UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 28, 2025
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
_________________________________________________________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
_________________________________________________________________________________________________________________________
| Not Applicable | ||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (510 ) 897-5200
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
| x | Accelerated filer | o | ||||||||||||
| Non‑accelerated filer | o | Small reporting company | ||||||||||||
| Emerging Growth Company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes o No x
As of April 29, 2025, the registrant had 34,119,879 ordinary shares, $0.0001 par value per share, outstanding.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ICHOR HOLDINGS, LTD.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
| March 28, 2025 | December 27, 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Other noncurrent assets | |||||||||||
| Deferred tax assets, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Current portion of long-term debt | |||||||||||
| Current portion of lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, less current portion, net | |||||||||||
| Lease liabilities, less current portion | |||||||||||
| Deferred tax liabilities, net | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Shareholders’ equity: | |||||||||||
Preferred shares ($ | |||||||||||
Ordinary shares ($ | |||||||||||
| Additional paid in capital | |||||||||||
Treasury shares at cost ( | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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ICHOR HOLDINGS, LTD.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Net sales | $ | $ | |||||||||
| Cost of sales | |||||||||||
| Gross profit | |||||||||||
| Operating expenses: | |||||||||||
| Research and development | |||||||||||
| Selling, general, and administrative | |||||||||||
| Amortization of intangible assets | |||||||||||
| Total operating expenses | |||||||||||
| Operating Loss | ( | ( | |||||||||
| Interest expense, net | |||||||||||
| Other expense, net | |||||||||||
| Loss before income taxes | ( | ( | |||||||||
| Income tax expense | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Net loss per share | |||||||||||
| Basic | $ | ( | $ | ( | |||||||
| Diluted | $ | ( | $ | ( | |||||||
| Shares used to compute Net loss per share: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
2
ICHOR HOLDINGS, LTD.
Consolidated Statements of Shareholders’ Equity
(in thousands, except share amounts)
(unaudited)
| For the three months ending March 28, 2025 | Ordinary Shares | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance at December 27, 2024 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
| Ordinary shares issued from exercise of stock options | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Ordinary shares issued from vesting of restricted share units | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
| Ordinary shares issued from employee share purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 28, 2025 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
| For the three months ending March 29, 2024 | Ordinary Shares | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance at December 29, 2023 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
| Ordinary shares issued, net of transaction costs | — | ||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued from exercise of stock options | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Ordinary shares issued from vesting of restricted share units | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
| Ordinary shares issued from employee share purchase plan | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 29, 2024 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
ICHOR HOLDINGS, LTD.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation | |||||||||||
| Deferred income taxes | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
| Accounts receivable, net | ( | ||||||||||
| Inventories | ( | ||||||||||
| Prepaid expenses and other assets | |||||||||||
| Accounts payable | |||||||||||
| Accrued liabilities | |||||||||||
| Other liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Issuance of ordinary shares, net of fees | |||||||||||
| Issuance of ordinary shares under share-based compensation plans | |||||||||||
| Employees' taxes paid upon vesting of restricted share units | ( | ( | |||||||||
| Repayments on revolving credit facility | ( | ||||||||||
| Repayments on term loan | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Net increase in cash | |||||||||||
| Cash at beginning of period | |||||||||||
| Cash at end of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid during the period for interest | $ | $ | |||||||||
| Cash paid during the period for taxes, net of refunds | $ | $ | |||||||||
| Supplemental disclosures of non-cash activities: | |||||||||||
| Capital expenditures included in accounts payable | $ | $ | |||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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ICHOR HOLDINGS, LTD.
Notes to Consolidated Financial Statements
(dollar figures in tables in thousands, except per share amounts)
(unaudited)
| Note 1 – Basis of Presentation and Selected Significant Accounting Policies | ||
Basis of Presentation
These consolidated unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). All intercompany balances and transactions have been eliminated upon consolidation. All dollar figures presented in tables in the notes to the consolidated financial statements are in thousands, except per share amounts. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by the U.S. Securities and Exchange Commission's rules and regulations for interim reporting. These consolidated financial statements should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10‑K for the year ended December 27, 2024.
Year End
We use a 52- or 53-week fiscal year ending on the last Friday in December. Our fiscal years ending December 26, 2025 and December 27, 2024 are each 52 weeks. References to 2025 and 2024 relate to the fiscal years then ended, respectively. The three-month periods ended March 28, 2025 and March 29, 2024 are each 13 weeks. References to the first quarter of 2025 and 2024 relate to the three-month periods then ended, respectively.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods presented. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from the estimates made by management. Significant estimates include inventory valuation, uncertain tax positions, valuation allowance on deferred tax assets, and impairment analysis for both definite‑lived intangible assets and goodwill.
