Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Ichor Holdings, Ltd. Announces Second Quarter 2022 Financial Results


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 second quarter 2022 financial results.

Second quarter 2022 highlights:

"We are pleased to report record revenues and strong operational execution in the second quarter, with financial results at the high end of expectations," commented Jeff Andreson, chief executive officer. "While we continue to operate in a supply-constrained environment, the availability of certain components and materials has started to improve, which enabled us to execute to the upper level of our forecast. Customer demand remains strong and continues to outpace industry supply, and we are forecasting continued sequential quarterly revenue growth in the forthcoming quarters. As expected, our gross margin bounced back in Q2, with revenue volumes now catching up with the increased labor and manufacturing capacity we've put into place in support of unprecedented levels of customer demand. We look forward to continuing to execute on our strategies to outgrow the overall industry and deliver strong operational leverage in what is shaping up to be a record revenue and earnings year for Ichor."

 

Q2 2022

 

Q1 2022

 

Q2 2021

 

 

(dollars in thousands, except per share amounts)

 

U.S. GAAP Financial Results:

 

Net sales

$

329,560

 

$

293,146

 

$

282,308

 

Gross margin

 

16.8

%

 

15.0

%

 

16.8

%

Operating margin

 

7.5

%

 

3.6

%

 

8.9

%

Net income

$

21,537

 

$

8,039

 

$

22,865

 

Diluted EPS

$

0.74

 

$

0.28

 

$

0.79

 

 

Q2 2022

 

Q1 2022

 

Q2 2021

 

 

(dollars in thousands, except per share amounts)

 

Non-GAAP Financial Results:

 

Gross margin

 

17.0

%

 

16.0

%

 

16.8

%

Operating margin

 

10.0

%

 

8.4

%

 

11.2

%

Net income

$

28,326

 

$

20,178

 

$

26,307

 

Diluted EPS

$

0.98

 

$

0.70

 

$

0.90

 

U.S. GAAP Financial Results Overview

For the second quarter of 2022, revenue was $329.6 million, net income was $21.5 million, and net income per diluted share ("diluted EPS") was $0.74. This compares to revenue of $293.1 million and $282.3 million, net income of $8.0 million and $22.9 million, and diluted EPS of $0.28 and $0.79, for the first quarter of 2022 and second quarter of 2021, respectively.

Non-GAAP Financial Results Overview

For the second quarter of 2022, non-GAAP net income was $28.3 million and non-GAAP diluted EPS was $0.98. This compares to non-GAAP net income of $20.2 million and $26.3 million, and non-GAAP diluted EPS of $0.70 and $0.90, for the first quarter of 2022 and second quarter of 2021, respectively.

Third Quarter 2022 Financial Outlook

For the third quarter of 2022, we expect revenue to be in the range of $320 million to $360 million. We expect GAAP diluted EPS to be in the range of $0.63 to $0.89 and non-GAAP diluted EPS to be in the range of $0.85 to $1.11.

This outlook for non?GAAP diluted EPS excludes known charges related to amortization of intangible assets, share?based compensation expense, tax adjustments related to these non-GAAP adjustments, and non-recurring charges known at the time of providing this outlook. 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 second quarter of 2022 with cash and cash equivalents of $46.1 million, an increase of $11.5 million from the prior quarter, and a decrease of $29.4 million from our 2021 fiscal year ending December 31, 2021.

The increase during the second quarter was primarily due to net proceeds from our credit facilities of $13.1 million and cash provided by operating activities of $9.4 million, partially offset by capital expenditures of $11.0 million.

The decrease during the six months ended July 1, 2022 was primarily due to cash used in operating activities of $26.9 million and capital expenditures of $14.4 million, partially offset by net proceeds from our credit facilities of $11.3 million.

Our cash used in operating activities of $26.9 million during the six months ended July 1, 2022 consisted of an increase in our net operating assets and liabilities of $80.4 million, partially offset by net income of $29.6 million and net non-cash charges of $23.9 million, primarily consisting of depreciation and amortization of $18.4 million and share-based compensation expense of $6.4 million.

