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Ichor Holdings, Ltd. Announces Third Quarter 2020 Financial Results

·16 min read

Ichor Holdings, Ltd. (NASDAQ: ICHR), a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment, today announced third quarter 2020 financial results.

Highlights for the third quarter of 2020:

  • Revenues of $228 million, up 47% year-over-year and our sixth consecutive quarter of revenue growth;

  • Gross margin of 14.3% on a GAAP basis and 14.6% on a non-GAAP basis;

  • Net earnings of $0.45 per diluted share on a GAAP basis and $0.62 on a non-GAAP basis; and

  • Cash flow from operations of $23.3 million and free cash flow of $20.7 million.

"We are pleased to again report sequential increases in our quarterly revenues, gross margin, operating margin, and earnings per share for the third quarter of 2020," commented Jeff Andreson, chief executive officer of Ichor. "Year-to-date in 2020, our results demonstrate strong execution against our stated objectives to outperform industry growth and also grow earnings faster than revenues, with revenues up 55%, and earnings up over twice that rate, for the first nine months of the year. Multiple drivers for our continued outperformance in 2020 include meaningful gains in market share, the continued ramp of EUV system shipments, and strong year-over-year growth in etch and CVD as a result of the beginning of a recovery in memory spending." Mr. Andreson concluded, "Longer-term, the technology transitions to next-generation device nodes in both logic and memory are expected to drive continued growth in our served markets, and we believe Ichor is well-positioned to continue to deliver revenue growth outperformance as well as increased operating leverage in our future results."

Q3 2020

Q2 2020

Q3 2019

(dollars in thousands, except per share amounts)

U.S. GAAP Financial Results:

Net sales

$

227,678

$

221,564

$

154,456

Gross profit percent

14.3

%

13.2

%

13.4

%

Operating income percent

5.5

%

4.2

%

2.2

%

Net income

$

10,548

$

6,811

$

923

Diluted EPS

$

0.45

$

0.30

$

0.04

Q3 2020

Q2 2020

Q3 2019

(dollars in thousands, except per share amounts)

Non-GAAP Financial Results:

Net sales

$

227,678

$

221,564

$

154,456

Gross profit percent

14.6

%

14.0

%

13.5

%

Operating income percent

8.3

%

7.5

%

5.8

%

Adjusted net income

$

14,581

$

12,569

$

6,748

Diluted EPS

$

0.62

$

0.54

$

0.30

U.S. GAAP Financial Results Overview

For the third quarter of 2020, revenue was $227.7 million, net income was $10.5 million, and net income per diluted share ("diluted EPS") was $0.45. This compares to revenue of $221.6 million and $154.5 million, net income of $6.8 million and $0.9 million, and diluted EPS of $0.30 and $0.04, for the second quarter of 2020 and third quarter of 2019, respectively.

Non-GAAP Financial Results Overview

For the third quarter of 2020, non-GAAP net income was $14.6 million and non-GAAP diluted EPS was $0.62. This compares to non-GAAP net income of $12.6 million and $6.7 million, and non-GAAP diluted EPS of $0.54 and $0.30, for the second quarter of 2020 and third quarter of 2019, respectively.

Fourth Quarter 2020 Financial Outlook

For the fourth quarter of 2020, we expect revenue to be in the range of $220 million to $245 million. We expect GAAP diluted EPS to be in the range of $0.38 to $0.59 and non-GAAP diluted EPS to be in the range of $0.59 to $0.77.

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.

COVID-19 Pandemic and Market Conditions Update

The COVID‑19 pandemic and related economic repercussions have created, and are expected to continue to create, significant volatility, uncertainty, and turmoil in our industry. As a result of governmental shelter-in-place orders instituted in March 2020, our facilities in California and Malaysia were shut down for durations ranging from approximately 1‑3 weeks near the end of the first quarter. While our facilities are currently not subject to any site-wide government shutdowns, "social distancing" guidelines are resulting, and will continue to result in, reduced factory capacity. In addition, an increase in direct costs within our factories associated with employee personal protective equipment ("PPE"), facility cleaning and layout changes, together with increases in logistics costs and employee labor costs, as well as other operating inefficiencies have resulted in, and may continue to result in, lower revenues and operating margins. The extent and duration of these impacts cannot be specifically quantified given the dynamic nature and breadth of the pandemic’s impact on our operations and that of our customers and suppliers.