Cash and Cash Equivalents
Cash and cash equivalents consist of deposits and financial instruments which are readily convertible into cash and have original maturities of 90 days or less at the time of acquisition.
Fair Value of Financial Instruments
The carrying values of our financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, and long-term debt, net of unamortized debt issuance costs, approximate fair value.
5
Revenue Recognition
We recognize revenue when control of promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. This amount is recorded as net sales in our consolidated statements of operations.
Transaction price – In most of our contracts, prices are generally determined by a customer-issued purchase order and generally remain fixed over the duration of the contract. Certain contracts contain variable consideration, including early-payment discounts and rebates. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal will not occur. Variable consideration estimates are updated at each reporting date. Historically, we have not incurred significant costs to obtain a contract. All amounts billed to a customer relating to shipping and handling are classified as net sales, while all costs incurred by us for shipping and handling are classified as cost of sales.
Performance obligations – Substantially all of our performance obligations pertain to promised goods (“products”), which are primarily comprised of fluid delivery subsystems, weldments, and other components. Most of our contracts contain a single performance obligation and are generally completed within 12 months. Product sales are recognized at a point-in-time, upon "delivery," as such term is defined within the contract, which is generally at the time of shipment, as that is when control of the product has transferred. Products are covered by a standard assurance warranty, generally extended for a period of to two years depending on the customer, which promises that delivered products conform to contract specifications. As such, we account for such warranties under Accounting Standards Codification ("ASC") Topic 460, Guarantees, and not as a separate performance obligation.
Contract balances – Accounts receivable represents our unconditional right to receive consideration from our customers. Accounts receivable are carried at invoice price less an estimate for doubtful accounts and estimated payment discounts. Payment terms vary by customer, but payment is generally due within 15 to 60 days of purchase. Historically, we have not experienced significant payment issues with our customers. We had no significant contract assets or liabilities on our consolidated balance sheets in any of the periods presented herein.
Accounting Pronouncements Recently Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards updated (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. We adopted this ASU in the fourth quarter of 2024 for the annual period ended December 27, 2024, and it did not have a material impact on our consolidated financial statements.
Accounting Pronouncements Recently Issued
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). This ASU is intended to enhance the transparency, decision usefulness, and effectiveness of income tax disclosures. The ASU requires a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. The ASU also requires a public entity to provide a qualitative description of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state, and foreign taxes as well as by individual jurisdictions. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. We are currently evaluating the effect that the adoption of this ASU may have on our consolidated financial statements.
6
Note 2 – Inventories | ||
Inventories consist of the following:
| March 28, 2025 | December 27, 2024 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
| Excess and obsolete adjustment | ( | ( | |||||||||
| Total inventories | $ | $ | |||||||||
| Note 3 – Property and Equipment and Other Noncurrent Assets | ||
Property and equipment consist of the following:
| March 28, 2025 | December 27, 2024 | ||||||||||
| Machinery | $ | $ | |||||||||
| Leasehold improvements | |||||||||||
| Computer software, hardware, and equipment | |||||||||||
| Office furniture, fixtures, and equipment | |||||||||||
| Vehicles | |||||||||||
| Construction-in-process | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Total property and equipment, net | $ | $ | |||||||||
Depreciation expense was $5.6 million and $5.2 million for the first quarter of 2025 and 2024, respectively.
Cloud Computing Implementation Costs
7
| Note 4 – Intangible Assets | ||
Definite‑lived intangible assets consist of the following:
| March 28, 2025 | |||||||||||||||||||||||||||||
| Gross value | Accumulated amortization | Accumulated impairment charges | Carrying amount | Weighted average useful life | |||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | — | $ | |||||||||||||||||||||||
| Developed technology | ( | — | |||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | — | $ | |||||||||||||||||||||||
| December 27, 2024 | |||||||||||||||||||||||||||||
| Gross value | Accumulated amortization | Accumulated impairment charges | Carrying amount | Weighted average useful life | |||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | — | $ | |||||||||||||||||||||||
| Developed technology | ( | — | |||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | — | $ | |||||||||||||||||||||||
| Note 5 – Leases | ||
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and liabilities, we use the non-cancelable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
We lease facilities under non-cancelable operating leases that expire at various dates from 2025 through 2037. In addition to base rental payments, we are generally responsible for our proportionate share of operating expenses, including facility maintenance, insurance, and property taxes. As these amounts are variable, they are not included in lease liabilities.