The increase in our net operating assets and liabilities during the six months ended July 1, 2022, net of acquisitions, was primarily due to an increase in inventories of $54.2 million, an increase in accounts receivable of $15.4 million, and a decrease in accounts payable of $12.5 million. The increase in our inventories is primarily driven by elevated purchasing activity pursuant to strong customer demand and certain supply chain component constraints. The decrease in accounts payable and increase in accounts receivable were primarily due to fluctuations in payment timing to suppliers and from customers, as well as higher revenues in the last few weeks of the second quarter of 2022 compared to the last few weeks of the fourth quarter of 2021.

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, as applicable, excluding (1) amortization of intangible assets, share-based compensation expense, and non-recurring expenses, including acquisition-related costs and charges, contract settlement losses and facility shutdown costs, to the extent they are present in gross profit, operating income, and net income; and (2) the tax impacts associated with our 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 any unusual or non-recurring items.

Conference Call

We will conduct a conference call to discuss our second quarter 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/ichorholdings20220809_en. To listen via telephone, please call (877) 407?0989 (domestic) or +1 (201) 389?0921 (international), conference ID: 13730731.

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 July 1, 2022, April 1, 2022, and June 25, 2021 were all 13 weeks. References to the second quarter of 2022, first quarter of 2022, and the second 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 third fiscal quarter of 2022, statements regarding the impacts of the COVID-19 pandemic, 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

(dollars in thousands, except per share amounts)

(unaudited)

 

 

July 1,

2022

 

December 31,

2021

 

June 25,

2021

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

46,064

 

$

75,495

 

$

141,714

 

Marketable securities

 

?

 

 

?

 

 

104,951

 

Accounts receivable, net

 

158,403

 

 

142,990

 

 

119,108

 

Inventories

 

290,327

 

 

236,133

 

 

166,256

 

Prepaid expenses and other current assets

 

5,699

 

 

8,153

 

 

8,491

 

Total current assets

 

500,493

 

 

462,771

 

 

540,520

 

Property and equipment, net

 

91,603

 

 

85,204

 

 

52,374

 

Operating lease right-of-use assets

 

35,649

 

 

29,790

 

 

9,333

 

Other noncurrent assets

 

12,887

 

 

9,166

 

 

7,036

 

Deferred tax assets, net

 

9,247

 

 

8,116

 

 

5,235

 

Intangible assets, net

 

79,923

 

 

89,927

 

 

33,064

 

Goodwill

 

335,902

 

 

335,902

 

 

174,887

 

Total assets

$

1,065,704

 

$

1,020,876

 

$

822,449

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

$

147,650

 

$

159,727

 

$

149,844

 

Accrued liabilities

 

21,652

 

 

19,066

 

 

19,820

 

Other current liabilities

 

14,162

 

 

14,377

 

 

14,216

 

Current portion of long-term debt

 

7,500

 

 

7,500

 

 

8,750

 

Current portion of lease liabilities

 

7,956

 

 

7,633

 

 

5,108

 

Total current liabilities

 

198,920

 

 

208,303

 

 

197,738

 

Long-term debt, less current portion, net

 

296,736

 

 

285,253

 

 

157,630

 

Lease liabilities, less current portion

 

28,063

 

 

22,354

 

 

4,497

 

Deferred tax liabilities, net

 

38

 

 

38

 

 

109

 

Other non-current liabilities

 

4,623

 

 

4,213

 

 

3,992

 

Total liabilities

 

528,380

 

 

520,161

 

 

363,966

 

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; 28,735,728; 28,551,160; and 28,326,559 shares outstanding, respectively; 33,173,167; 32,988,599; and 32,763,998 shares issued, respectively)

 

3

 

 

3

 

 

3

 

Additional paid in capital

 

424,471

 

 

417,438

 

 

408,626

 

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

 

(91,578

)

 

(91,578

)

 

(91,578

)

Accumulated other comprehensive loss

 

 

 

 

?

 

 

(24

)

Retained earnings

 

204,428

 

 

174,852

 

 

141,456

 

Total shareholders' equity

 

537,324

 

 

500,715

 

 

458,483

 

Total liabilities and shareholders' equity

$

1,065,704

 

$

1,020,876

 

$

822,449

 

ICHOR HOLDINGS, LTD.

