Stock Quote

Ichor Holdings, Ltd. Announces Fourth Quarter and Fiscal Year 2021 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 fourth quarter and fiscal year 2021 financial results.

Fiscal 2021 Highlights:

  • Record revenues of $1.1 billion;
  • Record earnings of $2.45 per share on a GAAP basis and $3.37 per share on a non-GAAP basis;
  • Gross margin of 16.2% on a GAAP basis and 16.7% on a non-GAAP basis, a year-over-year increase of 250bp on a GAAP basis and 210bp on a non-GAAP basis; and
  • Acquisition of IMG Companies, LLC (“IMG”), bringing additional precision machining capabilities and capacity, and an accretive operating model to Ichor.

“We are pleased to report record revenues and earnings for fiscal 2021,” commented Jeff Andreson, chief executive officer. “Over the course of the year, levels of customer demand increased significantly, in parallel with continual upward revisions of wafer fab equipment growth expectations. At the same time, supply chain challenges progressively increased through the year, which pressured companies in the semiconductor industry to meet these unprecedented levels of demand. In spite of the operational challenges, our team executed well in 2021, achieving record revenues and earnings, increasing gross margins, and earnings growth outpacing our revenue growth, as well as successfully completing the complementary and accretive acquisition of IMG. Looking forward, our current visibility along with our customers’ outlooks indicate continued quarter-over-quarter increases in both demand and output as we progress through 2022. We look forward to continuing to execute on our strategies for growth and operational leverage in this robust demand environment.”

 

 

Q4 2021

 

 

Q3 2021

 

 

Q4 2020

 

 

FY 2021

 

 

FY 2020

 

 

 

(dollars in thousands, except per share amounts)

 

U.S. GAAP Financial Results:

 

Net sales

 

$

287,188

 

 

$

262,855

 

 

$

244,966

 

 

$

1,096,917

 

 

$

914,236

 

Gross margin

 

 

16.4

%

 

 

16.6

%

 

 

14.0

%

 

 

16.2

%

 

 

13.7

%

Operating margin

 

 

5.7

%

 

 

8.1

%

 

 

5.8

%

 

 

7.4

%

 

 

4.5

%

Net income

 

$

14,859

 

 

$

18,537

 

 

$

12,521

 

 

$

70,899

 

 

$

33,279

 

Diluted EPS

 

$

0.51

 

 

$

0.64

 

 

$

0.51

 

 

$

2.45

 

 

$

1.42

 

 

 

Q4 2021

 

 

Q3 2021

 

 

Q4 2020

 

 

FY 2021

 

 

FY 2020

 

 

 

(dollars in thousands, except per share amounts)

 

Non-GAAP Financial Results:

 

Gross margin

 

 

17.1

%

 

 

16.7

%

 

 

15.8

%

 

 

16.7

%

 

 

14.6

%

Operating margin

 

 

10.7

%

 

 

10.5

%

 

 

10.0

%

 

 

10.7

%

 

 

8.3

%

Net income

 

$

26,245

 

 

$

23,421

 

 

$

19,834

 

 

$

97,698

 

 

$

59,042

 

Diluted EPS

 

$

0.90

 

 

$

0.81

 

 

$

0.81

 

 

$

3.37

 

 

$

2.52

 

U.S. GAAP Financial Results Overview

For the fourth quarter of 2021, revenue was $287.2 million, net income was $14.9 million, and net income per diluted share (“diluted EPS”) was $0.51. This compares to revenue of $262.9 million and $245.0 million, net income of $18.5 million and $12.5 million, and diluted EPS of $0.64 and $0.51, for the third quarter of 2021 and fourth quarter of 2020, respectively.

For 2021, revenue was $1,096.9 million, net income was $70.9 million, and diluted EPS was $2.45. This compares to revenue of $914.2 million, net income of $33.3 million, and diluted EPS of $1.42 for 2020.

Non-GAAP Financial Results Overview

For the fourth quarter of 2021, non-GAAP net income was $26.2 million and non-GAAP diluted EPS was $0.90. This compares to non-GAAP net income of $23.4 million and $19.8 million, and non-GAAP diluted EPS of $0.81 and $0.81, for the third quarter of 2021 and fourth quarter of 2020, respectively.

For 2021, non-GAAP net income was $97.7 million and non-GAAP diluted EPS was $3.37. This compares to non-GAAP net income of $59.0 million, and non-GAAP diluted EPS of $2.52 for 2020.

First Quarter 2022 Financial Outlook

For the first quarter of 2022, we expect revenue to be in the range of $280 million to $320 million. We expect GAAP diluted EPS to be in the range of $0.55 to $0.79 and non-GAAP diluted EPS to be in the range of $0.80 to $1.04.

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 items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Balance Sheet and Cash Flow Results

We ended the fourth quarter of 2021 with cash and cash equivalents of $75.5 million, a decrease of $52.5 million from the prior quarter, and a decrease of $177.4 million from December 25, 2020.

The decrease from the end of the prior quarter was primarily due to cash paid of $269.0 million, net of acquired-cash, to acquire IMG in November 2021 and cash used in operating activities of $8.9 million, partially offset by net proceeds from our credit facilities of $129.3 million and net proceeds from marketable securities of $98.5 million.

The decrease during 2021 was primarily due to cash paid of $269.0 million, net of acquired-cash, to acquire IMG in November 2021 and capital expenditures of $20.8 million, partially offset by net proceeds from our credit facilities of $92.7 million, and cash provided by operating activities of $15.5 million.

Our cash provided by operating activities of $15.5 million during 2021 consisted of net income of $70.9 million, net non-cash charges of $37.2 million, primarily consisting of depreciation and amortization of $26.0 million and share-based compensation expense of $11.5 million, and an increase in our net operating assets and liabilities, net of acquisitions, of $92.6 million.

The increase in our net operating assets and liabilities, net of acquisitions, was primarily due to an increase in inventories of $89.2 million and an increase in accounts receivable of $33.5 million, partially offset by an increase in accounts payable of $38.9 million. The increase in our inventories, net of acquired inventories, is primarily driven by elevated purchasing activity pursuant to strong customer demand and certain supply chain component constraints. The increase in accounts receivable, net of acquired receivables, was primarily due to increased revenue in the fourth quarter of 2021 compared to the fourth quarter of 2020 and timing of customer payments. The increase in accounts payable, net of acquired payables, is primarily due to higher purchases during the fourth quarter of 2021 compared to the fourth quarter of 2020 and payment timing.

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 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 fourth quarter and fiscal year 2021 results and business outlook today at 2:00 p.m. Pacific Time.

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/ichorholdings02082022. To listen via telephone, please call (877) 407‑0989 (domestic) or +1 (201) 389‑0921 (international), conference ID: 13726103.

After the call, an on-demand replay will be available at the same webcast link.

About Ichor

We are a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components primarily for semiconductor capital equipment, as well as other industries such as defense/aerospace and medical. Our primary product offerings include gas and chemical delivery subsystems, collectively known as fluid delivery subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices. Our gas delivery subsystems deliver, monitor and control precise quantities of the specialized gases used in semiconductor manufacturing processes such as etch and deposition. Our chemical delivery subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning. We also provide precision-machined components, weldments, e-beam and laser welded components, precision vacuum and hydrogen brazing, surface treatment technologies, and other proprietary products. We are headquartered in Fremont, CA. https://ir.ichorsystems.com.

We use a 52- or 53-week fiscal year ending on the last Friday in December. The three months ended December 31, 2021, September 24, 2021, and December 25, 2020 were 14 weeks, 13 weeks, and 13 weeks, respectively. References to the third and fourth quarters of 2021 and the fourth quarter of 2020 relate to the three-month periods then ended. The fiscal years ended December 31, 2021 and December 25, 2020 were 53 weeks and 52 weeks, respectively. References to 2021 and 2020 relate to the fiscal years then ended.

Safe Harbor Statement

Certain statements in this release are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "guidance," "expects," "intends," “may,” “will,” "projects," "plans," “predicts,” "believes," “could,” "estimates," "targets," "anticipates," “look forward,” and similar expressions are used to identify these forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements regarding financial results for our first fiscal quarter of 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) dependence on expenditures by manufacturers and cyclical downturns in the semiconductor capital equipment industry, (2) reliance on a very small number of original equipment manufacturers for a significant portion of sales, (3) negotiating leverage held by our customers, (4) competitiveness and rapid evolution of the industries in which we participate, (5) risks associated with weakness in the global economy and geopolitical instability, (6) keeping pace with developments in the industries we serve and with technological innovation generally, (7) designing, developing and introducing new products that are accepted by original equipment manufacturers in order to retain our existing customers and obtain new customers, (8) managing our manufacturing and procurement process effectively, (9) defects in our products that could damage our reputation, decrease market acceptance and result in potentially costly litigation, (10) dependence on a limited number of suppliers, and (11) 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 March 5, 2021.

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)

 

 

 

December 31,

2021

 

 

September 24,

2021

 

 

December 25,

2020

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

75,495

 

 

$

128,038

 

 

$

252,899

 

Marketable securities

 

 

 

 

 

98,706

 

 

 

 

Accounts receivable, net

 

 

142,990

 

 

 

121,680

 

 

 

100,977

 

Inventories

 

 

236,133

 

 

 

193,930

 

 

 

134,756

 

Prepaid expenses and other current assets

 

 

8,153

 

 

 

7,161

 

 

 

7,082

 

Total current assets

 

 

462,771

 

 

 

549,515

 

 

 

495,714

 

Property and equipment, net

 

 

85,203

 

 

 

53,087

 

 

 

41,811

 

Operating lease right-of-use assets

 

 

29,790

 

 

 

8,681

 

 

 

10,088

 

Other noncurrent assets

 

 

9,166

 

 

 

7,350

 

 

 

5,503

 

Deferred tax assets, net

 

 

8,116

 

 

 

5,341

 

 

 

6,324

 

Intangible assets, net

 

 

88,588

 

 

 

29,676

 

 

 

39,845

 

Goodwill

 

 

337,242

 

 

 

174,887

 

 

 

174,887

 

Total assets

 

$

1,020,876

 

 

$

828,537

 

 

$

774,172

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

159,727

 

 

$

137,970

 

 

$

116,664

 

Accrued liabilities

 

 

19,066

 

 

 

19,038

 

 

 

20,792

 

Other current liabilities

 

 

14,377

 

 

 

13,413

 

 

 

10,700

 

Current portion of long-term debt

 

 

7,500

 

 

 

5,625

 

 

 

8,750

 

Current portion of lease liabilities

 

 

7,633

 

 

 

4,927

 

 

 

5,128

 

Total current liabilities

 

 

208,303

 

 

 

180,973

 

 

 

162,034

 

Long-term debt, less current portion, net

 

 

285,253

 

 

 

158,810

 

 

 

191,522

 

Lease liabilities, less current portion

 

 

22,354

 

 

 

3,989

 

 

 

5,272

 

Deferred tax liabilities, net

 

 

38

 

 

 

109

 

 

 

109

 

Other non-current liabilities

 

 

4,213

 

 

 

4,000

 

 

 

3,546

 

Total liabilities

 

 

520,161

 

 

 

347,881

 

 

 

362,483

 

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; 28,409,734 and 27,907,077 shares outstanding, respectively; 32,847,173 and 32,344,516 shares issued, respectively)

 

 

3

 

 

 

3

 

 

 

3

 

Additional paid in capital

 

 

417,438

 

 

 

412,246

 

 

 

399,311

 

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

 

 

(91,578

)

 

 

(91,578

)

 

 

(91,578

)

Accumulated other comprehensive loss

 

 

 

 

 

(8

)

 

 

 

Retained earnings

 

 

174,852

 

 

 

159,993

 

 

 

103,953

 

Total shareholders’ equity

 

 

500,715

 

 

 

480,656

 

 

 

411,689

 

Total liabilities and shareholders’ equity

 

$

1,020,876

 

 

$

828,537

 

 

$

774,172

 

ICHOR HOLDINGS, LTD.

Consolidated Statement of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

2021

 

 

September 24,

2021

 

 

December 25,

2020

 

 

December 31,

2021

 

 

December 25,

2020

 

Net sales

 

$

287,188

 

 

$

262,855

 

 

$

244,966

 

 

$

1,096,917

 

 

$

914,236

 

Cost of sales

 

 

240,210

 

 

 

219,218

 

 

 

210,616

 

 

 

919,437

 

 

 

789,344

 

Gross profit

 

 

46,978

 

 

 

43,637

 

 

 

34,350

 

 

 

177,480

 

 

 

124,892

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,222

 

 

 

3,905

 

 

 

3,261

 

 

 

15,691

 

 

 

13,361

 

Selling, general, and administrative

 

 

21,662

 

 

 

15,147

 

 

 

13,516

 

 

 

65,857

 

 

 

56,614

 

Amortization of intangible assets

 