The components of lease expense are as follows:
| Three Months Ended | ||||||||||||||
| March 28, 2025 | March 29, 2024 | |||||||||||||
| Operating lease cost | $ | $ | ||||||||||||
Supplemental cash flow information related to leases is as follows:
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
Supplemental balance sheet information related to leases is as follows:
| March 28, 2025 | December 27, 2024 | ||||||||||
| Weighted-average remaining lease term of operating leases | |||||||||||
| Weighted-average discount rate of operating leases | |||||||||||
8
Future minimum lease payments under non-cancelable leases are as follows as of March 28, 2025:
| 2025, remaining | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total future minimum lease payments | |||||
| Less imputed interest | ( | ||||
| Total lease liabilities | $ | ||||
| Less current portion | $ | ( | |||
| Total lease liabilities, less current portion | $ | ||||
| Note 6 – Income Taxes | ||
Income tax information for the periods reported is as follows:
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Income tax expense | $ | $ | |||||||||
| Loss before income taxes | $ | ( | $ | ( | |||||||
| Effective income tax rate | ( | % | ( | % | |||||||
Our effective tax rate for the three months ended March 28, 2025 differs from the statutory rate primarily due to taxes on foreign income that differs from the U.S. tax rate, including an accrual for the OECD's Global Anti-Base Erosion OECD Model Rules ("Pillar Two") taxes, the impact of stock option exercises and the impact of a valuation allowance against U.S. deferred tax assets. Pillar Two taxes primarily impact our Singapore operations, wherein we were granted and currently participate in a tax holiday expiring in 2026.
The ending balance for the unrecognized tax benefits for uncertain tax positions was approximately $4.0 million as of March 28, 2025. The related interest was insignificant, and the related penalties were $0.6 million. The uncertain tax positions that are reasonably possible to decrease in the next twelve months are insignificant.
As of March 28, 2025, we were under examination by California tax authorities for fiscal years 2020-2022.
Note 7 – Employee Benefit Programs | ||
401(k) Plan
We sponsor a 401(k) plan available to employees of our U.S.‑based subsidiaries. Participants may make salary deferral contributions not to exceed 50 % of a participant’s annual compensation or the maximum amount otherwise allowed by law. Eligible employees receive a discretionary matching contribution equal to 50 % of a participant’s deferral, up to an annual matching maximum of 4 % of a participant’s annual compensation. Matching contributions were $0.8 million and $0.7 million for the first quarter of 2025 and 2024, respectively.
9
Note 8 – Long-Term Debt | ||
Long‑term debt consists of the following:
| March 28, 2025 | December 27, 2024 | ||||||||||
| Term loan | $ | $ | |||||||||
| Revolving credit facility | |||||||||||
| Total principal amount of long-term debt | |||||||||||
| Less unamortized debt issuance costs | ( | ( | |||||||||
| Total long-term debt, net | |||||||||||
| Less current portion | ( | ( | |||||||||
| Total long-term debt, less current portion, net | $ | $ | |||||||||
On October 29, 2021, we entered into an amended and restated credit agreement, which includes a group of financial institutions as direct lenders under the agreement that was subsequently amended on September 30, 2024 (the "credit agreement"). The credit agreement includes a $150.0 million term loan facility and a $250.0 million revolving credit facility (together, “credit facilities”). Term loan principal payments of $1.9 million are due on a quarterly basis. The credit agreement matures on October 29, 2026.
As of March 28, 2025, interest is charged at either the Base Rate or SOFR (as such terms are defined in the credit agreement) at our option, plus an applicable margin. The Base Rate is equal to the higher of i) the Prime Rate, ii) the Federal Funds Rate plus 0.5 %, or iii) SOFR plus 1.00 %. The applicable margin on Base Rate and SOFR loans is 0.375 % to 1.375 % and 1.375 % to 2.375 % per annum, respectively, depending on our leverage ratio, which is based on trailing 12-month consolidated EBITDA, as defined in our credit agreement. We are also charged a commitment fee of 0.175 % to 0.350 %, depending on our leverage ratio, on the unused portion of our revolving credit facility. Base Rate interest payments and commitment fees are due quarterly. SOFR interest payments are due on the last day of the applicable interest period, or quarterly for applicable interest periods longer than three months. As of March 28, 2025, our credit facilities bore interest under the SOFR option at 6.06 %.
Note 9 – Share‑Based Compensation | ||
The 2016 Omnibus Incentive Plan provides for grants of share‑based awards to employees, directors, and consultants. Awards may be in the form of stock options (“options”), tandem and non‑tandem stock appreciation rights, restricted share awards or restricted share units (“RSUs”), performance awards, and other share‑based awards. Forfeited or expired awards are returned to the incentive plan pool for future grants. Awards generally vest over four years , 25 % on the first anniversary of the date of grant and quarterly thereafter over the remaining three years . Upon vesting of RSUs, shares are withheld to cover statutory minimum withholding taxes. Shares withheld are not reflected as an issuance of ordinary shares within our consolidated statements of shareholders’ equity, as the shares are never issued, and the associated tax payments are reflected as financing activities within our consolidated statements of cash flows.
