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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 June 25, 2021

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 July 29, 2021, the registrant had 28,358,970 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)

 

 

 

June 25,

2021

 

 

December 25,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

141,714

 

 

$

252,899

 

Marketable securities

 

 

104,951

 

 

 

 

Accounts receivable, net

 

 

119,108

 

 

 

100,977

 

Inventories

 

 

166,256

 

 

 

134,756

 

Prepaid expenses and other current assets

 

 

8,491

 

 

 

7,082

 

Total current assets

 

 

540,520

 

 

 

495,714

 

Property and equipment, net

 

 

52,374

 

 

 

41,811

 

Operating lease right-of-use assets

 

 

9,333

 

 

 

10,088

 

Other noncurrent assets

 

 

7,036

 

 

 

5,503

 

Deferred tax assets, net

 

 

5,235

 

 

 

6,324

 

Intangible assets, net

 

 

33,064

 

 

 

39,845

 

Goodwill

 

 

174,887

 

 

 

174,887

 

Total assets

 

$

822,449

 

 

$

774,172

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

149,844

 

 

$

116,664

 

Accrued liabilities

 

 

19,820

 

 

 

20,792

 

Other current liabilities

 

 

14,216

 

 

 

10,700

 

Current portion of long-term debt

 

 

8,750

 

 

 

8,750

 

Current portion of lease liabilities

 

 

5,108

 

 

 

5,128

 

Total current liabilities

 

 

197,738

 

 

 

162,034

 

Long-term debt, less current portion, net

 

 

157,630

 

 

 

191,522

 

Lease liabilities, less current portion

 

 

4,497

 

 

 

5,272

 

Deferred tax liabilities, net

 

 

109

 

 

 

109

 

Other non-current liabilities

 

 

3,992

 

 

 

3,546

 

Total liabilities

 

 

363,966

 

 

 

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; 28,326,559 and 27,907,077 shares outstanding, respectively; 32,763,998 and 32,344,516 shares issued, respectively)

 

 

3

 

 

 

3

 

Additional paid in capital

 

 

408,626

 

 

 

399,311

 

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

 

 

(91,578

)

 

 

(91,578

)

Accumulated other comprehensive loss

 

 

(24

)

 

 

 

Retained earnings

 

 

141,456

 

 

 

103,953

 

Total shareholders’ equity

 

 

458,483

 

 

 

411,689

 

Total liabilities and shareholders’ equity

 

$

822,449

 

 

$

774,172

 

 

See accompanying notes.

1


ICHOR HOLDINGS, LTD.

Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 25,

2021

 

 

June 26,

2020

 

 

June 25,

2021

 

 

June 26,

2020

 

Net sales

 

$

282,308

 

 

$

221,564

 

 

$

546,874

 

 

$

441,592

 

Cost of sales

 

 

234,955

 

 

 

192,302

 

 

 

460,009

 

 

 

383,556

 

Gross profit

 

 

47,353

 

 

 

29,262

 

 

 

86,865

 

 

 

58,036

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,049

 

 

 

3,509

 

 

 

7,564

 

 

 

6,831

 

Selling, general, and administrative

 

 

14,699

 

 

 

13,113

 

 

 

29,048

 

 

 

29,731

 

Amortization of intangible assets

 

 

3,390

 

 

 

3,336

 

 

 

6,781

 

 

 

6,670

 

Total operating expenses

 

 

22,138

 

 

 

19,958

 

 

 

43,393

 

 

 

43,232

 

Operating income

 

 

25,215

 

 

 

9,304

 

 

 

43,472

 

 

 

14,804

 

Interest expense

 

 

1,591

 

 

 

2,302

 

 

 

3,510

 

 

 

4,676

 

Other expense (income), net

 

 

22

 

 

 

2

 

 

 

207

 

 

 

(29

)

Income before income taxes

 

 

23,602

 

 

 

7,000

 

 

 

39,755

 

 

 

10,157

 

Income tax expense (benefit)

 

 

737

 

 

 

189

 

 

 

2,252

 

 

 

(53

)

Net income

 

$

22,865

 

 

$

6,811

 

 

$

37,503

 

 

$

10,210

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.81

 

 

$

0.30

 

 

$

1.33

 

 

$

0.45

 

Diluted

 

$

0.79

 

 

$

0.30

 

 

$

1.30

 

 

$

0.44

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,180,821

 

 

 

22,836,400

 

 

 

28,092,535

 

 

 

22,786,782

 

Diluted

 

 

29,092,521

 

 

 

23,066,976

 

 

 

28,942,902

 

 

 

23,099,946

 

See accompanying notes.

