ICHR Ichor Holdings

Ichor Holdings, Ltd. (NASDAQ: ICHR), a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment, today announced fourth quarter and fiscal year 2022 financial results.

Fourth quarter 2022 highlights:

• Revenues of $302 million, up 5% year-over-year and moderating 15% from a record Q3 2022;
• Gross margin of 16.2% on a GAAP basis and 16.7% on a non‑GAAP basis;
• Earnings per share of $0.49 on a GAAP basis and $0.72 on a non-GAAP basis; and
• $39 million of cash flow from operations.

Fiscal 2022 highlights:

• Record revenues of $1.28 billion, up 17% from 2021;
• Gross margin of 16.6% on a GAAP basis and 17.0% on a non‑GAAP basis; and
• Record earnings per share of $2.51 on a GAAP basis and $3.62 on a non-GAAP basis.

“As we reflect upon a record year for our industry in 2022, we must recognize the strong operational execution of the Ichor team, as we navigated through a highly dynamic and often challenging business environment,” commented Jeff Andreson, chief executive officer. “Given the confluence of unprecedented levels of customer demand as well as significant operational challenges, we are proud to deliver record financial results for the year, with revenue growth of 17% exceeding the overall industry, expanding gross margins, and record earnings.

“As we progressed through the fourth quarter, it became evident that the areas of weakness in wafer fab equipment, particularly those related to memory capital spending as well as the recent export restrictions into China, have resulted in significant reductions in near-term demand from our customers. As a result, we are currently witnessing quarter-over-quarter revenue declines that are modestly higher than what we were expecting a quarter ago. Fortunately, over the last few years we have significantly reduced our exposure to the memory market, and at this time, we do not expect similar levels of sequential declines beyond the first quarter of 2023. We will continue to demonstrate our ability to manage the cost structure of the business through the cycles and deliver solid financial results and cash flow generation. Ichor plays a crucial role in the global semiconductor manufacturing ecosystem, and we look forward to continuing our focus on developing proprietary new products and winning evaluation programs with both new and existing customers in the coming year.”

 

 

Q4 2022

 

 

Q3 2022

 

 

Q4 2021

 

 

FY 2022

 

 

FY 2021

 

 

 

(dollars in thousands, except per share amounts)

 

U.S. GAAP Financial Results:

 

Net sales

 

$

301,720

 

 

$

355,643

 

 

$

287,188

 

 

$

1,280,069

 

 

$

1,096,917

 

Gross margin

 

 

16.2

%

 

 

17.9

%

 

 

16.4

%

 

 

16.6

%

 

 

16.2

%

Operating margin

 

 

6.0

%

 

 

9.2

%

 

 

5.7

%

 

 

6.7

%

 

 

7.4

%

Net income

 

$

14,197

 

 

$

29,031

 

 

$

14,859

 

 

$

72,804

 

 

$

70,899

 

Diluted EPS

 

$

0.49

 

 

$

1.00

 

 

$

0.51

 

 

$

2.51

 

 

$

2.45

 

 

 

Q4 2022

 

 

Q3 2022

 

 

Q4 2021

 

 

FY 2022

 

 

FY 2021

 

 

 

(dollars in thousands, except per share amounts)

 

Non-GAAP Financial Results:

 

Gross margin

 

 

16.7

%

 

 

18.0

%

 

 

17.1

%

 

 

17.0

%

 

 

16.7

%

Operating margin

 

 

8.9

%

 

 

11.6

%

 

 

10.7

%

 

 

9.8

%

 

 

10.7

%

Net income

 

$

21,005

 

 

$

35,354

 

 

$

26,245

 

 

$

104,863

 

 

$

97,698

 

Diluted EPS

 

$

0.72

 

 

$

1.22

 

 

$

0.90

 

 

$

3.62

 

 

$

3.37

 

U.S. GAAP Financial Results Overview

For the fourth quarter of 2022, revenue was $301.7 million, net income was $14.2 million, and net income per diluted share (“diluted EPS”) was $0.49. This compares to revenue of $355.6 million and $287.2 million, net income of $29.0 million and $14.9 million, and diluted EPS of $1.00 and $0.51, for the third quarter of 2022 and fourth quarter of 2021, respectively.

