UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 5, 2020

 

ICHOR HOLDINGS, LTD.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Cayman Islands

 

001-37961

 

Not Applicable

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

3185 Laurelview Ct.

Fremont, California 94538

(Address of principal executive offices, including Zip Code)

(510) 897-5200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares, par value $0.0001

ICHR

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b‑2 of the Securities Exchange Act of 1934 (§ 240.12b‑2 of this chapter).

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.   

 


Item 2.02

Results of Operations and Financial Condition

On February 5, 2020, Ichor Holdings, Ltd. (the “Company”) issued a press release announcing fourth quarter and fiscal year 2019 financial results. A copy of the press release is furnished with this Form 8‑K as Exhibit 99.1. The Company is furnishing this information in connection with its previously announced webcast conference call to be held on February 5, 2020 at 2:00 p.m. PST to discuss these results.

The Company makes reference to certain non‑GAAP financial measures, including non‑GAAP adjusted net income from continuing operations and non‑GAAP adjusted diluted EPS. The press release contains a reconciliation of each non‑GAAP measure to the directly comparable GAAP measure.

The information contained under Item 2.02 of this Current Report on Form 8‑K (including Exhibit 99.1) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

The Company uses the “Investors” section of its website (ir.ichorsystems.com) as a means of disclosing material non‑public information and for complying with its disclosure obligations under Regulation FD.

Item 9.01

Financial Statements and Exhibits

 

Exhibit
Number

  

Description

 

 

99.1

  

Press Release, dated February 5, 2020, announcing fourth quarter and fiscal year 2019 financial results.

 


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: February 5, 2020

 

/s/ Larry J. Sparks

 

 

Name: Larry J. Sparks

 

 

Title: Chief Financial Officer

 

Exhibit 99.1

Ichor Holdings, Ltd. Announces Fourth Quarter and Fiscal Year 2019 Financial Results

FREMONT, Calif., February 5, 2020–(BUSINESS WIRE)–Ichor Holdings, Ltd. (NASDAQ: ICHR), a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment, today announced fourth quarter and fiscal year 2019 financial results.

Highlights for the fourth quarter of 2019:

 

Revenues of $189 million, at the high end of expectations;

 

Net earnings of $0.35 per diluted share on a GAAP basis and $0.48 on a non-GAAP basis; and

 

Cash flow from operations of $32 million and free cash flow of $28 million.

Highlights for fiscal year 2019:

 

Revenues of $621 million;

 

Net earnings of $0.47 per diluted share on a GAAP basis and $1.25 on a non-GAAP basis; and

 

Cash flow from operations of $57 million and free cash flow of $45 million.

“We are very pleased to report a strong finish to 2019, with fourth quarter revenues at the upper end of our expectations and up 23% sequentially,” commented Jeff Andreson, chief executive officer of Ichor. “While the overall wafer fab equipment spending environment weakened in 2019 compared to a record 2018, our second-half momentum in terms of both revenue and earnings growth demonstrates our expanding share within our served markets and the resiliency and leverage of our variable operating model. Our sales in the second half of 2019 were up 24% from the first half, driven by a combination of our market share gains, an increase in shipments for EUV lithography, and by the beginning of an upturn in industry spending. Over the same period, earnings per share increased over 60%, demonstrating the strong operating leverage we can deliver as industry conditions rebound. We are encouraged by the continued strength of investments in the foundry and logic sectors, and the beginning of a recovery in memory capital spending – both driving an expected very strong first quarter for Ichor and optimism for significant growth in revenue and earnings in 2020.”

 

 

 

Q4 2019

 

 

Q3 2019

 

 

Q4 2018

 

 

FY 2019

 

 

FY 2018

 

 

 

(dollars in thousands, except per share amounts)

 

U.S. GAAP Financial Results:

 

Net sales

 

$

189,355

 

 

$

154,456

 

 

$

141,402

 

 

$

620,837

 

 

$

823,611

 

Gross profit percent

 

 

13.7

%

 

 

13.4

%

 

 

15.2

%

 

 

13.9

%

 

 

16.5

%

Operating income percent

 

 

3.0

%

 

 

2.2

%

 

 

4.2

%

 

 

2.4

%

 

 

7.8

%

Net income

 

$

7,952

 

 

$

923

 

 

$

3,485

 

 

$

10,729

 

 

$

57,883

 

Diluted EPS

 