2


ICHOR HOLDINGS, LTD.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 25,

2021

 

 

June 26,

2020

 

 

June 25,

2021

 

 

June 26,

2020

 

Net income

 

$

22,865

 

 

$

6,811

 

 

$

37,503

 

 

$

10,210

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale marketable securities

 

 

(24

)

 

 

 

 

 

(24

)

 

 

 

Comprehensive income

 

$

22,841

 

 

$

6,811

 

 

$

37,479

 

 

$

10,210

 

 

See accompanying notes.

 

3


 

 

ICHOR HOLDINGS, LTD.

Consolidated Statements of Shareholders’ Equity

(dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

Accumulated

 

 

 

 

 

 

Total

 

For the three months ending June 25, 2021

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Other Comprehensive

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Loss

 

 

Earnings

 

 

Equity

 

Balance at March 26, 2021

 

 

28,070,251

 

 

$

3

 

 

$

404,046

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

 

 

$

118,591

 

 

$

431,062

 

Ordinary shares issued from exercise of stock options

 

 

179,131

 

 

 

 

 

 

3,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,150

 

Ordinary shares issued from vesting of restricted share units

 

 

77,177

 

 

 

 

 

 

(1,251

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,251

)

Share-based compensation expense

 

 

 

 

 

 

 

 

2,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,681

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

(24

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,865

 

 

 

22,865

 

Balance at June 25, 2021

 

 

28,326,559

 

 

$

3

 

 

$

408,626

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

(24

)

 

$

141,456

 

 

$

458,483

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

Accumulated

 

 

 

 

 

 

Total

 

For the six months ending June 25, 2021

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Other Comprehensive

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Loss

 

 

Earnings

 

 

Equity

 

Balance at December 25, 2020

 

 

27,907,077

 

 

$

3

 

 

$

399,311

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

 

 

$

103,953

 

 

$

411,689

 

Ordinary shares issued from exercise of stock options

 

 

284,731

 

 

 

 

 

 

5,531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,531

 

Ordinary shares issued from vesting of restricted share units

 

 

107,600

 

 

 

 

 

 

(1,918

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,918

)

Ordinary shares issued from employee share purchase plan

 

 

27,151

 

 

 

 

 

 

606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

606

 

Share-based compensation expense

 

 

 

 

 

 

 

 

5,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,096

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

(24

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,503

 

 

 

37,503

 

Balance at June 25, 2021

 

 

28,326,559

 

 

$

3

 

 

 

408,626

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

(24

)

 

$

141,456

 

 

$

458,483

 

See accompanying notes.

4


ICHOR HOLDINGS, LTD.

Consolidated Statements of Shareholders’ Equity (continued)

(dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the three months ending June 26, 2020

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Equity

 

Balance at March 27, 2020

 

 

22,806,679

 

 

$

2

 

 

$

247,023

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

74,073

 

 

$

229,520

 

Ordinary shares issued from exercise of stock options

 

 

8,797

 

 

 

 

 

 

111

 

 

 

 

 

 

 

 

 

 

 

 

111

 

Ordinary shares issued from vesting of restricted share units

 

 

53,523

 

 

 

 

 

 

(393

)

 

 

 

 

 

 

 

 

 

 

 

(393

)

Share-based compensation expense

 

 

 

 

 

 

 

 

2,141

 

 

 

 

 

 

 

 

 

 

 

 

2,141

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,811

 

 

 

6,811

 

Balance at June 26, 2020

 

 

22,868,999

 

 

$

2

 

 

$

248,882

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

80,884

 

 

$

238,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the six months ending June 26, 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

 

 

122,336

 

 

 

 

 

 

2,594

 

 

 

 

 

 

 

 

 

 

 

 

2,594

 

Ordinary shares issued from vesting of restricted share units

 

 

111,435

 

 

 

 

 

 

(1,386

)

 

 

 

 

 

 

 

 

 

 

 

(1,386

)

Ordinary shares issued from employee share purchase plan

 

 

16,520

 

 

 

 

 

 

350

 

 

 

 

 

 

 

 

 

 

 

 

350

 

Share-based compensation expense

 

 

 

 

 

 

 

 

5,006

 

 

 

 

 

 

 

 

 

 

 

 

5,006

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,210

 

 

 

10,210

 

Balance at June 26, 2020

 

 

22,868,999

 

 

$

2

 

 

$

248,882

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

80,884

 

 

$

238,190

 

See accompanying notes.

 

5


 

 

ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended

 

 

 

June 25,

2021

 

 

June 26,

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

37,503

 

 

$

10,210

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,464

 

 

 

11,662

 

Share-based compensation

 

 

5,096

 

 

 

5,006

 

Deferred income taxes

 

 

1,089

 

 

 

384

 

Amortization of debt issuance costs

 

 

483

 

 

 

484

 

Gain on sale of asset disposal group

 

 

(504

)

 

 

 

Other

 

 

59

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(18,131

)

 

 

(20,010

)

Inventories

 

 

(31,500