For 2022, revenue was $1.3 billion, net income was $72.8 million, and diluted EPS was $2.51. This compares to revenue of $1.1 billion, net income of $70.9 million, and diluted EPS of $2.45 for 2021.

Non-GAAP Financial Results Overview

For the fourth quarter of 2022, non-GAAP net income was $21.0 million and non-GAAP diluted EPS was $0.72. This compares to non-GAAP net income of $35.4 million and $26.2 million, and non-GAAP diluted EPS of $1.22 and $0.90, for the third quarter of 2022 and fourth quarter of 2021, respectively.

For 2022, non-GAAP net income was $104.9 million and non-GAAP diluted EPS was $3.62. This compares to non-GAAP net income of $97.7 million, and non-GAAP diluted EPS of $3.37 for 2021.

First Quarter 2023 Financial Outlook

For the first quarter of 2023, we expect revenue to be in the range of $210 million to $240 million. We expect GAAP diluted EPS to be in the range of ($0.03) to $0.16 and non-GAAP diluted EPS to be in the range of $0.19 to $0.37.

This outlook for non‑GAAP diluted EPS excludes known charges related to amortization of intangible assets and share-based compensation expense, including the tax adjustments related to these non-GAAP adjustments. This outlook for non-GAAP diluted EPS excludes any items that are unknown at this time, such as non-recurring tax-related items or other unusual or infrequent items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Balance Sheet and Cash Flow Results

We ended the fourth quarter of 2022 with cash and cash equivalents of $86.5 million, an increase of $30.0 million from the prior quarter, and an increase of $11.0 million from our 2021 fiscal year ending December 31, 2021.

The increase of $30.0 million during the fourth quarter was primarily due to net cash provided by operating activities of $38.8 million, partially offset by capital expenditures of $7.0 million.

The increase of $11.0 million during the year ended December 30, 2022 was primarily due to cash provided by operating activities of $31.5 million and net proceeds from our credit facilities of $7.5 million, partially offset by capital expenditures of $29.4 million.

Our cash provided by operating activities of $31.5 million during the year ended December 30, 2022 consisted of net income of $72.8 million and net non-cash charges of $46.3 million, which consisted primarily of depreciation and amortization of $35.1 million and share-based compensation expense of $13.9 million, partially offset by an increase in our net operating assets and liabilities of $87.6 million.

The increase in our net operating assets and liabilities of $87.6 million during the year ended December 30, 2022 was primarily due to a decrease in accounts payable of $50.2 million and an increase in inventories of $47.5 million, partially offset by a decrease in accounts receivable of $6.7 million.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release also contains non-GAAP financial results, including non‑GAAP gross profit, non‑GAAP operating income, non‑GAAP net income, non‑GAAP diluted EPS, and free cash flow. Management uses these 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, or net income, 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 acquisition-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, and net income; and (2) the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items. 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 fourth quarter and fiscal year 2022 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://webcast-eqs.com/ichorholdings20230207. To listen via telephone, please call (877) 407‑0989 (domestic) or +1 (201) 389‑0921 (international), conference ID: 13735282.

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. The three months ended December 30, 2022, September 30, 2022, and December 31, 2021 were 13 weeks, 13 weeks, and 14 weeks, respectively. References to the fourth quarter of 2022, third quarter of 2022, and fourth quarter of 2021 relate to the three-month periods then ended. Our fiscal years ended December 30, 2022, and December 31, 2021, are 52 weeks and 53 weeks, respectively. References to 2022 and 2021 relate to the fiscal years 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. Words such as "guidance," "expects," "intends," “may,” “will,” "projects," "plans," “predicts,” "believes," “could,” "estimates," "targets," "anticipates," “look forward,” and similar expressions are used to identify these forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements regarding financial results for our first fiscal quarter of 2023 and the outlook beyond the first quarter, statements regarding the impacts of current macroeconomic conditions, U.S. export restrictions on semiconductor-related goods and services, materials or component shortages from suppliers, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements, including: (1) geopolitical, economic and market conditions, including heightened inflation, slower growth or recession, changes to fiscal and monetary policy, higher interest rates, currency fluctuations, challenges in the supply chain and any disruptions in European economies as a result of the conflict in Ukraine, (2) dependence on expenditures by manufacturers and cyclical downturns in the semiconductor capital equipment industry, (3) reliance on a very small number of original equipment manufacturers for a significant portion of sales, (4) negotiating leverage held by our customers, (5) competitiveness and rapid evolution of the industries in which we participate, (6) risks associated with weakness in the global economy and geopolitical instability, (7) keeping pace with developments in the industries we serve and with technological innovation generally, (8) designing, developing and introducing new products that are accepted by original equipment manufacturers in order to retain our existing customers and obtain new customers, (9) managing our manufacturing and procurement process effectively, (10) defects in our products that could damage our reputation, decrease market acceptance and result in potentially costly litigation, (11) dependence on a limited number of suppliers, and (12) the impact of the COVID‑19 pandemic, any related or unrelated public health threat or fear of such event on economic activity, us and our customers, suppliers, employees, and other business relations, including, but not limited to, demand for our products, workforce availability, and costs to manufacture our products. 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 filed with the SEC on February 28, 2022.