 

4,749

 

 

 

3,388

 

 

 

3,357

 

 

 

14,918

 

 

 

13,365

 

Total operating expenses

 

 

30,633

 

 

 

22,440

 

 

 

20,134

 

 

 

96,466

 

 

 

83,340

 

Operating income

 

 

16,345

 

 

 

21,197

 

 

 

14,216

 

 

 

81,014

 

 

 

41,552

 

Interest expense, net

 

 

1,454

 

 

 

1,487

 

 

 

1,999

 

 

 

6,451

 

 

 

8,727

 

Other expense (income), net

 

 

704

 

 

 

(104

)

 

 

321

 

 

 

807

 

 

 

534

 

Income before income taxes

 

 

14,187

 

 

 

19,814

 

 

 

11,896

 

 

 

73,756

 

 

 

32,291

 

Income tax expense (benefit)

 

 

(672

)

 

 

1,277

 

 

 

(625

)

 

 

2,857

 

 

 

(988

)

Net income

 

$

14,859

 

 

$

18,537

 

 

$

12,521

 

 

$

70,899

 

 

$

33,279

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

 

$

0.65

 

 

$

0.52

 

 

$

2.51

 

 

$

1.44

 

Diluted

 

$

0.51

 

 

$

0.64

 

 

$

0.51

 

 

$

2.45

 

 

$

1.42

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,465,870

 

 

 

28,371,644

 

 

 

24,066,287

 

 

 

28,259,607

 

 

 

23,172,961

 

Diluted

 

 

29,045,351

 

 

 

29,024,862

 

 

 

24,370,434

 

 

 

28,979,352

 

 

 

23,460,105

 

ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

2021

 

 

September 24,

2021

 

 

December 25,

2020

 

 

December 31,

2021

 

 

December 25,

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,859

 

 

$

18,537

 

 

$

12,521

 

 

$

70,899

 

 

$

33,279

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

8,323

 

 

 

6,205

 

 

 

6,217

 

 

 

25,992

 

 

 

24,246

 

Share-based compensation

 

 

3,367

 

 

 

3,010

 

 

 

2,452

 

 

 

11,473

 

 

 

9,875

 

Deferred income taxes

 

 

(2,848

)

 

 

(104

)

 

 

(1,751

)

 

 

(1,863

)

 

 

(1,687

)

Amortization of debt issuance costs

 

 

158

 

 

 

242

 

 

 

242

 

 

 

883

 

 

 

968

 

Gain on sale of asset disposal group

 

 

 

 

 

 

 

 

3,575

 

 

 

(504

)

 

 

3,575

 

Loss on extinguishment of debt

 

 

737

 

 

 

 

 

 

 

 

 

737

 

 

 

 

Other

 

 

165

 

 

 

260

 

 

 

 

 

 

484

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(12,751

)

 

 

(2,572

)

 

 

3,144

 

 

 

(33,454

)

 

 

(16,128

)

Inventories

 

 

(30,075

)

 

 

(27,674

)

 

 

2,019

 

 

 

(89,249

)

 

 

(8,527

)

Prepaid expenses and other assets

 

 

34

 

 

 

2,198

 

 

 

(1,604

)

 

 

1,754

 

 

 

(2,076

)

Accounts payable

 

 

17,675

 

 

 

(12,068

)

 

 

9,184

 

 

 

38,909

 

 

 

(14,509

)

Accrued liabilities

 

 

(5,292

)

 

 

(496

)

 

 

3,720

 

 

 

(6,740

)

 

 

7,722

 

Other liabilities

 

 

(3,233

)

 

 

(2,016

)

 

 

418

 

 

 

(3,791

)

 

 

1,521

 

Net cash provided by (used in) operating activities

 

 

(8,881

)

 

 

(14,478

)

 

 

40,137

 

 

 

15,530

 

 

 

38,259

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,135

)

 

 

(3,335

)

 

 

(2,010

)

 

 

(20,839

)

 

 

(10,301

)

Cash paid for acquisitions, net of cash acquired

 

 

(269,026

)

 

 

 

 

 

(5,035

)

 

 

(269,026

)

 

 

(5,035

)

Purchase of marketable securities

 

 

(10,164

)

 

 

 

 

 

 

 

 

(115,197

)

 

 

 

Proceeds from maturities and sales of marketable securities

 

 

108,713

 

 

 

6,000

 

 

 

 

 

 

