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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 25, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __ to __

 

Commission File Number: 001-37961

 

ICHOR HOLDINGS, LTD.

(Exact Name of Registrant as Specified in its Charter)

 

 

Cayman Islands

Not Applicable

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

3185 Laurelview Ct.

Fremont, CA

94538

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (510) 897-5200

 

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares, par value $0.0001

ICHR

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non‑accelerated filer

 

  

Small reporting company

 

 

Emerging Growth Company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).    Yes      No  

As of October 28, 2020, the registrant had 23,162,445 ordinary shares, $0.0001 par value per share, outstanding.

 


TABLE OF CONTENTS

 

 

 

 


PART I

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

ICHOR HOLDINGS, LTD.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

September 25,

2020

 

 

December 27,

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

78,919

 

 

$

60,612

 

Accounts receivable, net

 

 

104,121

 

 

 

84,849

 

Inventories

 

 

137,583

 

 

 

127,037

 

Prepaid expenses and other current assets

 

 

5,577

 

 

 

4,449

 

Total current assets

 

 

326,200

 

 

 

276,947

 

Property and equipment, net

 

 

44,574

 

 

 

44,541

 

Operating lease right-of-use assets

 

 

10,863

 

 

 

14,198

 

Other noncurrent assets

 

 

4,101

 

 

 

1,094

 

Deferred tax assets, net

 

 

4,674

 

 

 

4,738

 

Intangible assets, net

 

 

42,019

 

 

 

52,027

 

Goodwill

 

 

173,010

 

 

 

173,010

 

Total assets

 

$

605,441

 

 

$

566,555

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

107,648

 

 

$

131,578

 

Accrued liabilities

 

 

16,785

 

 

 

12,814

 

Other current liabilities

 

 

9,949

 

 

 

5,233

 

Current portion of long-term debt

 

 

8,750

 

 

 

8,750

 

Current portion of lease liabilities

 

 

5,167

 

 

 

5,492

 

Total current liabilities

 

 

148,299

 

 

 

163,867

 

Long-term debt, less current portion, net

 

 

193,467

 

 

 

169,304

 

Lease liabilities, less current portion

 

 

6,040

 

 

 

9,081

 

Deferred tax liabilities

 

 

210

 

 

 

210

 

Other non-current liabilities

 

 

2,758

 

 

 

2,677

 

Total liabilities

 

 

350,774

 

 

 

345,139

 

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; 23,160,672 and 22,618,708 shares outstanding, respectively; 27,598,111 and 27,056,147 shares issued, respectively)

 

 

2

 

 

 

2

 

Additional paid in capital

 

 

254,811

 

 

 

242,318

 

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

 

 

(91,578

)

 

 

(91,578

)

Retained earnings

 

 

91,432

 

 

 

70,674

 

Total shareholders’ equity

 

 

254,667

 

 

 

221,416

 

Total liabilities and shareholders’ equity

 

$

605,441

 

 

$

566,555

 

 

See accompanying notes.

1


ICHOR HOLDINGS, LTD.

Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 25,

2020

 

 

September 27,

2019

 

 

September 25,

2020

 

 

September 27,

2019

 

Net sales

 

$

227,678

 

 

$

154,456

 

 

$

669,270

 

 

$

431,482

 

Cost of sales

 

 

195,172

 

 

 

133,763

 

 

 

578,728

 

 

 

371,033

 

Gross profit

 

 

32,506

 

 

 

20,693

 

 

 

90,542

 

 

 

60,449

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

3,269

 

 

 

2,987

 

 

 

10,100

 

 

 

8,012

 

Selling, general, and administrative

 

 

13,367

 

 

 

11,048

 

 

 

43,098

 

 

 

33,491

 

Amortization of intangible assets

 

 

3,338

 

 

 

3,336

 

 

 

10,008

 

 

 

9,675

 

Total operating expenses

 

 

19,974

 

 

 