Balance Sheet and Cash Flow Results

We ended the third quarter of 2020 with cash of $78.9 million, an increase of $22.0 million from the end of the prior quarter, and an increase of $18.3 million from December 27, 2019. The increase from the end of the prior quarter was primarily due to cash provided by operating activities of $23.3 million and net proceeds from the issuance of shares under our share-based compensation plans of $3.5 million, partially offset by capital expenditures of $2.6 million and a scheduled term loan payment of $2.2 million. The increase from December 27, 2019 was primarily due to net proceeds from our credit facilities of $23.4 million and net proceeds from the issuance of shares under our share-based compensation plans of $5.0 million, partially offset by capital expenditures of $8.3 million and cash used in operating activities of $1.9 million.

Our cash used in operating activities of $1.9 million for the nine months ended September 25, 2020 consisted of net income of $20.8 million and net non-cash charges of $26.2 million, offset by an increase in our net operating assets and liabilities of $48.9 million. Net non-cash charges primarily consisted of depreciation and amortization of $18.0 million and share-based compensation of $7.4 million. The increase in our net operating assets and liabilities was primarily due to a decrease of accounts payable of $23.7 million, an increase in accounts receivable of $19.3 million, and an increase in inventories of $10.5 million, partially offset by an increase in accrued and other liabilities of $5.1 million. The decrease in accounts payable was primarily due to the timing of purchases, material receipts, and payments near the end of the third quarter of 2020 and the fourth quarter of 2019; the fourth quarter of 2019 included higher purchasing activity near the end of the quarter compared to the third quarter of 2020. The increase in accounts receivable was primarily due to increased sales volume during the quarter compared to the fourth quarter of 2019, as well as the timing of third quarter sales being heavily back-end weighted.

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 excluding (1) amortization of intangible assets, share-based compensation expense, and non-recurring expenses, including 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. 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 third quarter 2020 results and business outlook on November 2, 2020, at 1:30 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/ichorholdings20201102. To listen via telephone, please call (877) 407‑0989 (domestic) or +1 (201) 389‑0921 (international), conference ID: 13711016.

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. We are 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 September 25, 2020, June 26, 2020, and September 27, 2019 were all 13 weeks. References to the third and second quarter of 2020 and the third quarter of 2019 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 our fourth fiscal quarter of 2020, statements regarding the impacts of the COVID-19 pandemic, 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 6, 2020, 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 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)

September 25,

2020

December 27,

2019

Assets

Current assets:

Cash

$

78,919

$

60,612

Accounts receivable, net

104,121

84,849

Inventories, net

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

ICHOR HOLDINGS, LTD.

Consolidated Statement of Operations

(dollars in thousands, except per share amounts)

(unaudited)

Three Months Ended

Nine Months Ended

September 25,

2020

June 26,

2020

September 27,

2019

September 25,

2020

September 27,

2019

Net sales

$

227,678

$

221,564

$

154,456

$

669,270

$

431,482

Cost of sales

195,172

192,302

133,763

578,728

371,033

Gross profit

32,506

29,262

20,693

90,542

60,449

Operating expenses:

Research and development

3,269

3,509

2,987

10,100

8,012

Selling, general, and administrative

13,367

13,113

11,048

43,098

33,491

Amortization of intangible assets

3,338

3,336

3,336

10,008

9,675

Total operating expenses

19,974

19,958

17,371

63,206

51,178

Operating income

12,532

9,304

3,322

27,336

9,271

Interest expense

2,052

2,302

2,663

6,728

8,193

Other expense (income), net

242

2

(43

)

213

(12

)

Income before income taxes

10,238

7,000

702

20,395

1,090

Income tax expense (benefit)

(310

)

189

(221

)

(363

)

(1,687

)

Net income

$

10,548

$

6,811

$

923

$

20,758

$

2,777

Net income per share:

Basic

$

0.46

$

0.30

$

0.04

$

0.91

$

0.12

Diluted

$

0.45

$

0.30

$

0.04

$

0.89

$

0.12

Shares used to compute net income per share:

Basic

23,051,994

22,836,400

22,454,408

22,875,186

22,373,181

Diluted

23,347,460

23,066,976

22,718,882

23,199,618

22,629,855

ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September 25,

2020

June 26,

2020

September 27,

2019

September 25,

2020

September 27,

2019

Cash flows from operating activities:

Net income

$

10,548

$

6,811

$

923

$

20,758

$

2,777

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

Depreciation and amortization

6,367

5,925

5,497

18,029

15,957

Share-based compensation

2,417

2,141

1,792

7,423

4,597

Deferred income taxes

(320

)

(338

)

(697

)

64

(869

)

Amortization of debt issuance costs

242

241

242

726

696

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable, net

738

(17,286

)

(35,569

)

(19,272

)

(36,853

)

Inventories, net

11,607

(5,469

)

2,651

(10,546

)

15,284

Prepaid expenses and other assets

(1,035

)

1,431

434

(472

)

3,492

Accounts payable

(9,976

)

(1,337

)

27,589

(23,693

)

23,413

Accrued liabilities

864

3,706

1,367

4,002

661

Other liabilities

1,853

28

114

1,103

(4,152

)

Net cash provided by (used in) operating activities

23,305

(4,147

)

4,343

(1,878

)

25,003

Cash flows from investing activities:

Capital expenditures

(2,626

)

(3,195

)

(2,231

)

(8,291

)

(8,348

)

Cash paid for intangible assets

(8,147

)

Net cash used in investing activities

(2,626

)

(3,195

)

(2,231

)

(8,291

)

(16,495

)

Cash flows from financing activities:

Issuance of ordinary shares under share-based compensation plans

3,643

308

655

6,609

3,217

Employees' taxes paid upon vesting of restricted share units

(184

)

(393

)

(48

)

(1,570

)

(222

)

Repurchase of ordinary shares

(1,599

)

Borrowings on revolving credit facility

25,000

30,000

5,000

Repayments on revolving credit facility

(14,000

)

(22,000

)

Repayments on term loan

(2,188

)

(2,187

)

(6,563

)

(6,563

)

Net cash provided by (used in) financing activities

1,271

22,728

(13,393

)

28,476

(22,167

)

Net increase (decrease) in cash

21,950

15,386

(11,281

)

18,307

(13,659

)

Cash at beginning of period

56,969

41,583

41,456

60,612

43,834

Cash at end of period

$

78,919

$

56,969

$

30,175

$

78,919

$

30,175

Supplemental disclosures of cash flow information:

Cash paid during the period for interest

$

2,186

$

2,104

$

360

$

6,426

$

6,115

Cash paid during the period for taxes, net of refunds

$

145

$

$

337

$

179

$

1,961

Supplemental disclosures of non-cash activities:

Capital expenditures included in accounts payable

$

537

$

1,191

$

712

$

537

$

712

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

$

$

$

$

328

$

566

ICHOR HOLDINGS, LTD.

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

(dollars in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September 25,

2020

June 26,

2020

September 27,

2019

September 25,

2020

September 27,

2019

U.S. GAAP gross profit

$

32,506

$

29,262

$

20,693

$

90,542

$

60,449

Non-GAAP adjustments:

Share-based compensation

289

239

186

724

509

Other non-recurring expense, net (1)

129

Contract settlement loss (2)

1,386

Facility shutdown costs (3)

408

1,475

1,883

Non-GAAP gross profit

$

33,203

$

30,976

$

20,879

$

94,535

$

61,087

U.S. GAAP gross margin

14.3

%

13.2

%

13.4

%

13.5

%

14.0

%

Non-GAAP gross margin

14.6

%

14.0

%

13.5

%

14.1

%

14.2

%

(1)

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

(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)

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we expect to complete by the end of the first quarter of 2021. Included in this amount are (i) inventory write-off costs of $1.3 million amount for the second quarter of 2020 and nine months ended September 25, 2020; (ii) severance costs associated with affected employees of $0.2 million, $0.2 million, and $0.4 million for the third quarter of 2020, second quarter of 2020, and nine months ended September 25, 2020, respectively; and (iii) accelerated depreciation charges in excess of pre-shutdown decision run-rate associated with property and equipment expected to be abandoned at the time of facility closure of $0.2 million for the third quarter of 2020 and nine months ended September 25, 2020.

ICHOR HOLDINGS, LTD.