114,713

 

 

 

 

Proceeds from sale of property and equipment

 

 

 

 

 

 

 

 

739

 

 

 

504

 

 

 

739

 

Net cash provided by (used in) investing activities

 

 

(172,612

)

 

 

2,665

 

 

 

(6,306

)

 

 

(289,845

)

 

 

(14,597

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares, net of fees

 

 

 

 

 

 

 

 

139,372

 

 

 

 

 

 

139,372

 

Issuance of ordinary shares under share-based compensation plans

 

 

2,440

 

 

 

1,020

 

 

 

3,223

 

 

 

9,577

 

 

 

9,832

 

Employees' taxes paid upon vesting of restricted share units

 

 

(913

)

 

 

(696

)

 

 

(259

)

 

 

(3,527

)

 

 

(1,829

)

Debt issuance and modification costs

 

 

(1,852

)

 

 

 

 

 

 

 

 

(1,852

)

 

 

 

Borrowings on revolving credit facility

 

 

137,591

 

 

 

 

 

 

 

 

 

137,591

 

 

 

30,000

 

Repayments on revolving credit facility

 

 

(11,753

)

 

 

 

 

 

 

 

 

(41,753

)

 

 

 

Proceeds from term loan

 

 

94,175

 

 

 

 

 

 

 

 

 

94,175

 

 

 

 

Repayments on term loan

 

 

(90,738

)

 

 

(2,187

)

 

 

(2,187

)

 

 

(97,300

)

 

 

(8,750

)

Net cash provided by (used in) financing activities

 

 

128,950

 

 

 

(1,863

)

 

 

140,149

 

 

 

96,911

 

 

 

168,625

 

Net increase (decrease) in cash

 

 

(52,543

)

 

 

(13,676

)

 

 

173,980

 

 

 

(177,404

)

 

 

192,287

 

Cash at beginning of period

 

 

128,038

 

 

 

141,714

 

 

 

78,919

 

 

 

252,899

 

 

 

60,612

 

Cash at end of period

 

$

75,495

 

 

$

128,038

 

 

$

252,899

 

 

$

75,495

 

 

$

252,899

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

2,433

 

 

$

1,349

 

 

$

1,809

 

 

$

7,123

 

 

$

8,235

 

Cash paid during the period for taxes, net of refunds

 

$

3,856

 

 

$

514

 

 

$

71

 

 

$

5,642

 

 

$

250

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures included in accounts payable

 

$

930

 

 

$

441

 

 

$

369

 

 

$

930

 

 

$

369

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

22,186

 

 

$

530

 

 

$

314

 

 

$

24,425

 

 

$

642

 

ICHOR HOLDINGS, LTD.

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

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

2021

 

 

September 24,

2021

 

 

December 25,

2020

 

 

December 31,

2021

 

 

December 25,

2020

 

U.S. GAAP gross profit

 

$

46,978

 

 

$

43,637

 

 

$

34,350

 

 

$

177,480

 

 

$

124,892

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

437

 

 

 

343

 

 

 

267

 

 

 

1,384

 

 

 

991

 

Facility shutdown costs (1)

 

 

314

 

 

 

 

 

 

332

 

 

 

2,611

 

 

 

2,215

 

Contract settlement loss (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,386

 

Fair value adjustment to inventory from acquisitions (3)

 

 

1,441

 

 

 

 

 

 

 

 

 

1,652

 

 

 

 

Other non-recurring expense, net (4)

 

 

 

 

 

 

 

 

3,743

 

 

 

106

 

 

 

3,743

 

Non-GAAP gross profit

 

$

49,170

 

 

$

43,980

 

 

$

38,692

 

 

$

183,233

 

 

$

133,227

 

U.S. GAAP gross margin

 

 

16.4

%

 

 

16.6

%

 

 

14.0

%

 

 

16.2

%

 

 

13.7

%

Non-GAAP gross margin

 

 

17.1

%

 

 

16.7

%

 

 

15.8

%

 

 

16.7

%

 

 

14.6

%

(1)

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed during the second quarter of 2021. We incurred additional shutdown related costs in the fourth quarter of 2021 associated with inventories determined during the quarter to be obsolete of $0.3 million.

Included in this amount for the fourth quarter of 2020 are (i) severance costs associated with affected employees of $0.1 million, and (ii) accelerated depreciation charges associated with property and equipment that was expected to be abandoned at the time of facility closure of $0.2 million.