17,371

 

 

 

63,206

 

 

 

51,178

 

Operating income

 

 

12,532

 

 

 

3,322

 

 

 

27,336

 

 

 

9,271

 

Interest expense

 

 

2,052

 

 

 

2,663

 

 

 

6,728

 

 

 

8,193

 

Other expense (income), net

 

 

242

 

 

 

(43

)

 

 

213

 

 

 

(12

)

Income before income taxes

 

 

10,238

 

 

 

702

 

 

 

20,395

 

 

 

1,090

 

Income tax benefit

 

 

(310

)

 

 

(221

)

 

 

(363

)

 

 

(1,687

)

Net income

 

$

10,548

 

 

$

923

 

 

$

20,758

 

 

$

2,777

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.46

 

 

$

0.04

 

 

$

0.91

 

 

$

0.12

 

Diluted

 

$

0.45

 

 

$

0.04

 

 

$

0.89

 

 

$

0.12

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

23,051,994

 

 

 

22,454,408

 

 

 

22,875,186

 

 

 

22,373,181

 

Diluted

 

 

23,347,460

 

 

 

22,718,882

 

 

 

23,199,618

 

 

 

22,629,855

 

See accompanying notes.

2


ICHOR HOLDINGS, LTD.

Consolidated Statements of Shareholders’ Equity

(dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the three months ending September 25, 2020

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Equity

 

Balance at June 26, 2020

 

 

22,868,999

 

 

$

2

 

 

$

248,882

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

80,884

 

 

$

238,190

 

Ordinary shares issued from exercise of stock options

 

 

262,940

 

 

 

 

 

 

3,319

 

 

 

 

 

 

 

 

 

 

 

 

3,319

 

Ordinary shares issued from vesting of restricted share units

 

 

12,065

 

 

 

 

 

 

(184

)

 

 

 

 

 

 

 

 

 

 

 

(184

)

Ordinary shares issued from employee share purchase plan

 

 

16,668

 

 

 

 

 

 

377

 

 

 

 

 

 

 

 

 

 

 

 

377

 

Share-based compensation expense

 

 

 

 

 

 

 

 

2,417

 

 

 

 

 

 

 

 

 

 

 

 

2,417

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,548

 

 

 

10,548

 

Balance at September 25, 2020

 

 

23,160,672

 

 

$

2

 

 

$

254,811

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

91,432

 

 

$

254,667

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the nine months ending September 25, 2020

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Equity

 

Balance at December 27, 2019

 

 

22,618,708

 

 

$

2

 

 

$

242,318

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

70,674

 

 

$

221,416

 

Ordinary shares issued from exercise of stock options

 

 

385,276

 

 

 

 

 

 

5,913

 

 

 

 

 

 

 

 

 

 

 

 

5,913

 

Ordinary shares issued from vesting of restricted share units

 

 

123,500

 

 

 

 

 

 

(1,570

)

 

 

 

 

 

 

 

 

 

 

 

(1,570

)

Ordinary shares issued from employee share purchase plan

 

 

33,188

 

 

 

 

 

 

727

 

 

 

 

 

 

 

 

 

 

 

 

727

 

Share-based compensation expense

 

 

 

 

 

 

 

 

7,423

 

 

 

 

 

 

 

 

 

 

 

 

7,423

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,758

 

 

 

20,758

 

Balance at September 25, 2020

 

 

23,160,672

 

 

$

2

 

 

 

254,811

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

91,432

 

 

$

254,667

 

 

3


ICHOR HOLDINGS, LTD.