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) 

 

 

December 30, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

86,470

 

 

$

56,463

 

 

$

75,495

 

Accounts receivable, net

 

 

136,321

 

 

 

183,297

 

 

 

142,990

 

Inventories

 

 

283,660

 

 

 

290,658

 

 

 

236,133

 

Prepaid expenses and other current assets

 

 

7,007

 

 

 

5,164

 

 

 

8,153

 

Total current assets

 

 

513,458

 

 

 

535,582

 

 

 

462,771

 

Property and equipment, net

 

 

98,055

 

 

 

95,577

 

 

 

85,204

 

Operating lease right-of-use assets

 

 

40,557

 

 

 

35,723

 

 

 

29,790

 

Other noncurrent assets

 

 

12,926

 

 

 

13,349

 

 

 

9,166

 

Deferred tax assets, net

 

 

11,322

 

 

 

11,138

 

 

 

8,116

 

Intangible assets, net

 

 

72,022

 

 

 

75,964

 

 

 

89,927

 

Goodwill

 

 

335,402

 

 

 

335,402

 

 

 

335,902

 

Total assets

 

$

1,083,742

 

 

$

1,102,735

 

 

$

1,020,876

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

110,165

 

 

$

141,914

 

 

$

159,727

 

Accrued liabilities

 

 

23,616

 

 

 

26,363

 

 

 

19,066

 

Other current liabilities

 

 

15,815

 

 

 

21,224

 

 

 

14,377

 

Current portion of long-term debt

 

 

7,500

 

 

 

7,500

 

 

 

7,500

 

Current portion of lease liabilities

 

 

9,196

 

 

 

8,062

 

 

 

7,633

 

Total current liabilities

 

 

166,292

 

 

 

205,063

 

 

 

208,303

 

Long-term debt, less current portion, net

 

 

293,218

 

 

 

294,977

 

 

 

285,253

 

Lease liabilities, less current portion

 

 

31,828

 

 

 

28,103

 

 

 

22,354

 

Deferred tax liabilities, net

 

 

29

 

 

 

38

 

 

 

38

 

Other non-current liabilities

 

 

4,879

 

 

 

4,709

 

 

 

4,213

 

Total liabilities

 

 

496,246

 

 

 

532,890

 

 

 

520,161

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares ($0.0001 par value; 20,000,000 shares authorized; zero shares issued and outstanding)

 

 

—

 

 

 

—

 

 

 

—

 

Ordinary shares ($0.0001 par value; 200,000,000 shares authorized; 28,861,949, 28,801,274, and 28,551,160 shares outstanding, respectively; 33,299,388, 33,238,713, and 32,988,599 shares issued, respectively)

 

 

3

 

 

 

3

 

 

 

3

 

Additional paid in capital

 

 

431,415

 

 

 

427,961

 

 

 

417,438

 

Treasury shares at cost (4,437,439 shares)

 

 

(91,578

)

 

 

(91,578

)

 

 

(91,578

)

Retained earnings

 

 

247,656

 

 

 

233,459

 

 

 

174,852

 

Total shareholders’ equity

 

 

587,496

 

 

 

569,845

 

 

 

500,715

 

Total liabilities and shareholders’ equity

 

$

1,083,742

 

 

$

1,102,735

 

 

$

1,020,876

 

 ICHOR HOLDINGS, LTD.

Consolidated Statement of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 30, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

 

December 30, 2022

 

 

December 31, 2021

 

Net sales

 

$

301,720

 

 

$

355,643

 

 

$

287,188

 

 

$

1,280,069

 

 

$

1,096,917

 

Cost of sales

 

 

252,809

 

 

 

292,083

 

 

 

240,210

 

 

 

1,068,205

 

 

 

919,437

 

Gross profit

 

 

48,911

 

 

 

63,560

 

 

 

46,978

 

 

 

211,864

 

 

 

177,480

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,947

 

 

 

4,859

 

 

 

4,222

 

 

 

19,564

 

 

 

15,691

 

Selling, general, and administrative

 

 

22,007

 

 

 

22,195

 

 

 

21,662

 

 

 

88,572

 

 

 

65,857

 

Amortization of intangible assets

 

 

3,942

 

 

 

3,959

 

 

 

4,749

 

 

 

17,905

 

 

 

14,918

 

Total operating expenses

 

 

30,896

 

 

 

31,013

 

 

 

30,633

 

 

 

126,041

 

 

 

96,466

 

Operating income

 

 

18,015

 

 

 

32,547

 

 

 

16,345

 

 

 

85,823

 

 

 

81,014

 

Interest expense, net

 

 

4,212

 

 

 

3,249

 

 

 

1,454

 

 

 

11,056

 

 

 

6,451

 

Other expense (income), net

 

 

111

 

 

 

(210

)

 

 

704

 

 

 

(563

)

 

 

807

 

Income before income taxes

 

 

13,692

 

 

 

29,508

 

 

 

14,187

 

 

 

75,330

 

 

 

73,756

 

Income tax expense (benefit)

 

 

(505

)

 

 

477

 

 

 

(672

)

 

 

2,526

 

 

 

2,857

 

Net income

 

$

14,197

 

 

$

29,031

 

 

$

14,859

 

 

$

72,804

 

 

$

70,899

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.49

 

 

$

1.01

 

 

$

0.52

 

 

$

2.54

 

 

$

2.51

 

Diluted

 

$

0.49

 

 

$

1.00

 

 

$

0.51

 

 

$

2.51

 

 

$

2.45

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,830,505

 

 

 

28,769,135

 

 

 

28,465,870

 

 

 

28,714,550

 

 

 

28,259,607

 

Diluted

 

 

29,046,802

 

 

 

29,050,396

 

 

 

29,045,351

 

 

 

28,963,031

 

 

 

28,979,352

 

ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 30, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

 

December 30, 2022

 

 

December 31, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,197

 

 

$

29,031

 

 

$

14,859

 

 

$

72,804

 

 

$

70,899

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

8,357

 

 

 

8,349

 

 

 

8,323

 

 

 

35,100

 

 

 

25,992

 

Share-based compensation

 

 

3,799

 

 

 

3,719

 

 

 

3,367

 

 

 

13,924

 

 

 

11,473

 

Deferred income taxes

 

 

(193

)

 

 

(1,891

)

 

 

(2,848

)

 

 

(3,215

)

 

 

(1,863

)

Amortization of debt issuance costs

 

 

116

 

 

 

116

 

 

 

158

 

 

 

465

 

 

 

883

 

Gain on sale of asset disposal group

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(504

)

Loss on extinguishment of debt

 

 

—

 

 

 

—

 

 

 

737

 

 

 

—

 

 

 

737

 

Other

 

 

—

 

 

 

—

 

 

 

165

 

 

 

—

 

 

 

484

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

46,976

 

 

 

(24,894

)

 

 

(12,751

)

 

 

6,669

 

 

 

(33,454

)

Inventories

 

 

6,998

 

 

 

(331

)

 

 

(30,075

)

 

 

(47,527

)

 

 

(89,249

)

Prepaid expenses and other assets

 

 

477

 

 

 

1,570

 

 

 

(934

)

 

 

4,508

 

 

 

786

 

Accounts payable

 

 

(31,667

)

 

 

(6,055

)

 

 

17,415

 

 

 

(50,175

)

 

 

38,649

 

Accrued liabilities

 

 

(3,175

)

 

 

4,237

 

 

 

(5,292

)

 

 

3,648

 

 

 

(6,740

)

Other liabilities

 

 

(7,111

)

 

 

5,723

 

 

 

(2,263

)

 

 

(4,748

)

 

 

(2,821

)

Net cash provided by (used in) operating activities

 

 

38,774

 

 

 

19,574

 

 

 

(9,139

)

 

 

31,453

 

 

 

15,272

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(6,975

)

 

 

(8,045

)

 

 

(2,135

)

 

 

(29,433

)

 

 

(20,839

)

Cash paid for acquisitions, net of cash acquired

 

 

—

 

 

 

500

 

 

 

(268,766

)

 

 

500

 

 

 

(268,766

)

Purchase of marketable securities

 

 

—

 

 

 

—

 

 

 

(10,164

)

 

 

—

 

 

 

(115,197

)

Proceeds from maturities and sales of marketable securities

 

 

—

 

 

 

—

 

 

 

108,713

 

 

 

—

 

 

 

114,713

 

Proceeds from sale of property and equipment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

504

 

Net cash used in investing activities

 

 

(6,975

)

 

 

(7,545

)

 

 

(172,352

)

 

 

(28,933

)

 

 

(289,585

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares under share-based compensation plans

 

 

675

 

 

 

1,126

 

 

 

2,527

 

 

 

3,768

 

 

 

9,664

 

Employees' taxes paid upon vesting of restricted share units

 

 

(592

)

 

 

(881

)

 

 

(1,002

)

 

 

(2,813

)

 

 

(3,616

)

Debt issuance and modification costs

 

 

—

 

 

 

—

 

 

 

(1,852

)

 

 

—

 

 

 

(1,852

)

Borrowings on revolving credit facility

 

 

—

 

 

 

—

 

 

 

137,591

 

 

 

25,000

 

 

 

137,591

 

Repayments on revolving credit facility

 

 

—

 

 

 

—

 

 

 

(11,753

)

 

 

(10,000

)

 

 

(41,753

)

Proceeds from term loan

 

 

—

 

 

 

—

 

 

 

94,175

 

 

 

—

 

 

 

94,175

 

Repayments on term loan

 

 

(1,875

)

 

 

(1,875

)

 

 

(90,738

)

 

 

(7,500

)

 

 

(97,300

)

Net cash provided by (used in) financing activities

 

 

(1,792

)

 

 

(1,630

)

 

 

128,948

 

 

 

8,455

 

 

 

96,909

 

Net increase (decrease) in cash

 

 

30,007

 

 

 

10,399

 

 

 

(52,543

)

 

 

10,975

 

 

 

(177,404

)

Cash at beginning of period

 

 

56,463

 

 

 

46,064

 

 

 

128,038

 

 

 

75,495

 

 

 

252,899

 

Cash at end of period

 

$

86,470

 

 

$

56,463

 

 

$

75,495

 

 

$

86,470

 

 

$

75,495

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

4,133

 

 

$

3,162

 

 

$

2,433

 

 

$

10,590

 

 

$

7,123

 

Cash paid during the period for taxes, net of refunds

 

$

950

 

 

$

836

 

 

$

3,856

 

 

$

3,285

 

 

$

5,642

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures included in accounts payable

 

$

1,543

 

 

$

1,625

 

 

$

930

 

 

$

1,543

 

 

$

930

 

Right-of-use assets obtained in exchange for new operating lease liabilities, including those acquired through acquisitions

 

$

6,731

 

 

$

1,571

 

 

$

22,404

 

 

$

17,889

 

 

$

24,643

 

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Gross Profit to Non-GAAP Gross Profit

(dollars in thousands)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 30, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

 

December 30, 2022

 

 

December 31, 2021

 

U.S. GAAP gross profit

 

$

48,911

 

 

$

63,560

 

 

$

46,978

 

 

$

211,864

 

 

$

177,480

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

501

 

 

 

553

 

 

 

437

 

 

 

2,056

 

 

 

1,384

 

Facility shutdown costs (1)

 

 

—

 

 

 

—

 

 

 

314

 

 

 

—

 

 

 

2,611

 

Fair value adjustment to inventory from acquisitions (2)

 

 

—

 

 

 

—

 

 

 

1,441

 

 

 

2,492

 

 

 

1,652

 

Other (3)

 

 

933

 

 

 

—

 

 

 

—

 

 

 

933

 

 

 

106

 

Non-GAAP gross profit

 

$

50,345

 

 

$

64,113

 

 

$

49,170

 

 

$

217,345

 

 

$

183,233

 

U.S. GAAP gross margin

 

 

16.2

%

 

 

17.9

%

 

 

16.4

%

 

 

16.6

%

 

 

16.2

%

Non-GAAP gross margin

 

 

16.7

%

 

 

18.0

%

 

 

17.1

%

 

 

17.0

%

 

 

16.7

%

(1)

 

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed in 2021. Included in this amount are costs and charges directly related to the facility closure.

(2)

 

As part of the purchase price allocations of our acquisitions of IMG Companies, LLC (“IMG”) in November 2021 and a precision machining operation in Mexico in December 2020, we recorded acquired-inventories at fair value, resulting in a fair value step-up. These amounts represent the release of the step-up to cost of sales as acquired-inventories were sold.

(3)

 

Included in this amount for 2022 are severance costs associated with a global reduction-in-force program.

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Operating Income to Non-GAAP Operating Income

(dollars in thousands)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 30, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

 

December 30, 2022

 

 

December 31, 2021

 

U.S. GAAP operating income

 

$

18,015

 

 

$

32,547

 

 

$

16,345

 

 

$

85,823

 

 

$

81,014

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

3,942

 

 

 

3,959

 

 

 

4,749

 

 

 

17,905

 

 

 

14,918

 

Share-based compensation

 

 

3,799

 

 

 

3,719

 

 

 

3,367

 

 

 

13,924

 

 

 

11,473

 

Facility shutdown costs (1)

 

 

—

 

 

 

—

 

 

 

314

 

 

 

—

 

 

 

2,996

 

Settlement loss (2)

 

 

—

 

 

 

1,046

 

 

 

—

 

 

 

4,146

 

 

 

—

 

Fair value adjustment to inventory from acquisitions (3)

 

 

—

 

 

 

—

 

 

 

1,441

 

 

 

2,492

 

 

 

1,652

 

Acquisition costs (4)

 

 

—

 

 

 

—

 

 

 

4,386

 

 

 

296

 

 

 

4,386

 

Other (5)

 

 

1,144

 

 

 

—

 

 

 

—

 

 

 

1,144

 

 

 

498

 

Non-GAAP operating income

 

$

26,900

 

 

$

41,271

 

 

$

30,602

 

 

$

125,730

 

 

$

116,937

 

U.S. GAAP operating margin

 

 

6.0

%

 

 

9.2

%

 

 

5.7

%

 

 

6.7

%

 

 

7.4

%

Non-GAAP operating margin

 

 

8.9

%

 

 

11.6

%

 

 

10.7

%

 

 

9.8

%

 

 

10.7

%

(1)

 

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed in 2021. Included in this amount are costs and charges directly related to the facility closure.

(2)

 

During the first and third quarters of 2022, we recorded loss accruals of $3.1 million and $1.0 million, respectively, relating to expected settlements of employment-related legal matters. We expect the settlements to be finalized and paid within 12 months.

(3)

 

As part of the purchase price allocations of our acquisitions of IMG in November 2021 and a precision machining operation in Mexico in December 2020, we recorded acquired-inventories at fair value, resulting in a fair value step-up. These amounts represent the release of the step-up to cost of sales as acquired-inventories were sold.

(4)

 

Included in this amount are transaction-related costs incurred in connection with our acquisition of IMG in November 2021.

(5)

 

Included in this amount for 2022 are severance costs associated with a global reduction-in-force program. Included in this amount for 2021 are primarily non-capitalized costs incurred in connection with our implementation of a new ERP system and our implementation of a Sarbanes-Oxley compliance program.