Consolidated Statement of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

July 1,

2022

 

 

April 1,

2022

 

June 25,

2021

 

July 1,

2022

 

 

June 25,

2021

Net sales

$

329,560

 

$

293,146

$

282,308

$

622,706

 

$

546,874

Cost of sales

 

274,099

 

 

249,214

 

234,955

 

523,313

 

 

460,009

Gross profit

 

55,461

 

 

43,932

 

47,353

 

99,393

 

 

86,865

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

4,907

 

 

4,851

 

4,049

 

9,758

 

 

7,564

Selling, general, and administrative

 

21,103

 

 

23,267

 

14,699

 

44,370

 

 

29,048

Amortization of intangible assets

 

4,655

 

 

5,349

 

3,390

 

10,004

 

 

6,781

Total operating expenses

 

30,665

 

 

33,467

 

22,138

 

64,132

 

 

43,393

Operating income

 

24,796

 

 

10,465

 

25,215

 

35,261

 

 

43,472

Interest expense, net

 

2,063

 

 

1,532

 

1,591

 

3,595

 

 

3,510

Other expense (income), net

 

(548

)

 

84

 

22

 

(464

)

 

207

Income before income taxes

 

23,281

 

 

8,849

 

23,602

 

32,130

 

 

39,755

Income tax expense

 

1,744

 

 

810

 

737

 

2,554

 

 

2,252

Net income

$

21,537

 

$

8,039

$

22,865

$

29,576

 

$

37,503

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.75

 

$

0.28

$

0.81

$

1.03

 

$

1.33

Diluted

$

0.74

 

$

0.28

$

0.79

$

1.02

 

$

1.30

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

28,665,930

 

 

28,592,629

 

28,180,821

 

28,629,280

 

 

28,092,535

Diluted

 

29,042,519

 

 

29,023,455

 

29,092,521

 

28,948,055

 

 

28,942,902

ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

July 1,

2022

 

April 1,

2022

 

June 25,

2021

 

July 1,

2022

 

June 25,

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

21,537

 

$

8,039

 

$

22,865

 

$

29,576

 

$

37,503

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

9,079

 

 

9,315

 

 

5,807

 

 

18,394

 

 

11,464

 

Share-based compensation

 

3,509

 

 

2,897

 

 

2,681

 

 

6,406

 

 

5,096

 

Deferred income taxes

 

(1,094

)

 

(37

)

 

577

 

 

(1,131

)

 

1,089

 

Amortization of debt issuance costs

 

116

 

 

117

 

 

241

 

 

233

 

 

483

 

Gain on sale of asset disposal group

 

?

 

 

?

 

 

(504

)

 

?

 

 

(504

)

Other

 

?

 

 

?

 

 

59

 

 

?

 

 

59

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(4,869

)

 

(10,544

)

 

(10,434

)

 

(15,413

)

 

(18,131

)

Inventories

 

(26,476

)

 

(27,718

)

 

(22,194

)

 

(54,194

)

 

(31,500

)

Prepaid expenses and other assets

 

3,111

 

 

(650

)

 

(990

)

 

2,461

 

 

(478

)

Accounts payable

 

5,756

 

 

(18,209

)

 

11,201

 

 

(12,453

)

 

33,302

 

Accrued liabilities

 

404

 

 

2,182

 

 

2,515

 

 

2,586

 

 

(952

)

Other liabilities

 

(1,690

)

 

(1,670

)

 

1,417

 

 

(3,360

)

 

1,458

 

Net cash provided by (used in) operating activities

 

9,383

 

 

(36,278

)

 

13,241

 

 

(26,895

)

 

38,889

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(10,996

)

 

(3,417

)

 

(9,969

)

 

(14,413

)

 

(15,369

)

Purchase of marketable securities

 

?

 

 

?

 

 

(105,033

)

 

?

 

 

(105,033

)

Proceeds from sale of property and equipment

 

?

 

 

?

 

 

504

 

 

?

 

 

504

 

Net cash used in investing activities

 

(10,996

)

 

(3,417

)

 

(114,498

)

 

(14,413

)

 

(119,898

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares under share-based compensation plans

 

599

 

 

1,368

 

 

3,463

 

 

1,967

 

 

6,117

 

Employees' taxes paid upon vesting of restricted share units

 

(563

)

 

(777

)

 

(1,251

)

 

(1,340

)

 

(1,918

)

Borrowings on revolving credit facility

 

25,000

 

 

?

 

 

?

 

 

25,000

 

 

?