Included in this amount for 2021 are (i) write-off costs associated with inventories determined during the period to be obsolete of $2.9 million and (ii) severance costs associated with affected employees of $0.2 million, partially offset by (iii) a gain realized upon the sale of equipment and other fixed assets of $0.5 million.

Included in this amount for 2020 are (i) write-off costs associated with inventories determined during the period to be obsolete of $1.3 million, (ii) severance costs associated with affected employees of $0.5 million, and (iii) accelerated depreciation charges associated with property and equipment that was expected to be abandoned at the time of facility closure of $0.4 million.

(2)

During the first quarter of 2020, we reached a mutual settlement with the counterparty of a contract dispute and, accordingly, recorded a $1.4 million contract settlement loss to cost of sales.

(3)

As part of our purchase price allocation for our acquisition of IMG in November 2021 and our acquisition of 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 (preliminary) and $0.2 million, respectively. These amounts are released to cost of sales as acquired-inventories are sold.

(4)

Included in this amount for 2021 is primarily a non-recurring settlement charge. Included in this amount for the 2020 is a $3.6 million loss on the sale of inventories and property and equipment from our Tampa, Florida facility. In addition to the $3.6 million loss, 2020 include costs associated with restructuring and transitioning key leadership roles.

ICHOR HOLDINGS, LTD.

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

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

2021

 

 

September 24,

2021

 

 

December 25,

2020

 

 

December 31,

2021

 

 

December 25,

2020

 

U.S. GAAP operating income

 

$

16,345

 

 

$

21,197

 

 

$

14,216

 

 

$

81,014

 

 

$

41,552

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

4,749

 

 

 

3,388

 

 

 

3,357

 

 

 

14,918

 

 

 

13,365

 

Share-based compensation

 

 

3,367

 

 

 

3,010

 

 

 

2,452

 

 

 

11,473

 

 

 

9,875

 

Facility shutdown costs (1)

 

 

314

 

 

 

 

 

 

446

 

 

 

2,996

 

 

 

2,463

 

Contract settlement loss (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,386

 

Fair value adjustment to inventory from acquisitions (3)

 

 

1,441

 

 

 

 

 

 

 

 

 

1,652

 

 

 

 

Acquisition costs (4)

 

 

4,386

 

 

 

 

 

 

 

 

 

4,386

 

 

 

 

Other non-recurring expense, net (5)

 

 

 

 

 

110

 

 

 

4,057

 

 

 

498

 

 

 

7,181

 

Non-GAAP operating income

 

$

30,602

 

 

$

27,705

 

 

$

24,528

 

 

$

116,937

 

 

$

75,822

 

U.S. GAAP operating margin

 

 

5.7

%

 

 

8.1

%

 

 

5.8

%

 

 

7.4

%

 

 

4.5

%

Non-GAAP operating margin

 

 

10.7

%

 

 

10.5

%

 

 

10.0

%

 

 

10.7

%

 

 

8.3

%

(1)

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed during the second quarter of 2021. We incurred additional shutdown related costs in the fourth quarter of 2021 associated with inventories determined during the quarter to be obsolete of $0.3 million.

Included in this amount for the fourth quarter of 2020 are (i) severance costs associated with affected employees of $0.1 million, and (ii) accelerated depreciation charges associated with property and equipment that was expected to be abandoned at the time of facility closure of $0.3 million.

Included in this amount for 2021 are (i) write-off costs associated with inventories determined during the period to be obsolete of $2.9 million, (ii) other shutdown related charges of $0.3 million, (iii) severance costs associated with affected employees of $0.2 million, partially offset by (iv) a gain realized upon the sale of equipment and other fixed assets of $0.5 million.

Included in this amount for 2020 are (i) write-off costs associated with inventories determined during the period to be obsolete of $1.3 million, (ii) severance costs associated with affected employees of $0.5 million, and (iii) accelerated depreciation charges associated with property and equipment that was expected to be abandoned at the time of facility closure of $0.6 million.

(2)

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

(3)

See footnote 3 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 third quarter of 2021 are primarily non-capitalized costs incurred in connection with our implementation of a new ERP system.

Included in this amount for the fourth quarter of 2020 are primarily (i) a $3.6 million loss on the sale of inventories and property and equipment from our Tampa, Florida facility, (ii) non-capitalized costs incurred in connection with our implementation of a new ERP system and a Sarbanes-Oxley (“SOX”) compliance program, and (iii) costs associated with restructuring and transitioning key leadership roles.