$

0.35

 

 

$

0.04

 

 

$

0.15

 

 

$

0.47

 

 

$

2.30

 

 

 

 

Q4 2019

 

 

Q3 2019

 

 

Q4 2018

 

 

FY 2019

 

 

FY 2018

 

 

 

(dollars in thousands, except per share amounts)

 

Non-GAAP Financial Results:

 

Net sales

 

$

189,355

 

 

$

154,456

 

 

$

141,402

 

 

$

620,837

 

 

$

823,611

 

Gross profit percent

 

 

13.8

%

 

 

13.5

%

 

 

15.3

%

 

 

14.0

%

 

 

17.2

%

Operating income percent

 

 

7.1

%

 

 

5.8

%

 

 

7.5

%

 

 

6.3

%

 

 

11.3

%

Adjusted net income

 

$

10,929

 

 

$

6,748

 

 

$

7,280

 

 

$

28,346

 

 

$

75,052

 

Diluted EPS

 

$

0.48

 

 

$

0.30

 

 

$

0.32

 

 

$

1.25

 

 

$

2.99

 

 

Page 1 of 10


U.S. GAAP Financial Results Overview

For the fourth quarter of 2019, revenue was $189.4 million, net income was $8.0 million, and net income per diluted share (“diluted EPS”) was $0.35. This compares to revenue of $154.5 million and $141.4 million, net income of $0.9 million and $3.5 million, and diluted EPS of $0.04 and $0.15, for the third quarter of 2019 and fourth quarter of 2018, respectively.

For fiscal year 2019, revenue was $620.8 million, net income was $10.7 million, and diluted EPS was $0.47. This compares to revenue of $823.6 million, net income of $57.9 million, and diluted EPS of $2.30 for fiscal year 2018.

Non-GAAP Financial Results Overview

For the fourth quarter of 2019, non-GAAP adjusted net income was $10.9 million and non-GAAP adjusted diluted EPS was $0.48. This compares to non-GAAP adjusted net income of $6.7 million and $7.3 million, and non-GAAP adjusted diluted EPS of $0.30 and $0.32, for the third quarter of 2019 and fourth quarter of 2018, respectively.

For the fiscal year 2019, non-GAAP adjusted net income was $28.3 million and non-GAAP adjusted diluted EPS was $1.25. This compares to non-GAAP adjusted net income of $75.1 million and non-GAAP adjusted diluted EPS of $2.99 for fiscal year 2018.

First Quarter 2020 Financial Outlook

For the first quarter of 2020, we expect revenue to be in the range of $220 to $235 million. We expect GAAP diluted EPS to be in the range of $0.41 to $0.51 and non-GAAP adjusted diluted EPS to be in the range of $0.64 to $0.74.

This outlook for non‑GAAP adjusted 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 adjusted 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 2019 with cash of $60.6 million, an increase of $30.4 million from the prior quarter and an increase of $16.8 million from December 28, 2018. The increase from the prior quarter was primarily due to operating cash flows of $32.1 million. The increase from December 28, 2018 was primarily due to operating cash flows of $57.2 million and net proceeds from the issuance of ordinary shares under our share-based compensation plans of $5.5 million, partially offset by net payments on long-term debt of $23.8 million, capital expenditures of $12.3 million, and cash paid for intangible assets of $8.1 million.

Our cash generated from operations of $57.2 million during 2019 consists of net income of $10.7 million, net non-cash charges of $24.2 million, and a decrease in our net operating assets and liabilities of $22.2 million. Non-cash charges of $24.2 million primarily consist of depreciation and amortization of $21.9 million and share-based compensation of $8.5 million, partially offset by an increase in our net deferred tax assets of $7.1 million. The decrease in our net operating assets and liabilities was primarily due to an increase in accounts payable of $68.0 million, partially offset by an increase in accounts receivable of $44.6 million.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release also contains non-GAAP financial results, including non-GAAP gross profit, non‑GAAP operating income, non-GAAP adjusted net income, and non-GAAP adjusted diluted EPS. These non-GAAP metrics exclude amortization of intangible assets, share-based compensation expense, non-recurring expenses including adjustments to the cost of goods sold, tax adjustments related to those non-GAAP adjustments, and non-recurring discrete tax items including tax impacts from releasing a valuation allowance related to foreign tax credits, to the extent they are present in gross profit, operating income, and net income. Tables showing these metrics on a GAAP and non-GAAP basis, with reconciliation footnotes thereto, is included at the end of this press release. Non-GAAP adjusted diluted EPS is defined as non-GAAP adjusted net income divided by weighted average diluted ordinary shares outstanding during the period.

Management uses non-GAAP gross profit, non-GAAP operating income, non-GAAP adjusted net income, and non-GAAP adjusted diluted EPS 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.

Page 2 of 10


Conference Call

We will conduct a conference call to discuss our fourth quarter and fiscal year 2019 results and business outlook on February 5, 2020, at 2:00 p.m. PST.

To listen to a live webcast of the call, please visit our investor relations website at ir.ichorsystems.com, or go to the live link at webcasts.eqs.com/ichorholdings20200205. To listen via telephone, please call (877) 407‑0989 (domestic) or +1 (201) 389‑0921 (international), conference ID: 13697751.

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 for semiconductor capital equipment. Our 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 manufacture precision-machined components, weldments, and proprietary products for use in fluid delivery systems for direct sales to our customers, as well as certain components for internal use in fluid delivery systems and for direct sales to our customers. This vertically-integrated portion of our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively. Ichor is headquartered in Fremont, CA. ichorsystems.com.

We use a 52 or 53 week fiscal year ending on the last Friday in December. The three months ended December 27, 2019, September 27, 2019, and December 28, 2018 were all 13 weeks. References to the fourth and third quarter of 2019 and the fourth quarter of 2018 relate to the three month periods then ended.

Safe Harbor Statement

Certain statements in this release are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "guidance," "expects," "intends," "projects," "plans," "believes," "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 the fiscal fourth quarter of 2019, which are subject to adjustment in connection with the year-end audit and preparation of our annual report on Form 10‑K, expected sales for the first quarter of 2020, 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, and (10)  dependence on a limited number of suppliers. Additional information concerning these and other factors can be found in Ichor's filings with the Securities and Exchange Commission (the “SEC”), including other risks, relevant factors and uncertainties identified in the "Risk Factors" section of Ichor's Annual Report on Form 10‑K filed with the SEC on March 8, 2019, and subsequent filings with the SEC.

All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. We undertake no obligation to update or revise any forward-looking statements contained herein, whether as a result of actual results, changes in Ichor’s expectations, future events or developments, or otherwise, except as required by law.

Contact:

Larry Sparks, CFO 510-897-5200

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

IR@ichorsystems.com

Source: Ichor Holdings, Ltd.

Page 3 of 10


ICHOR HOLDINGS, LTD.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

 

 

December 27,

2019

 

 

December 28,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

60,612

 

 

$

43,834

 

Accounts receivable, net

 

 

84,849

 

 

 

40,287

 

Inventories, net

 

 

127,037

 

 

 

121,106

 

Prepaid expenses and other current assets

 

 

4,449

 

 

 

6,348

 

Total current assets

 

 

276,947

 

 

 

211,575

 

Property and equipment, net

 

 

44,541

 

 

 

41,740

 

Operating lease right-of-use assets

 

 

14,198

 

 

 

 

Other noncurrent assets

 

 

1,094

 

 

 

906

 

Deferred tax assets, net

 

 

4,738

 

 

 

1,363

 

Intangible assets, net

 

 

52,027

 

 

 

56,895

 

Goodwill

 

 

173,010

 

 

 

173,010

 

Total assets

 

$

566,555

 

 

$

485,489

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

131,578

 

 

$

64,300

 

Accrued liabilities

 

 

12,814

 

 

 

9,556

 

Other current liabilities

 

 

5,233

 

 

 

5,148

 

Current portion of long-term debt

 

 

8,750

 

 

 

8,750

 

Current portion of lease liabilities

 

 

5,492

 

 

 

 

Total current liabilities

 

 

163,867

 

 

 

87,754

 

Long-term debt, less current portion, net

 

 

169,304

 

 

 

192,117

 

Lease liabilities, less current portion

 

 

9,081

 

 

 

 

Deferred tax liabilities

 

 

210

 

 

 

3,966

 

Other non-current liabilities

 

 

2,677

 

 

 

3,326

 

Total liabilities

 

 

345,139

 

 

 

287,163

 

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; 22,618,708 and 22,234,508 shares outstanding, respectively; 27,056,147 and 26,574,037 shares issued, respectively)

 

 

2

 

 

 

2

 

Additional paid in capital

 

 

242,318

 

 

 

228,358

 

Treasury shares at cost (4,437,439 and 4,339,529 shares, respectively)

 

 

(91,578

)

 

 

(89,979

)

Retained earnings

 

 

70,674

 

 

 

59,945

 

Total shareholders’ equity

 

 

221,416

 

 

 

198,326

 

Total liabilities and shareholders’ equity

 

$

566,555

 

 

$

485,489

 

Page 4 of 10


ICHOR HOLDINGS, LTD.