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 30, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

 

December 30, 2022

 

 

December 31, 2021

 

U.S. GAAP net income

 

$

14,197

 

 

$

29,031

 

 

$

14,859

 

 

$

72,804

 

 

$

70,899

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

3,942

 

 

 

3,959

 

 

 

4,749

 

 

 

17,905

 

 

 

14,918

 

Share-based compensation

 

 

3,799

 

 

 

3,719

 

 

 

3,367

 

 

 

13,924

 

 

 

11,473

 

Facility shutdown costs (1)

 

 

—

 

 

 

—

 

 

 

314

 

 

 

—

 

 

 

2,996

 

Settlement loss (2)

 

 

—

 

 

 

1,046

 

 

 

—

 

 

 

4,146

 

 

 

—

 

Fair value adjustment to inventory from acquisitions (3)

 

 

—

 

 

 

—

 

 

 

1,441

 

 

 

2,492

 

 

 

1,652

 

Acquisition costs (4)

 

 

—

 

 

 

—

 

 

 

4,386

 

 

 

296

 

 

 

4,386

 

Other (5)

 

 

1,144

 

 

 

—

 

 

 

—

 

 

 

1,144

 

 

 

498

 

Loss on extinguishment of debt (6)

 

 

—

 

 

 

—

 

 

 

737

 

 

 

—

 

 

 

737

 

Tax adjustments related to non-GAAP adjustments (7)

 

 

(2,077

)

 

 

(2,401

)

 

 

(3,608

)

 

 

(7,848

)

 

 

(9,861

)

Non-GAAP net income

 

$

21,005

 

 

$

35,354

 

 

$

26,245

 

 

$

104,863

 

 

$

97,698

 

U.S. GAAP diluted EPS

 

$

0.49

 

 

$

1.00

 

 

$

0.51

 

 

$

2.51

 

 

$

2.45

 

Non-GAAP diluted EPS

 

$

0.72

 

 

$

1.22

 

 

$

0.90

 

 

$

3.62

 

 

$

3.37

 

Shares used to compute diluted EPS

 

 

29,046,802

 

 

 

29,050,396

 

 

 

29,045,351

 

 

 

28,963,031

 

 

 

28,979,352

 

(1)

 

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed in 2021. Included in this amount are costs and charges directly related to the facility closure.

(2)

 

During the first and third quarters of 2022, we recorded loss accruals of $3.1 million and $1.0 million, respectively, relating to expected settlements of employment-related legal matters. We expect the settlements to be finalized and paid within 12 months.

(3)

 

As part of the purchase price allocations of our acquisitions of IMG in November 2021 and a precision machining operation in Mexico in December 2020, we recorded acquired-inventories at fair value, resulting in a fair value step-up. These amounts represent the release of the step-up to cost of sales as acquired-inventories were sold.

(4)

 

Included in this amount are transaction-related costs incurred in connection with our acquisition of IMG in November 2021.

(5)

 

Included in this amount for 2022 are severance costs associated with a global reduction-in-force program. Included in this amount for 2021 are primarily non-capitalized costs incurred in connection with our implementation of a new ERP system and our implementation of a Sarbanes-Oxley compliance program.

(6)

 

In October 2021, we entered into an amended and restated credit agreement. Pursuant to ASC 470, a portion of the refinance was treated as an extinguishment, resulting in a $0.7 million write-off of existing capitalized deferred issuance costs.

(7)

 

Adjusts U.S. GAAP income tax expense for impact of our non-GAAP adjustments. Additionally, this adjustment excludes the impact of non-recurring discrete tax items.

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

 

 

Year Ended

 

 

 

December 30, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

 

December 30, 2022

 

 

December 31, 2021

 

Net cash provided by (used in) operating activities

 

$

38,774

 

 

$

19,574

 

 

$

(9,139

)

 

$

31,453

 

 

$

15,272

 

Capital expenditures

 

 

(6,975

)

 

 

(8,045

)

 

 

(2,135

)

 

 

(29,433

)

 

 

(20,839

)

Free cash flow

 

$

31,799

 

 

$

11,529

 

 

$

(11,274

)

 

$

2,020

 

 

$

(5,567

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230207005588/en/

Larry Sparks, CFO 510-897-5200 Claire McAdams, IR & Strategic Initiatives 530-265-9899 ir@ichorsystems.com Source: Ichor Holdings, Ltd.