Included in this amount for 2021 are primarily non-capitalized costs incurred in connection with our implementation of a new ERP system and a SOX compliance program.

Included in this amount for 2020 are primarily (i) a $3.6 million loss on the sale of inventories and property and equipment from our Tampa, Florida facility, (ii) non-capitalized costs incurred in connection with our implementation of a new ERP system and a SOX compliance program, and (iii) costs associated with restructuring and transitioning key leadership roles, including a $1.8 million bonus payment to our former CEO in connection with his transition to executive chairman.

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

 

 

Year Ended

 

 

 

December 31,

2021

 

 

September 24,

2021

 

 

December 25,

2020

 

 

December 31,

2021

 

 

December 25,

2020

 

U.S. GAAP net income

 

$

14,859

 

 

$

18,537

 

 

$

12,521

 

 

$

70,899

 

 

$

33,279

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

4,749

 

 

 

3,388

 

 

 

3,357

 

 

 

14,918

 

 

 

13,365

 

Share-based compensation

 

 

3,367

 

 

 

3,010

 

 

 

2,452

 

 

 

11,473

 

 

 

9,875

 

Facility shutdown costs (1)

 

 

314

 

 

 

 

 

 

446

 

 

 

2,996

 

 

 

2,463

 

Contract settlement loss (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,386

 

Fair value adjustment to inventory from acquisitions (3)

 

 

1,441

 

 

 

 

 

 

 

 

 

1,652

 

 

 

 

Acquisition costs (4)

 

 

4,386

 

 

 

 

 

 

 

 

 

4,386

 

 

 

 

Other non-recurring expense, net (5)

 

 

 

 

 

110

 

 

 

4,057

 

 

 

498

 

 

 

7,181

 

Loss on extinguishment of debt (6)

 

 

737

 

 

 

 

 

 

 

 

 

737

 

 

 

 

Tax adjustments related to non-GAAP adjustments (7)

 

 

(3,608

)

 

 

(1,624

)

 

 

(2,999

)

 

 

(9,861

)

 

 

(8,507

)

Non-GAAP net income

 

$

26,245

 

 

$

23,421

 

 

$

19,834

 

 

$

97,698

 

 

$

59,042

 

U.S. GAAP diluted EPS

 

$

0.51

 

 

$

0.64

 

 

$

0.51

 

 

$

2.45

 

 

$

1.42

 

Non-GAAP diluted EPS

 

$

0.90

 

 

$

0.81

 

 

$

0.81

 

 

$

3.37

 

 

$

2.52

 

Shares used to compute diluted EPS

 

 

29,045,351

 

 

 

29,024,862

 

 

 

24,370,434

 

 

 

28,979,352

 

 

 

23,460,105

 

(1)

See footnote 1 to the reconciliation of U.S. GAAP operating income to non-GAAP operating income above.

(2)

See footnote 2 to the reconciliation of U.S. GAAP gross profit to non-GAAP gross profit 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 4 to the reconciliation of U.S. GAAP operating income to non-GAAP operating income above.

(6)

In October 2021, we entered into an amended and restated credit agreement, which includes a group of financial institutions as direct lenders underlying the agreement. Under the debt modification literature codified in ASC 470, a portion of the refinance was treated as an extinguishment. Accordingly, $0.7 million of existing capitalized deferred issuance costs were written off as a loss on extinguishment of debt.

(7)

Adjusts U.S. GAAP income tax expense (benefit) 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 Operating Activities to Free Cash Flow

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

2021

 

 

September 24,

2021

 

 

December 25,

2020

 

 

December 31,

2021

 

 

December 25,

2020

 

Net cash provided by (used in) operating activities

 

$

(8,881

)

 

$

(14,478

)

 

$

40,137

 

 

$

15,530

 

 

$

38,259

 

Capital expenditures

 

 

(2,135

)

 

 

(3,335

)

 

 

(2,010

)

 

 

(20,839

)

 

 

(10,301

)

Free cash flow

 

$

(11,016

)

 

$

(17,813

)

 

$

38,127

 

 

$

(5,309

)

 

$

27,958

 

 

Contacts

Larry Sparks, CFO 510-897-5200

Claire McAdams, IR & Strategic Initiatives 530-265-9899

ir@ichorsystems.com

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