Share‑based compensation expense across all plans for options, RSUs, and employee share purchase rights was $4.1 million and $2.4 million for the first quarter of 2025 and 2024, respectively.
10
Stock Options
The following table summarizes option activity:
| Number of Stock Options | |||||||||||||||||||||||
| Service condition | Weighted average exercise price per share | Weighted average remaining contractual term | Aggregate intrinsic value | ||||||||||||||||||||
| Outstanding, December 27, 2024 | $ | ||||||||||||||||||||||
| Granted | $ | ||||||||||||||||||||||
| Exercised | ( | $ | |||||||||||||||||||||
| Forfeited or expired | $ | ||||||||||||||||||||||
| Outstanding, March 28, 2025 | $ | $ | |||||||||||||||||||||
| Exercisable, March 28, 2025 | $ | $ | |||||||||||||||||||||
Restricted Share Units
The following table summarizes RSU activity:
| Number of RSUs | |||||||||||||||||||||||
| Service condition | Performance condition | Market condition | Weighted average grant-date fair value per share | ||||||||||||||||||||
| Unvested, December 27, 2024 | $ | ||||||||||||||||||||||
| Granted | $ | ||||||||||||||||||||||
| Vested | ( | ( | ( | $ | |||||||||||||||||||
| Forfeited | ( | ( | ( | $ | |||||||||||||||||||
| Unvested, March 28, 2025 | $ | ||||||||||||||||||||||
Employee Share Purchase Plan
The 2017 Employee Stock Purchase Plan (the “2017 ESPP”) grants employees the ability to designate a portion of their base-pay to purchase ordinary shares at a price equal to 85 % of the fair market value of our ordinary shares on the first or last day of each six-month purchase period. Purchase periods begin on January 1 or July 1 and end on June 30 or December 31 (or the next business day if such date is not a business day). Shares are purchased on the last day of the purchase period.
As of March 28, 2025, approximately 2.1 million ordinary shares remain available for purchase under the 2017 ESPP.
11
Note 10 – Earnings per Share | ||
The following table sets forth the computation of basic and diluted earnings per share and a reconciliation of the numerator and denominator used in the calculation:
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Numerator: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Denominator: | |||||||||||
| Basic weighted average ordinary shares outstanding | |||||||||||
| Dilutive effect of options | |||||||||||
| Dilutive effect of RSUs | |||||||||||
| Dilutive effect of ESPP | |||||||||||
| Diluted weighted average ordinary shares outstanding | |||||||||||
| Securities excluded from the calculation of diluted weighted average ordinary shares outstanding (1) | |||||||||||
| Net loss per share: | |||||||||||
| Basic | $ | ( | $ | ( | |||||||
| Diluted | $ | ( | $ | ( | |||||||
(1)Represents potentially dilutive options and RSUs excluded from the calculation of diluted weighted average ordinary shares outstanding, because including them would have been antidilutive under the treasury stock method.
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Note 11 – Segment Information | ||
We operate as a single business operating segment, which includes all activities related to the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Accordingly, we report as one operating segment. The determination of a single business operating segment is consistent with the consolidated financial information regularly provided to our CODM. The consolidated financial information provided to our CODM does not contain significant disaggregated expenses outside of what is already disclosed in our statements of operations and notes thereto included in these consolidated financial statements. Our CODM is our Chief Executive Officer, and the CODM reviews and evaluates consolidated net income for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.
Foreign operations are conducted primarily through our wholly owned subsidiaries in Singapore, Malaysia and Mexico, and to a lesser degree, Scotland and Korea. Our principal markets include North America, Asia, and, to a lesser degree, Europe.
The following table sets forth sales by geographic area, which represents sales to unaffiliated customers based upon the location to which the products were shipped:
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Singapore | $ | $ | |||||||||
| United States of America | |||||||||||
| Europe | |||||||||||
| Other | |||||||||||
| Total net sales | $ | $ | |||||||||
Foreign long-lived assets, exclusive of deferred tax assets, were $65.3 million and $62.5 million as of March 28, 2025 and December 27, 2024, respectively.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Concerning Forward-Looking Statements | ||
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. You should not place undue reliance on these statements. All statements other than statements of historical fact included in this report are forward-looking statements. These statements relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. These forward-looking statements are identified by the use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions. However, these words are not the exclusive means of identifying such statements. These statements are contained in many sections of this report, including in this Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or expectations. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, include geopolitical, economic and market conditions, including high inflation, changes to trade, 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 OEMs 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; our dependence on a limited number of suppliers; and other factors set forth in this report, and those set forth in Part I – Item 1A. Risk Factors of our Annual Report on Form 10‑K for the fiscal year ended December 27, 2024 (“2024 Annual Report on Form 10-K”) and our other filings with the Securities and Exchange Commission (“SEC”). All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements contained in Part I – Item 1A. Risk Factors to our 2024 Annual Report on Form 10-K, as well as other cautionary statements that are made from time to time in our other filings with the SEC and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated unaudited financial statements and related notes included elsewhere in this report.