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

(dollars in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September 25,

2020

June 26,

2020

September 27,

2019

September 25,

2020

September 27,

2019

U.S. GAAP operating income

$

12,532

$

9,304

$

3,322

$

27,336

$

9,271

Non-GAAP adjustments:

Amortization of intangible assets

3,338

3,336

3,336

10,008

9,675

Share-based compensation

2,417

2,141

1,792

7,423

4,597

Other non-recurring expense, net (1)

239

195

476

3,124

2,323

Contract settlement loss (2)

1,386

Facility shutdown costs (3)

481

1,536

2,017

Non-GAAP operating income

$

19,007

$

16,512

$

8,926

$

51,294

$

25,866

U.S. GAAP operating margin

5.5

%

4.2

%

2.2

%

4.1

%

2.1

%

Non-GAAP operating margin

8.3

%

7.5

%

5.8

%

7.7

%

6.0

%

(1)

Included in this amount for the third quarter of 2020 are primarily non-capitalizable costs incurred in connection with our implementation of a new ERP system and a Sarbanes-Oxley ("SOX") compliance program.

Included in this amount for the second quarter of 2020 are primarily (i) acquisition-related expenses 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) non-capitalizable costs incurred in connection with our implementation of a new ERP system and a Sarbanes-Oxley ("SOX") compliance program.

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

Included in this amount for the nine months ended September 25, 2020 are primarily (i) acquisition-related expenses associated with the IAN retention agreement, and (ii) non-capitalizable costs incurred in connection with our implementation of a new ERP system and a Sarbanes-Oxley ("SOX") compliance program.

Included in this amount for the nine months ended September 27, 2019 are primarily (i) acquisition-related expenses associated with a charge to expense from the extinguishment of an indemnification asset related to our acquisition of Cal‑Weld in 2017 and the IAN retention agreement, (ii) costs associated with restructuring and transitioning key leadership roles, and (iii) non-capitalizable costs incurred with implementing a new ERP system.

(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)

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we expect to complete by the end of the first quarter of 2021. Included in this amount are (i) inventory write-off costs of $1.3 million amount for the second quarter of 2020 and nine months ended September 25, 2020; (ii) severance costs associated with affected employees of $0.2 million, $0.2 million, and $0.4 million for the third quarter of 2020, second quarter of 2020, and nine months ended September 25, 2020, respectively; and (iii) accelerated depreciation charges in excess of pre-shutdown decision run-rate associated with property and equipment expected to be abandoned at the time of facility closure of $0.3 million for the third quarter of 2020 and nine months ended September 25, 2020.

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

Nine Months Ended

September 25,

2020

June 26,

2020

September 27,

2019

September 25,

2020

September 27,

2019

U.S. GAAP net income

$

10,548

$

6,811

$

923

$

20,758

$

2,777

Non-GAAP adjustments:

Amortization of intangible assets

3,338

3,336

3,336

10,008

9,675

Share-based compensation

2,417

2,141

1,792

7,423

4,597

Other non-recurring expense, net (1)

239

195

476

3,124

2,323

Contract settlement loss (2)

1,386

Facility shutdown costs (3)

481

1,536

2,017

Tax adjustments related to non-GAAP adjustments (4)

(2,442

)

(1,450

)

221

(5,508

)

(1,955

)

Non-GAAP net income

$

14,581

$

12,569

$

6,748

$

39,208

$

17,417

U.S. GAAP diluted EPS

$

0.45

$

0.30

$

0.04

$

0.89

$

0.12

Non-GAAP diluted EPS

$

0.62

$

0.54

$

0.30

$

1.69

$

0.77

Shares used to compute diluted EPS

23,347,460

23,066,976

22,718,882

23,199,618

22,629,855

(1)

See footnote 1 on preceding table.

(2)

See footnote 2 on preceding table.

(3)

See footnote 3 on preceding table.

(4)

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

Nine Months Ended

September 25,

2020

June 26,

2020

September 27,

2019

September 25,

2020

September 27,

2019

Net cash provided by (used in) operating activities

$

23,305

$

(4,147

)

$

4,343

$

(1,878

)

$

25,003

Capital expenditures

(2,626

)

(3,195

)

(2,231

)

(8,291

)

(8,348

)

Free cash flow

$

20,679

$

(7,342

)

$

2,112

$

(10,169

)

$

16,655

View source version on businesswire.com: https://www.businesswire.com/news/home/20201102005273/en/

Contacts

Larry Sparks, CFO 510-897-5200
Claire McAdams, IR & Strategic Initiatives 530-265-9899
IR@ichorsystems.com