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Ichor Holdings, Ltd. Announces Third Quarter 2018 Financial Results
Copyright Business Wire 2018

Ichor Holdings,Ltd. (NASDAQ:ICHR), a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment, today announced financial results for the third quarter of fiscal year 2018.

Highlights for the third quarter of 2018:

-- Revenues of $175million;

-- Gross margin on a GAAP basis of 16.1% and 16.2% on a non-GAAP basis;

-- With net earnings of $0.39 per diluted share on a GAAP basis, our non-GAAP diluted EPS was $0.55;

-- Completed $30million of share repurchases, inclusive of $10million under the additional authorization of $50million announced August20th, and in the fourth quarter to date, purchased an additional $20million.

"We are pleased to deliver solid earnings performance in the third quarter, demonstrating the resiliency of our variable operating model during a period of reductions in semiconductor capital equipment spending," commented Tom Rohrs, Chairman and CEO of Ichor. "Year to date, Ichor's revenue growth has outperformed overall industry spending, as we've done consistently for the last several years. For the first nine months of 2018, revenues are up 44% from the same period last year, and gross profits, operating profits, net income and EPS have all grown in excess of that rate. Given our variable manufacturing cost structure, we are able to take action to reduce expenditures in order to continue delivering strong profitability. After four straight years of growing demand for wafer fab equipment, during which period the only two pauses in capital spending were very brief in duration, the industry is now forecasting several quarters of spending levels significantly lower than the first-half 2018 run-rate. Ichor is well-positioned to deliver strong profitability during this period, as we continue executing on our strategy to expand our customer footprint and overall market share through close partnerships with the world's leading semiconductor equipment companies."

U.S. GAAP Financial Results Overview

For the third quarter of 2018, revenue was $175.2million, net income from continuing operations was $9.6million, and net income from continuing operations per diluted share ("diluted EPS") was $0.39. This compares to revenue of $249.0million and $164.5million, net income from continuing operations of $28.0million and $14.3million, and diluted EPS of $1.07 and $0.54, for the second quarter of 2018 and third quarter of 2017, respectively.

Non-GAAP Financial Results Overview

For the third quarter of 2018, non-GAAP adjusted net income from continuing operations was $13.6million and non-GAAP adjusted diluted EPS was $0.55. This compares to non-GAAP adjusted net income from continuing operations of $26.7million and $16.3million, and non-GAAP adjusted diluted EPS of $1.02 and $0.62, for the second quarter of 2018 and third quarter of 2017, respectively.

Fourth Quarter 2018 Financial Outlook

For the fourth quarter of 2018, we expect revenue to be in the range of $140to$150million. We expect GAAP diluted EPS to be in the range of $0.11to$0.19 and non-GAAP adjusted diluted EPS to be in the range of $0.32to$0.40.

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 third quarter of 2018 with cash of $33.0million, a net decrease of $30.4million from the second quarter of 2018, primarily due to share repurchases of $30.3million during the quarter.

The net decrease in cash of $36.3million during the nine months ended September28,2018 from December29,2017 was primarily due to cash flow from operations of $27.4million, proceeds from the issuance of ordinary shares under our share-based compensation plans of $6.1million, and net borrowings on long-term debt of $5.4million, offset by share repurchases of $60.3million, capital expenditures of $11.4million, debt modification costs from the refinancing of our credit facilities in February2018 of $2.1million, and net cash paid in connection with acquisitions of $1.4million.

Our cash from operations during the nine months ended September28,2018 of $27.4million was due to net income of $54.4million and net non-cash charges of $18.2million, partially offset by an increase in our net operating assets and liabilities of $45.2million, net of acquired assets and liabilities. Non-cash charges primarily consist of depreciation and amortization of $17.4million and share-based compensation of $6.3million, partially offset by deferred income taxes of $6.2million. The increase in our net operating assets and liabilities, net of acquired assets and liabilities, was primarily due to a decrease in accounts payable of $48.1million and an increase in accounts receivable of $14.6million, partially offset by a decrease in inventories of $22.6million.

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 from continuing operations, 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 from continuing operations. A table 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 from continuing operations 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 from continuing operations, 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. A table presenting the reconciliation of non-GAAP adjusted net income from continuing operations to U.S. GAAP net income from continuing operations is also included at the end of this press release.

Conference Call

We will conduct a conference call to discuss our third quarter 2018 results and business outlook on November6,2018, at 2:30p.m. Pacific time.

To listen to the conference call via the Internet, please visit the investor relations section of our web site at ir.ichorsystems.com. To listen to the conference call via telephone, please call 844-395-9251 (domestic) or 478-219-0504 (international), conferenceID:8782499.

A taped replay of the webcast will be available shortly after the call on our website or by calling 855-859-2056 (domestic) or 404-537-3406 (international), conferenceID:8782499.

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. We also manufacture 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. www.ichorsystems.com.

We use a 52 or 53 week fiscal year ending on the last Friday in December. The three months ended September28,2018, June29,2018, and September29,2017 were all 13weeks. References to the third and second quarters of 2018 and the third quarter of 2017 relate to the three months ended September28,2018, June29,2018, and September29,2017, respectively.

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 expected revenue, growth, earnings, profitability, and industry trends for the fourth quarter of 2018, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on management's current expectations and assumptions regarding Ichor's business and industry, the economy and other future conditions, 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. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. 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 integration of recent acquisitions with Ichor, including the ability to retain customers, suppliers and key employees. 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 Form10-K filed with the SEC on March13,2018, 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.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20181106005910r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: https://www.businesswire.com/news/home/20181106005910/en/

SOURCE: Ichor Holdings, Ltd.


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