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Overview | ||
We are a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Our product offerings include gas and chemical delivery systems and subsystems, collectively known as fluid delivery systems and 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 systems and 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, electron beam (“e‑beam”) and laser-welded components, precision vacuum and hydrogen brazing and surface treatment technologies, and other proprietary products for the commercial space, aerospace, defense, medical device, and general-industrial industries. This vertically integrated portion of our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively.
Fluid delivery subsystems ensure accurate measurement and uniform delivery of specialty gases and chemicals at critical steps in the semiconductor manufacturing processes. Any malfunction or material degradation in fluid delivery reduces yields and increases the likelihood of manufacturing defects in these processes. Most original equipment manufacturers (“OEMs”) outsource all or a portion of the design, engineering, and manufacturing of their gas delivery subsystems to a few specialized suppliers, including us. Additionally, many OEMs are outsourcing the design, engineering, and manufacturing of their chemical delivery subsystems due to the increased fluid expertise required to manufacture these subsystems. Outsourcing these subsystems allows OEMs to leverage suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes. Outsourcing enables OEMs to reduce their costs and development time, as well as provide growth opportunities for specialized subsystems suppliers like us.
We have a global footprint with production facilities in California, Minnesota, Oregon, Texas, Singapore, Malaysia, the United Kingdom, Korea, and Mexico.
The following table summarizes key financial information for the periods indicated. Amounts are presented in accordance with GAAP unless explicitly identified as being a non-GAAP metric. For a description of our non-GAAP metrics and reconciliations to the most comparable GAAP metrics, please refer below to the section entitled Non-GAAP Financial Results within this report.
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| (dollars in thousands, except per share amounts) | |||||||||||
| Net sales | $ | 244,465 | $ | 201,383 | |||||||
| Gross margin | 11.7 | % | 11.4 | % | |||||||
| Non-GAAP gross margin | 12.4 | % | 12.2 | % | |||||||
| Operating margin | (0.5) | % | (1.9) | % | |||||||
| Non-GAAP operating margin | 2.7 | % | 1.2 | % | |||||||
| Net loss | $ | (4,559) | $ | (8,989) | |||||||
| Non-GAAP Net Income (Loss) | $ | 4,236 | $ | (2,712) | |||||||
| Diluted EPS | $ | (0.13) | $ | (0.30) | |||||||
| Non-GAAP diluted EPS | $ | 0.12 | $ | (0.09) | |||||||
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Macroeconomic Conditions and Business Update | ||
The semiconductor capital equipment industry is inherently cyclical. Overall semiconductor equipment spending in 2025 is anticipated to grow, particularly in our primary markets of etch and deposition, where current demand remains healthy among our customers. However, the global trade environment is uncertain and rapidly evolving as numerous countries propose new, increased or retaliatory tariffs. The outcome of ongoing negotiations between the United States and other countries with respect to these tariffs is highly uncertain, and could significantly affect our costs, prices for our products, and demand. To date, tariffs have not materially impacted demand for our products, as semiconductors are currently excluded from the "reciprocal tariffs" and our existing tariff exemption under the U.S.-Mexico-Canada Agreement applicable to imports from our operations in Mexico. However, we cannot provide any assurance that these exclusions and exemptions will remain in place indefinitely, or that any new or expanded tariffs will not have a material adverse impact on our business in the future.
While challenging macroeconomic conditions may persist in the near and intermediate term, we remain confident in our belief that the long-term demand for semiconductors, semiconductor capital equipment, and our products will continue to grow, driven by an increasing need for expanded semiconductor productive capacity and advanced manufacturing process technologies.
Results of Operations | ||
The following table sets forth our unaudited results of operations for the periods presented. The period‑to‑period comparison of results is not necessarily indicative of results for future periods.
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Net sales | $ | 244,465 | $ | 201,383 | |||||||
| Cost of sales | 215,943 | 178,389 | |||||||||
| Gross profit | 28,522 | 22,994 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 5,874 | 5,370 | |||||||||
| Selling, general, and administrative | 21,742 | 19,219 | |||||||||
| Amortization of intangible assets | 2,078 | 2,146 | |||||||||
| Total operating expenses | 29,694 | 26,735 | |||||||||
| Operating Loss | (1,172) | (3,741) | |||||||||
| Interest expense, net | 1,646 | 4,096 | |||||||||
| Other expense, net | 81 | 239 | |||||||||
| Loss before income taxes | (2,899) | (8,076) | |||||||||
| Income tax expense | 1,660 | 913 | |||||||||
| Net loss | $ | (4,559) | $ | (8,989) | |||||||
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The following table sets forth our unaudited results of operations as a percentage of our total sales for the periods presented.
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Net sales | 100.0 | 100.0 | |||||||||
| Cost of sales | 88.3 | 88.6 | |||||||||
| Gross profit | 11.7 | 11.4 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 2.4 | 2.7 | |||||||||
| Selling, general, and administrative | 8.9 | 9.5 | |||||||||
| Amortization of intangible assets | 0.9 | 1.1 | |||||||||
| Total operating expenses | 12.1 | 13.3 | |||||||||
| Operating Loss | (0.5) | (1.9) | |||||||||
| Interest expense, net | 0.7 | 2.0 | |||||||||
| Other expense, net | 0.0 | 0.1 | |||||||||
| Loss before income taxes | (1.2) | (4.0) | |||||||||
| Income tax expense | 0.7 | 0.5 | |||||||||
| Net loss | (1.9) | (4.5) | |||||||||
Comparison of the Three Months Ended March 28, 2025 and March 29, 2024 | ||
Net sales
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 244,465 | $ | 201,383 | $ | 43,082 | 21.4 | % | |||||||||||||||
The increase in net sales from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to increased customer demand as a result of a stronger semiconductor capital equipment spending environment.
Gross margin
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Cost of sales | $ | 215,943 | $ | 178,389 | $ | 37,554 | 21.1% | ||||||||||||||||
| Gross profit | $ | 28,522 | $ | 22,994 | $ | 5,528 | 24.0% | ||||||||||||||||
| Gross margin | 11.7 | % | 11.4 | % | +30 | bps | |||||||||||||||||
The increase in gross margin from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to lower excess and obsolete inventory expense (+65bps), partially offset by unfavorable sales mix and increased factory overhead costs.
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Research and development
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Research and development | $ | 5,874 | $ | 5,370 | $ | 504 | 9.4 | % | |||||||||||||||
The increase in research and development expenses from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to increased material and service costs from our new product development programs of $0.2 million and increased employee-related expenses of $0.3 million, inclusive of share-based compensation expense.
Selling, general, and administrative
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Selling, general, and administrative | $ | 21,742 | $ | 19,219 | $ | 2,523 | 13.1 | % | |||||||||||||||
The increase in selling, general, and administrative expense from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to increased share based compensation expense of $1.7 million, increased IT system and related support costs of $0.6 million, increase outside service and software provider costs of $0.5 million, and increased severance costs associated with our global reduction-in-force programs of $0.3, partially offset by reduced transaction-related costs associated with our acquisitions pipeline of $0.8 million.
Amortization of intangible assets
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Amortization of intangible assets | $ | 2,078 | $ | 2,146 | $ | (68) | (3.2) | % | |||||||||||||||
The decrease in amortization expense from the three months ended March 29, 2024 to the three months ended March 28, 2025 was due to certain intangible assets becoming fully amortized in the second half of 2024.
Interest expense, net
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Interest expense, net | $ | 1,646 | $ | 4,096 | $ | (2,450) | (59.8) | % | |||||||||||||||
| Weighted average borrowings outstanding | $ | 127,562 | $ | 243,935 | $ | (116,373) | (47.7) | % | |||||||||||||||
| Weighted average borrowing rate | 6.24 | % | 7.61 | % | -137 bps | ||||||||||||||||||
The decrease in interest expense, net from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to a decrease in our weighted average borrowings outstanding and a decrease in our weighted average borrowing rate. The reduction in our weighted average borrowings outstanding was primarily due to paying off our revolving credit facility near the end of the first quarter of 2024. The decrease in our weighted average borrowing rate was due to lower applicable margin as a result of a lower leverage ratio (-41 bps) and lower Secured Overnight Financing Rate ("SOFR") rates, the variable portion of our borrowing rate (-96 bps).
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Other expense, net
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Other expense, net | $ | 81 | $ | 239 | $ | (158) | (66.1) | % | |||||||||||||||
The change in other expense, net from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to currency exchange rate fluctuations related to our local currency payables and cash holdings of our foreign operations.
Income tax expense
| Three Months Ended | Change | ||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Income tax expense | $ | 1,660 | $ | 913 | $ | 747 | 81.8 | % | |||||||||||||||
| Loss before income taxes | $ | (2,899) | $ | (8,076) | $ | 5,177 | (64.1) | % | |||||||||||||||
| Effective income tax rate | -57.3 | % | -11.3 | % | -4,600 bps | ||||||||||||||||||
The increase in income tax expense from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to additional tax expense provisioned in Singapore in connection with Pillar Two minimum tax rules and discrete expense from recording a valuation allowance against our Scotland and Korea deferred tax assets in the first quarter of 2025.