Consolidated Statements of Shareholders’ Equity (continued)

(dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the three months ending September 27, 2019

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Equity

 

Balance at June 28, 2019

 

 

22,414,089

 

 

$

2

 

 

$

233,508

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

61,799

 

 

$

203,731

 

Ordinary shares issued from exercise of stock options

 

 

33,421

 

 

 

 

 

 

433

 

 

 

 

 

 

 

 

 

 

 

 

433

 

Ordinary shares issued from vesting of restricted share units

 

 

9,749

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

 

 

 

 

 

(48

)

Ordinary shares issued from employee share purchase plan

 

 

25,144

 

 

 

 

 

 

359

 

 

 

 

 

 

 

 

 

 

 

 

359

 

Share-based compensation expense

 

 

 

 

 

 

 

 

1,792

 

 

 

 

 

 

 

 

 

 

 

 

1,792

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

923

 

 

 

923

 

Balance at September 27, 2019

 

 

22,482,403

 

 

$

2

 

 

$

236,044

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

62,722

 

 

$

207,190

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the nine months ending September 27, 2019

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Equity

 

Balance at December 28, 2018

 

 

22,234,508

 

 

$

2

 

 

$

228,358

 

 

 

4,339,529

 

 

$

(89,979

)

 

$

59,945

 

 

$

198,326

 

Ordinary shares issued from exercise of stock options

 

 

238,121

 

 

 

 

 

 

2,640

 

 

 

 

 

 

 

 

 

 

 

 

2,640

 

Ordinary shares issued from vesting of restricted share units

 

 

60,039

 

 

 

 

 

 

(222

)

 

 

 

 

 

 

 

 

 

 

 

(222

)

Ordinary shares issued from employee share purchase plan

 

 

47,645

 

 

 

 

 

 

671

 

 

 

 

 

 

 

 

 

 

 

 

671

 

Repurchase of ordinary shares

 

 

(97,910

)

 

 

 

 

 

 

 

 

97,910

 

 

 

(1,599

)

 

 

 

 

 

(1,599

)

Share-based compensation expense

 

 

 

 

 

 

 

 

4,597

 

 

 

 

 

 

 

 

 

 

 

 

4,597

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,777

 

 

 

2,777

 

Balance at September 27, 2019

 

 

22,482,403

 

 

$

2

 

 

$

236,044

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

62,722

 

 

$

207,190

 

 

See accompanying notes.

4


ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

September 25,

2020

 

 

September 27,

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

20,758

 

 

$

2,777

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

18,029

 

 

 

15,957

 

Share-based compensation

 

 

7,423

 

 

 

4,597

 

Deferred income taxes

 

 

64

 

 

 

(869

)

Amortization of debt issuance costs

 

 

726

 

 

 

696

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(19,272

)

 

 

(36,853

)

Inventories

 

 

(10,546

)

 

 

15,284

 

Prepaid expenses and other assets

 

 

(472

)

 

 

3,492

 

Accounts payable

 

 

(23,693

)

 

 

23,413

 

Accrued liabilities

 

 

4,002

 

 

 

661

 

Other liabilities

 

 

1,103

 

 

 

(4,152

)

Net cash provided by (used in) operating activities

 

 

(1,878

)

 

 

25,003

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8,291

)

 

 

(8,348

)

Cash paid for intangible assets

 

 

 

 

 

(8,147

)

Net cash used in investing activities

 

 

(8,291

)

 

 

(16,495

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of ordinary shares under share-based compensation plans

 

 

6,609

 

 

 

3,217

 

Employees' taxes paid upon vesting of restricted share units

 

 

(1,570

)

 

 

(222

)

Repurchase of ordinary shares

 

 

 

 

 

(1,599

)

Borrowings on revolving credit facility

 

 

30,000

 

 

 

5,000

 

Repayments on revolving credit facility

 

 

 

 

 

(22,000

)

Repayments on term loan

 

 

(6,563

)

 

 

(6,563

)

Net cash provided by (used in) financing activities

 

 

28,476

 

 

 

(22,167

)

Net increase (decrease) in cash

 

 

18,307

 

 

 

(13,659

)

Cash at beginning of period

 

 

60,612

 

 

 

43,834

 

Cash at end of period

 

$

78,919

 

 

$

30,175

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest