------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Cash flows from operating activities:
$ (8,989 ) $ (11,899 ) $ (5 )
Net loss
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
7,556 8,541 8,489
Depreciation and amortization
2,375 4,672 3,637
Share-based compensation
140 (74 ) (1,023 )
Deferred income taxes
116 116 116
Amortization of debt issuance costs
Changes in operating assets and liabilities, net of acquisitions:
(6,650 ) 36,629 13,628
Accounts receivable, net
5,206 21,015 12,122
Inventories
1,735 1,594 2,705
Prepaid expenses and other assets
3,405 (16,218 ) (43,018 )
Accounts payable
1,020 (2,660 ) (1,797 )
Accrued liabilities
(1,110 ) (4,142 ) (5,727 )
Other liabilities
-------------------- -------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
4,804 37,574 (10,873 )
Net cash provided by (used in) operating activities
-------------------- -------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from investing activities:
(4,490 ) (2,257 ) (6,819 )
Capital expenditures
-------------------- -------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
(4,490 ) (2,257 ) (6,819 )
Net cash used in investing activities
-------------------- -------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from financing activities:
136,738 -- --
Issuance of ordinary shares, net of fees
3,335 1,370 2,626
Issuance of ordinary shares under share-based compensation plans
(1,343 ) (790 ) (692 )
Employees' taxes paid upon vesting of restricted share units
(115,000 ) (30,000 ) --
Repayments on revolving credit facility
(1,875 ) (1,875 ) (1,875 )
Repayments on term loan
-------------------- -------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
21,855 (31,295 ) 59
Net cash provided by (used in) financing activities
-------------------- -------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
22,169 4,022 (17,633 )
Net increase (decrease) in cash
Cash at beginning of period 79,955 75,933 86,470
-------------------- -------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash at end of period $ 102,124 $ 79,955 $ 68,837
==================== ======== ==================== ==================== ============== ==================== ==================== ============== ====================
Supplemental disclosures of cash flow information:
$ 4,833 $ 5,236 $ 4,745
Cash paid during the period for interest
$ 702 $ 25 $ 104
Cash paid during the period for taxes, net of refunds
Supplemental disclosures of non-cash activities:
$ 267 $ 625 $ 2,426
Capital expenditures included in accounts payable
ICHOR HOLDINGS, LTD.
Reconciliation of U.S. GAAP Gross Profit to Non-GAAP Gross Profit
(dollars in thousands)
(unaudited)
Three Months Ended
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 29, December 29, March 31,
2024 2023 2023
---------------------------------------------- ---------------------------------------------- ----------------------------------------------
U.S. GAAP gross profit $ 22,994 $ 20,345 $ 33,240
Non-GAAP adjustments:
776 778 421
Share-based compensation
748 130 1,287
Other (1)
-------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------ --------------------
Non-GAAP gross profit $ 24,518 $ 21,253 $ 34,948
==================== ====== ==================== ==================== ====== ==================== ==================== ====== ====================
U.S. GAAP gross margin 11.4 % 10.0 % 14.7 %
(1) Included in this amount are severance costs associated with our global reduction-in-force programs. Included in this amount are severance costs associated with our global reduction-in-force programs.
ICHOR HOLDINGS, LTD.
Reconciliation of U.S. GAAP Operating Income (Loss) to Non-GAAP Operating Income
(dollars in thousands)
(unaudited)
Three Months Ended
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 29, December 29, March 31,
2024 2023 2023
---------------------------------------------- ------------------------------------------------------ ------------------------------------------------------
U.S. GAAP operating income (loss) $ (3,741 ) $ (7,959 ) $ 4,794
Non-GAAP adjustments:
2,146 3,169 3,966
Amortization of intangible assets
2,375 4,672 3,637
Share-based compensation
785 -- --
Transaction-related costs (1)
867 181 1,324
Other (2)
-------------------- ------ -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Non-GAAP operating income $ 2,432 $ 63 $ 13,721
==================== ====== ==================== ==================== ============== ==================== ==================== ============== ====================
U.S. GAAP operating margin (1.9 )% (3.9 )% 2.1 %
(1) Included in this amount are transaction-related costs incurred in connection with our acquisitions pipeline. Included in this amount are transaction-related costs incurred in connection with our acquisitions pipeline.
ICHOR HOLDINGS, LTD.
Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net Income (Loss)
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 29, December 29, March 31,
2024 2023 2023
---------------------------------------------- ------------------------------------------------------ ------------------------------------------------------
U.S. GAAP net loss $ (8,989 ) $ (11,899 ) $ (5 )
Non-GAAP adjustments:
2,146 3,169 3,966
Amortization of intangible assets
2,375 4,672 3,637
Share-based compensation
785 -- --
Transaction-related costs (1)
867 181 1,324
Other (2)
104 2,202 2,206
Tax adjustments related to non-GAAP adjustments (3)
-------------------- ------ -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Non-GAAP net income (loss) $ (2,712 ) $ (1,675 ) $ 11,128
==================== ====== ==================== ==================== ============== ==================== ==================== ============== ====================
U.S. GAAP diluted EPS $ (0.30 ) $ (0.40 ) $ 0.00
Non-GAAP diluted EPS $ (0.09 ) $ (0.06 ) $ 0.38
(1) Included in this amount are transaction-related costs incurred in connection with our acquisitions pipeline. Included in this amount are transaction-related costs incurred in connection with our acquisitions pipeline. (2) Included in this amount are severance costs associated with our global reduction-in-force programs. Included in this amount are severance costs associated with our global reduction-in-force programs.
ICHOR HOLDINGS, LTD.
Reconciliation of U.S. GAAP Net Cash Provided by (Used in) Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
Three Months Ended
---------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 29, December 29, March 31,
2024 2023 2023
------------------------------------------------ ------------------------------------------------ -----------------------------
Net cash provided by (used in) operating activities $ 4,804 $ 37,574 $ (10,873 )
Capital expenditures (4,490 ) (2,257 ) (6,819 )
-------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507346231/en/
SOURCE: Ichor Holdings, Ltd.
<img alt="" src="https://cts.businesswire.com/ct/CT?id=bwnews&sty=20240507346231r1&sid=cmtx6&distro=nx&lang=en" style="width:0;height:0" />
Greg Swyt, CFO 510-897-5200 Claire McAdams, IR & Strategic Initiatives 530-265-9899 ir@ichorsystems.com
COMTEX_452026002/1006/2024-05-07T16:05:09