Non‑GAAP Financial Results | ||
Management uses certain 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. All non-GAAP adjustments are presented on a gross basis. Non-GAAP gross profit, operating income, and net income (loss) 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) with respect to non-GAAP net income (loss), the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items, including deferred tax asset valuation allowance charges. 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 earnings per share ("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.
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.
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The following table presents our unaudited non‑GAAP gross profit and non-GAAP gross margin and a reconciliation from GAAP gross profit, the most comparable GAAP measure, for the periods indicated:
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| U.S. GAAP gross profit | $ | 28,522 | $ | 22,994 | |||||||
| Non-GAAP adjustments: | |||||||||||
| Share-based compensation | 707 | 776 | |||||||||
| Other (1) | 1,087 | 748 | |||||||||
| Non-GAAP gross profit | $ | 30,316 | $ | 24,518 | |||||||
| U.S. GAAP gross margin | 11.7 | % | 11.4 | % | |||||||
| Non-GAAP gross margin | 12.4 | % | 12.2 | % | |||||||
(1)Represents severance costs associated with our global reduction-in-force programs. Additionally, the first quarter of 2025 includes severance costs incurred in connection with the planned exit from our Scotland operations.
The following table presents our unaudited non‑GAAP operating loss and non-GAAP operating margin and a reconciliation from GAAP operating loss, the most comparable GAAP measure, for the periods indicated:
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| (dollars in thousands, except per share amounts) | |||||||||||
| U.S. GAAP operating loss | $ | (1,172) | $ | (3,741) | |||||||
| Non-GAAP adjustments: | |||||||||||
| Amortization of intangible assets | 2,078 | 2,146 | |||||||||
| Share-based compensation | 4,123 | 2,375 | |||||||||
| Transaction-related costs (1) | — | 785 | |||||||||
| Other (2) | 1,546 | 867 | |||||||||
| Non-GAAP operating income | $ | 6,575 | $ | 2,432 | |||||||
| U.S. GAAP operating margin | (0.5) | % | (1.9) | % | |||||||
| Non-GAAP operating margin | 2.7 | % | 1.2 | % | |||||||
(1)Represents transaction-related costs incurred in connection with our acquisitions pipeline.
(2)Represents severance costs associated with our global reduction-in-force programs. Additionally, the first quarter of 2025 includes severance costs incurred in connection with the planned exit from our Scotland operations.
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The following table presents our unaudited non‑GAAP net income (loss) and non-GAAP diluted EPS and a reconciliation from GAAP net loss, the most comparable GAAP measure, for the periods indicated. 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".
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| (dollars in thousands, except per share amounts) | |||||||||||
| U.S. GAAP net loss | $ | (4,559) | $ | (8,989) | |||||||
| Non-GAAP adjustments: | |||||||||||
| Amortization of intangible assets | 2,078 | 2,146 | |||||||||
| Share-based compensation | 4,123 | 2,375 | |||||||||
| Transaction-related costs (1) | — | 785 | |||||||||
| Other (2) | 1,546 | 867 | |||||||||
| Tax adjustments related to non-GAAP adjustments (3) | 711 | 104 | |||||||||
| Tax expense from valuation allowance (4) | 337 | — | |||||||||
| Non-GAAP net income (loss) | $ | 4,236 | $ | (2,712) | |||||||
| U.S. GAAP diluted EPS | $ | (0.13) | $ | (0.30) | |||||||
| Non-GAAP diluted EPS | $ | 0.12 | $ | (0.09) | |||||||
| Shares used to compute non-GAAP diluted EPS | 34,206,989 | 30,010,971 | |||||||||
(1)Represents transaction-related costs incurred in connection with our acquisitions pipeline.
(2)Represents severance costs associated with our global reduction-in-force programs. Additionally, the first quarter of 2025 includes severance costs incurred in connection with the planned exit from our Scotland operations.
(3)Adjusts GAAP income tax expense for the impact of our non-GAAP adjustments, which are presented on a gross basis.
(4)During the first quarter of 2025, we recorded a valuation allowance against the deferred tax assets from Scotland and Korea operations.
Liquidity and Capital Resources | ||
The following section discusses our liquidity and capital resources, including our primary sources of liquidity and our material cash requirements. Our cash and cash equivalents are maintained in highly liquid and accessible accounts with no significant restrictions.
Material Cash Requirements
Our primary liquidity requirements arise from: (i) working capital requirements, including procurement of raw materials inventory for use in our factories and employee-related costs, (ii) business acquisitions, (iii) interest and principal payments under our credit facilities, (iv) research and development investments and capital expenditures, (v) payment of income taxes, and (vi) payments associated with our noncancellable leases and related occupancy costs. We have no significant long-term purchase commitments related to procuring raw materials inventory. Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and are therefore subject to prevailing global macroeconomic conditions, such as interest rates, increased tariffs and retaliatory trade policies, geopolitical events, and financial, business, and other factors, some of which are beyond our control.