 

Repayments on revolving credit facility

 

(10,000

)

 

?

 

 

?

 

 

(10,000

)

 

(30,000

)

Repayments on term loan

 

(1,875

)

 

(1,875

)

 

(2,187

)

 

(3,750

)

 

(4,375

)

Net cash provided by (used in) financing activities

 

13,161

 

 

(1,284

)

 

25

 

 

11,877

 

 

(30,176

)

Net increase (decrease) in cash

 

11,548

 

 

(40,979

)

 

(101,232

)

 

(29,431

)

 

(111,185

)

Cash at beginning of period

 

34,516

 

 

75,495

 

 

242,946

 

 

75,495

 

 

252,899

 

Cash at end of period

$

46,064

 

$

34,516

 

$

141,714

 

$

46,064

 

$

141,714

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

$

1,900

 

$

1,395

 

$

1,499

 

$

3,295

 

$

3,341

 

Cash paid during the period for taxes, net of refunds

$

1,393

 

$

106

 

$

605

 

$

1,499

 

$

1,272

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures included in accounts payable

$

1,306

 

$

2,278

 

$

246

 

$

1,306

 

$

246

 

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

$

3,520

 

$

6,067

 

$

1,345

 

$

9,587

 

$

1,709

 

ICHOR HOLDINGS, LTD.

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

(dollars in thousands)

(unaudited)

 

Three Months Ended

 

Six Months Ended

 

 

July 1,

2022

 

April 1,

2022

 

June 25,

2021

 

July 1,

2022

 

June 25,

2021

 

U.S. GAAP gross profit

$

55,461

 

$

43,932

 

$

47,353

 

$

99,393

 

$

86,865

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

451

 

 

551

 

 

298

 

 

1,002

 

 

604

 

Facility shutdown costs (1)

 

?

 

 

?

 

 

(102

)

 

?

 

 

2,297

 

Fair value adjustment to inventory from acquisitions (2)

 

?

 

 

2,492

 

 

?

 

 

2,492

 

 

211

 

Other non-recurring expense, net (3)

 

?

 

 

?

 

 

?

 

 

?

 

 

106

 

Non-GAAP gross profit

$

55,912

 

$

46,975

 

$

47,549

 

$

102,887

 

$

90,083

 

U.S. GAAP gross margin

 

16.8

%

 

15.0

%

 

16.8

%

 

16.0

%

 

15.9

%

Non-GAAP gross margin

 

17.0

%

 

16.0

%

 

16.8

%

 

16.5

%

 

16.5

%

(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 for the second quarter of 2021 is a gain realized upon the sale of equipment and other fixed assets, partially offset by write-off costs associated with inventories determined during the quarter to be obsolete. Included in this amount for the six months ended June 25, 2021 are write-off costs associated with inventories determined during the period to be obsolete and severance and other shutdown related charges, partially offset by a gain realized upon the sale of equipment and other fixed assets.

(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 of $3.9 million and $0.2 million, respectively. These amounts were subsequently released to cost of sales as acquired-inventories were sold.

(3)

Included in this amount for the six months ended June 25, 2021 is primarily a non-recurring settlement charge.

ICHOR HOLDINGS, LTD.

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

(dollars in thousands)

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

July 1,

2022

 

April 1,

2022

 

June 25,

2021

 

July 1,

2022

 

June 25,

2021

 

U.S. GAAP operating income

$

24,796

 

$

10,465

 

$

25,215

 

$

35,261

 

$

43,472

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

4,655

 

 

5,349

 

 

3,390

 

 

10,004

 

 

6,781

 

Share-based compensation

 

3,509

 

 

2,897

 

 

2,681

 

 

6,406

 

 

5,096

 

Facility shutdown costs (1)

 

?

 

 

?

 

 

172

 

 

?

 

 

2,682

 

Settlement loss (2)

 

?

 

 

3,100

 

 

?

 

 

3,100

 

 

?

 

Fair value adjustment to inventory from acquisitions (3)

 

?

 

 

2,492

 

 

?

 

 

2,492

 

 

211

 

Acquisition costs (4)

 

21

 

 

275

 

 

?

 

 

296

 

 

?

 

Other non-recurring expense, net (5)

 

?

 

 

?

 

 

110

 

 

?