Consolidated Statement of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 27,

2019

 

 

September 27,

2019

 

 

December 28,

2018

 

 

December 27,

2019

 

 

December 28,

2018

 

Net sales

 

$

189,355

 

 

$

154,456

 

 

$

141,402

 

 

$

620,837

 

 

$

823,611

 

Cost of sales

 

 

163,440

 

 

 

133,763

 

 

 

119,953

 

 

 

534,473

 

 

 

687,474

 

Gross profit

 

 

25,915

 

 

 

20,693

 

 

 

21,449

 

 

 

86,364

 

 

 

136,137

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

3,090

 

 

 

2,987

 

 

 

2,203

 

 

 

11,102

 

 

 

9,355

 

Selling, general, and administrative

 

 

13,779

 

 

 

11,048

 

 

 

9,432

 

 

 

47,270

 

 

 

47,448

 

Amortization of intangible assets

 

 

3,340

 

 

 

3,336

 

 

 

3,833

 

 

 

13,015

 

 

 

15,369

 

Total operating expenses

 

 

20,209

 

 

 

17,371

 

 

 

15,468

 

 

 

71,387

 

 

 

72,172

 

Operating income

 

 

5,706

 

 

 

3,322

 

 

 

5,981

 

 

 

14,977

 

 

 

63,965

 

Interest expense

 

 

2,454

 

 

 

2,663

 

 

 

2,627

 

 

 

10,647

 

 

 

9,987

 

Other expense (income), net

 

 

67

 

 

 

(43

)

 

 

(181

)

 

 

55

 

 

 

(241

)

Income before income taxes

 

 

3,185

 

 

 

702

 

 

 

3,535

 

 

 

4,275

 

 

 

54,219

 

Income tax expense (benefit)

 

 

(4,767

)

 

 

(221

)

 

 

50

 

 

 

(6,454

)

 

 

(3,664

)

Net income

 

$

7,952

 

 

$

923

 

 

$

3,485

 

 

 

10,729

 

 

 

57,883

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.35

 

 

$

0.04

 

 

$

0.15

 

 

$

0.48

 

 

$

2.34

 

Diluted

 

$

0.35

 

 

$

0.04

 

 

$

0.15

 

 

$

0.47

 

 

$

2.30

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

22,555,666

 

 

 

22,454,408

 

 

 

22,768,704

 

 

 

22,418,802

 

 

 

24,706,542

 

Diluted

 

 

22,993,767

 

 

 

22,718,882

 

 

 

23,014,317

 

 

 

22,766,903

 

 

 

25,128,055

 

Page 5 of 10


ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 27,

2019

 

 

September 27,

2019

 

 

December 28,

2018

 

 

December 27,

2019

 

 

December 28,

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

7,952

 

 

$

923

 

 

$

3,485

 

 

$

10,729

 

 

$

57,883

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,912

 

 

 

5,497

 

 

 

5,659

 

 

 

21,869

 

 

 

23,064

 

Share-based compensation

 

 

3,940

 

 

 

1,792

 

 

 

1,300

 

 

 

8,537

 

 

 

7,577

 

Deferred income taxes

 

 

(6,262

)

 

 

(697

)

 

 

(441

)

 

 

(7,131

)

 

 

(6,687

)

Amortization of debt issuance costs

 

 

241

 

 

 

242

 

 

 

239

 

 

 

937

 

 

 

970

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(7,709

)

 

 

(35,569

)

 

 

25,071

 

 

 

(44,562

)

 

 

10,425

 

Inventories, net

 

 

(21,215

)

 

 

2,651

 

 

 

12,557

 

 

 

(5,931

)

 

 

35,126

 

Prepaid expenses and other assets

 

 

2,575

 

 

 

434

 

 

 

(2,021

)

 

 

6,067

 

 

 

(685

)

Accounts payable

 

 

44,553

 

 

 

27,589

 

 

 

(14,069

)

 

 

67,966

 

 

 

(62,173

)

Accrued liabilities

 

 

2,553

 

 

 

1,367

 

 

 

193

 

 

 

3,214

 

 

 

(3,518

)

Other liabilities

 

 

(393

)

 

 

114

 

 

 

1,132

 

 

 

(4,545

)

 

 

(1,507

)

Net cash provided by operating activities

 

 

32,147

 

 

 

4,343

 

 

 

33,105

 

 

 

57,150

 

 

 

60,475

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(3,995

)

 

 

(2,231

)

 

 

(2,535

)

 

 

(12,343

)

 

 

(13,920

)

Cash paid for acquisitions, net of cash acquired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,443

)

Cash paid for intangible assets

 

 

 

 

 

 

 

 

 

 

 

(8,147

)

 

 

 

Net cash used in investing activities

 

 

(3,995

)

 

 

(2,231

)

 

 

(2,535

)

 

 

(20,490

)

 

 

(15,363

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares under share-based compensation plans

 

 

2,540

 

 

 

655

 

 

 

114

 

 

 

5,757

 

 

 

6,329

 

Employees' taxes paid upon vesting of restricted share units

 

 

(68

)

 

 

(48

)

 

 

(21

)

 

 

(290

)

 

 

(91

)

Repurchase of ordinary shares

 

 

 

 

 

 

 

 

(29,662

)

 

 

(1,599

)

 

 

(89,980

)

Debt issuance and modification costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,092

)

Borrowings on revolving credit facility

 

 

8,000

 

 

 

 

 

 

27,000

 

 

 

13,000

 

 

 

44,162

 

Repayments on revolving credit facility

 

 

(6,000

)

 

 

(14,000

)

 

 

(15,000

)

 

 

(28,000

)

 

 

(20,000

)

Repayments on term loan

 

 

(2,187

)

 

 

 

 

 

(2,188

)

 

 

(8,750

)

 

 

(8,910

)

Net cash provided by (used in) financing activities

 

 

2,285

 

 

 

(13,393

)

 

 

(19,757

)

 

 

(19,882

)

 

 

(70,582

)

Net increase (decrease) in cash

 

 

30,437

 

 

 

(11,281

)

 

 

10,813

 

 

 

16,778

 

 

 

(25,470

)

Cash at beginning of period

 

 

30,175

 

 

 

41,456

 

 

 

33,021

 

 

 

43,834

 

 

 

69,304

 

Cash at end of period

 

$

60,612

 

 

$

30,175

 

 

$

43,834

 

 

$

60,612

 

 

$

43,834

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

2,309

 

 

$

360

 

 

$

2,286

 

 

$

8,424

 

 

$

8,273

 

Cash paid during the period for taxes, net of refunds

 

$

(1,065

)

 

$

337

 

 

$

112

 

 

$

896

 

 

$

2,278

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures included in accounts payable

 

$

774

 

 

$

712

 

 

$

1,462

 

 

$

774

 

 

$

1,462

 

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

 

$

251

 

 

$

566

 

 

$

 

 

$

817

 

 

$

 

Page 6 of 10


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 27,

2019

 

 

September 27,

2019

 

 

December 28,

2018

 

 

December 27,

2019

 

 

December 28,

2018

 

U.S. GAAP gross profit

 

$

25,915

 

 

$

20,693

 

 

$

21,449

 

 

$

86,364

 

 

$

136,137

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

196

 

 

 

186

 

 

 

123

 

 

 

705

 

 

 

608

 

Other non-recurring expense, net (1)

 

 

 

 

 

 

 

 

116

 

 

 

129

 

 

 

116

 

Fair value adjustment to inventory from acquisitions (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,839

 

Non-GAAP gross profit

 

$

26,111

 

 

$

20,879

 

 

$

21,688

 

 

$

87,198

 

 

$

141,700

 

U.S. GAAP gross margin

 

 

13.7

%

 

 

13.4

%

 

 

15.2

%

 

 

13.9

%

 

 

16.5

%

Non-GAAP gross margin

 

 

13.8

%

 

 

13.5

%

 

 

15.3

%

 

 

14.0

%

 

 

17.2

%

 

(1)

Included in this amount for all periods presented are costs associated with restructuring and transitioning key leadership roles.

(2)

As part of our purchase price allocation for our acquisition of Talon in December 2017 and IAN in April 2018, we recorded acquired-inventory at fair value, resulting in a fair value step-up of $6.2 million and $0.3 million, respectively. This amount was subsequently charged to cost of sales as acquired-inventory was sold.

Page 7 of 10


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 27,

2019

 

 

September 27,

2019

 

 

December 28,

2018

 

 

December 27,

2019

 

 

December 28,

2018

 

U.S. GAAP operating income

 

$

5,706

 

 

$

3,322

 

 

$

5,981

 

 

$

14,977

 

 

$

63,965

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

3,340

 

 

 

3,336

 

 

 

3,833

 

 

 

13,015

 

 

 

15,369

 

Share-based compensation

 

 

3,940

 

 

 

1,792

 

 

 

1,300

 

 

 

8,537

 

 

 

7,577

 

Other non-recurring expense, net (1)

 

 

485

 

 

 

476

 

 

 

(556

)

 

 

2,808

 

 

 

1,727

 

Fair value adjustment to inventory from acquisitions (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,839

 

Non-GAAP operating income

 

$

13,471

 

 

$

8,926

 

 

$

10,558

 

 

$

39,337

 

 

$

93,477

 

U.S. GAAP operating margin

 

 

3.0

%

 

 

2.2

%

 

 

4.2

%

 

 

2.4

%

 

 

7.8

%

Non-GAAP operating margin

 

 

7.1

%

 

 

5.8

%

 

 

7.5

%

 

 

6.3

%

 

 

11.3

%

 

(1)

Included in this amount for the fourth quarter of 2019 are (i) acquisition-related expenses, comprised primarily of expense associated with a two-year retention agreement between the Company and key management personnel of IAN (the “IAN retention agreement”), which we acquired in April 2018, and (ii) costs associated with implementation of our Sarbanes-Oxley compliance program and a new ERP system.

Included in this amount for the third quarter of 2019 are (i) acquisition-related expenses, comprised primarily of expense associated with the IAN retention agreement, and (ii) costs associated with restructuring and transitioning key leadership roles.

Included in this amount for the fourth quarter of 2018 are (i) a gain on the extinguishment of an earn-out liability recorded in connection with our acquisition of IAN (the “IAN earn-out liability”) which will not be paid, (ii) acquisition-related expenses, comprised primarily of expense associated with the IAN retention agreement, and (iii) costs incurred in connection with reorganizing our key personnel and leadership.

Included in this amount for fiscal year 2019 are (i) acquisition-related expenses, comprised primarily of a charge to expense from the extinguishment of an indemnification asset related to our acquisition of Cal‑Weld in 2017 and expense associated with the IAN retention agreement, (ii) costs associated with restructuring and transitioning key leadership roles, and (iii) costs associated with implementation of our Sarbanes-Oxley compliance program and a new ERP system.

Included in this amount for fiscal year 2018 are (i) expenses associated with separation benefits for a former officer that became effective in January 2018, (ii) a gain on the extinguishment of the IAN earn-out liability, and (iii) acquisition-related expenses, comprised primarily of expense associated with the IAN retention agreement.

(2)

As part of our purchase price allocation for our acquisition of Talon in December 2017 and IAN in April 2018, we recorded acquired-inventory at fair value, resulting in a fair value step-up of $6.2 million and $0.3 million, respectively. This amount was subsequently charged to cost of sales as acquired-inventory was sold.

Page 8 of 10


ICHOR HOLDINGS, LTD.

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

(dollars in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 27,

2019

 

 

September 27,

2019

 

 

December 28,

2018

 

 

December 27,

2019

 

 

December 28,

2018

 

U.S. GAAP net income

 

$

7,952

 

 

$

923

 

 

$

3,485

 

 

$

10,729

 

 

$

57,883

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

3,340

 

 

 

3,336

 

 

 

3,833

 

 

 

13,015

 

 

 

15,369

 

Share-based compensation

 

 

3,940

 

 

 

1,792

 

 

 

1,300

 

 

 

8,537

 

 

 

7,577

 

Other non-recurring expense, net (1)

 

 

485

 

 

 

476

 

 

 

(556

)

 

 

2,808

 

 

 

1,727

 

Tax adjustments related to non-GAAP adjustments

 

 

(4,788

)

 

 

221

 

 

 

(782

)

 

 

(6,743

)

 

 

(8,203

)

Tax benefit from release of valuation allowance (2)