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We believe that our cash and cash equivalents, the amounts available under our credit facilities, and our operating cash flow will be sufficient to fund our business and our current obligations for at least the next 12 months and beyond.
Sources and Conditions of Liquidity
Our ongoing sources of liquidity to fund our material cash requirements are primarily derived from: (i) sales to our customers and the related changes in our net operating assets and liabilities and (ii) proceeds from our credit facilities and equity offerings, when applicable.
Summary of Cash Flows
We ended the first quarter of 2025 with cash and cash equivalents of $109.3 million, an increase of $0.6 million from the prior year ended December 27, 2024. The increase was primarily due to net cash provided by operating activities of $19.0 million and net cash received from share-based compensation of $2.0 million, partially offset by capital expenditures of $18.5 million and net payments on credit facilities of $1.9 million.
The following table sets forth a summary of operating, investing, and financing activities for the periods presented:
| Three Months Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Cash provided by operating activities | $ | 18,977 | $ | 4,804 | |||||||
| Cash used in investing activities | (18,481) | (4,490) | |||||||||
| Cash provided by financing activities | 116 | 21,855 | |||||||||
| Net increase (decrease) in cash | $ | 612 | $ | 22,169 | |||||||
Our cash provided by operating activities of $19.0 million for the three months ended March 28, 2025 consisted of net non-cash charges of $12.5 million, consisting primarily of depreciation and amortization of $8.1 million and share-based compensation expense of $4.1 million, and a decrease in our net operating assets and liabilities of $11.0 million, partially offset by net loss of $4.6 million.
The decrease in our net operating assets and liabilities of $11.0 million during the three months ended March 28, 2025 was primarily due to an increase in accounts payable of $14.3 million and a decrease in accounts receivable of $6.8 million, partially offset by an increase in inventories of $13.4 million.
The increase in cash provided by operating activities from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to favorable changes in working capital of $7.4 million, a reduction in net loss of $4.4 million, and an increase in net non-cash charges of $2.4 million.
Cash used in investing activities during the three months ended March 28, 2025 and March 29, 2024 consisted of capital expenditures.
Cash provided by financing activities during the three months ended March 28, 2025 consisted of net proceeds from share-based compensation activity of $2.0 million, partially offset by net payment on our credit facilities of $1.9 million. The decrease in cash provided by financing activities from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to 2024 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 which were partially used to make net payments on our credit facilities of $116.9 million.
22
Critical Accounting Estimates | ||
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are identified and described in our annual consolidated financial statements and the notes included in our 2024 Annual Report on Form 10‑K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Please see our 2024 Annual Report on Form 10-K (Part II, Item 7A). There have been no material changes to this information.
ITEM 4. CONTROLS AND PROCEDURES
| Evaluation of Disclosure Controls and Procedures | ||
We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (the "certifying officers"), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act”)) as of the end of the period covered by this report. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on the evaluation of our disclosure controls and procedures as required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act, our certifying officers concluded that our disclosure controls and procedures were effective as of March 28, 2025.
| Inherent limitations on Effectiveness of Controls and Procedures | ||
A company’s internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. If we cannot provide reliable financial information, our business, operating results, and share price could be negatively impacted.
| Changes in Internal Control Over Financial Reporting | ||
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
At this time, neither we nor any of our subsidiaries is a party to, and none of our respective property is the subject of, any legal proceeding that, if determined adversely to us, would have a material adverse effect on us.
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ITEM 1A. RISK FACTORS
This quarterly report should be read in conjunction with the risk factors included in our 2024 Annual Report on Form 10‑K. These risk factors do not identify all risks that we face – our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On February 10, 2025 , Jeffery Andreson , Chief Executive Officer and a director of the Company , entered into a 10b5-1 trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) promulgated under the Exchange Act. The trading arrangement provides for the potential sale of an aggregate of up to 62,266 of our ordinary shares issuable upon the exercise of option awards granted to Mr. Anderson under our 2016 Omnibus Incentive Plan. The trading arrangement will expire on January 6, 2027, and may be terminated earlier in the limited circumstances defined in the trading arrangement.
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ITEM 6. EXHIBITS
Exhibit Number | Description | |||||||
| 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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ICHOR HOLDINGS, LTD. | ||||||||
Date: May 6, 2025 | By: | /s/ Jeffrey S. Andreson | ||||||
| Jeffrey S. Andreson | ||||||||
Chief Executive Officer (Principal Executive Officer) | ||||||||
Date: May 6, 2025 | By: | /s/ Greg Swyt | ||||||
| Greg Swyt | ||||||||
Chief Financial Officer (Principal Accounting and Financial Officer) | ||||||||
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