 

 

388

 

Non-GAAP operating income

$

32,981

 

$

24,578

 

$

31,568

 

$

57,559

 

$

58,630

 

U.S. GAAP operating margin

 

7.5

%

 

3.6

%

 

8.9

%

 

5.7

%

 

7.9

%

Non-GAAP operating margin

 

10.0

%

 

8.4

%

 

11.2

%

 

9.2

%

 

10.7

%

(1)

See footnote 1 to the reconciliation of U.S. GAAP gross profit to non-GAAP gross profit above.

(2)

During the first quarter of 2022, we recorded a non-recurring loss accrual of $3.1 million relating to an expected settlement of an employment-related legal matter. We expect the settlement to be finalized and paid within the next 12 months.

(3)

See footnote 2 to the reconciliation of U.S. GAAP gross profit to non-GAAP gross profit above.

(4)

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

(5)

Included in this amount for the six months ended June 25, 2021 are primarily (i) non-capitalized costs incurred in connection with our implementation of a new ERP system and a Sarbanes-Oxley compliance program and (ii) a non-recurring settlement charge.

ICHOR HOLDINGS, LTD.

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

(dollars in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

July 1,

2022

 

April 1,

2022

 

June 25,

2021

 

July 1,

2022

 

June 25,

2021

 

U.S. GAAP net income

$

21,537

 

$

8,039

 

$

22,865

 

$

29,576

 

$

37,503

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

4,655

 

 

5,349

 

 

3,390

 

 

10,004

 

 

6,781

 

Share-based compensation

 

3,509

 

 

2,897

 

 

2,681

 

 

6,406

 

 

5,096

 

Facility shutdown costs (1)

 

?

 

 

?

 

 

172

 

 

?

 

 

2,682

 

Settlement loss (2)

 

?

 

 

3,100

 

 

?

 

 

3,100

 

 

?

 

Fair value adjustment to inventory from acquisitions (3)

 

?

 

 

2,492

 

 

?

 

 

2,492

 

 

211

 

Acquisition costs (4)

 

21

 

 

275

 

 

?

 

 

296

 

 

?

 

Other non-recurring expense, net (5)

 

?

 

 

?

 

 

110

 

 

?

 

 

388

 

Tax adjustments related to non-GAAP adjustments (6)

 

(1,396

)

 

(1,974

)

 

(2,911

)

 

(3,370

)

 

(4,629

)

Non-GAAP net income

$

28,326

 

$

20,178

 

$

26,307

 

$

48,504

 

$

48,032

 

U.S. GAAP diluted EPS

$

0.74

 

$

0.28

 

$

0.79

 

$

1.02

 

$

1.30

 

Non-GAAP diluted EPS

$

0.98

 

$

0.70

 

$

0.90

 

$

1.68

 

$

1.66

 

Shares used to compute diluted EPS

 

29,042,519

 

 

29,023,455

 

 

29,092,521

 

 

28,948,055

 

 

28,942,902

 

(1)

See footnote 1 to the reconciliation of U.S. GAAP gross profit to non-GAAP gross profit above.

(2)

See footnote 2 to the reconciliation of U.S. GAAP operating income to non-GAAP operating income above.

(3)

See footnote 3 to the reconciliation of U.S. GAAP gross profit to non-GAAP gross profit above.

(4)

See footnote 4 to the reconciliation of U.S. GAAP operating income to non-GAAP operating income above.

(5)

See footnote 5 to the reconciliation of U.S. GAAP operating income to non-GAAP operating income above.

(6)

Adjusts U.S. GAAP income tax expense for impact of our non-GAAP adjustments, as defined, including the impacts of excluding share-based compensation, amortization of intangible assets, and other non-recurring expenses. This adjustment also 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

 

Six Months Ended

 

 

July 1,

2022

 

April 1,

2022

 

June 25,

2021

 

July 1,

2022

 

June 25,

2021

 

Net cash provided by (used in) operating activities

$

9,383

 

$

(36,278

)

$

13,241

 

$

(26,895

)

$

38,889

 

Capital expenditures

 

(10,996

)

 

(3,417

)

 

(9,969

)

 

(14,413

)

 

(15,369

)

Free cash flow

$

(1,613

)

$

(39,695

)

$

3,272

 

$

(41,308

)

$

23,520

 

 


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