What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 90 added, 55 removed, 317 unchanged (31% of the section changed)

48 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended

2023 April 1,

Three Months Ended Six Months Ended

2022 June 30,

Net sales $ 185,008 $ 329,560 $ 410,878 $ 622,706

6 unchanged sentences

Total operating expenses 28,648 30,665 57,094 64,132

Operating income 4,794 10,465

Operating income (loss) ( 2,906 ) 24,796 1,888 35,261

Interest expense, net 5,030 2,063 9,580 3,595

Other expense, net 784 84

Other expense (income), net 100 ( 548 ) 884 ( 464 )

Income (loss) before income taxes ( 8,036 ) 23,281 ( 8,576 ) 32,130

Income tax expense (benefit) ( 535 ) 810

Income tax expense 12,620 1,744 12,085 2,554

Net income (loss) $ ( 20,656 ) $ 21,537 $ ( 20,661 ) $ 29,576

9 unchanged sentences

(in thousands, except share amounts)

For the three months ending March 31, 2023 Ordinary Shares Additional

For the three months ending June 30, 2023 Ordinary Shares Additional

Capital Treasury

3 unchanged sentences

Shares Amount Shares Amount

Balance at March 31, 2023 29,034,946 $ 3 $ 437,388 4,437,439 $ ( 91,578 ) $ 247,651 $ 593,464

Ordinary shares issued from exercise of stock options 31,996 — 724 — — — 724

Ordinary shares issued from vesting of restricted share units 124,702 — ( 1,637 ) — — — ( 1,637 )

Ordinary shares issued from employee share purchase plan 49,917 — 1,131 — — — 1,131

Share-based compensation expense — — 4,277 — — — 4,277

Net loss — — — — — ( 20,656 ) ( 20,656 )

Balance at June 30, 2023 29,241,561 $ 3 $ 441,883 4,437,439 $ ( 91,578 ) $ 226,995 $ 577,303

For the six months ending June 30, 2023 Ordinary Shares Additional

Capital Treasury

Shares Retained

Earnings Total

Shareholders'

Shares Amount Shares Amount

Balance at December 30, 2022 28,861,949 $ 3 $ 431,415 4,437,439 $ ( 91,578 ) $ 247,656 $ 587,496

4 unchanged sentences

Net loss — — — — — ( 20,661 ) ( 20,661 )

Balance at March 31, 2023 29,034,946 $ 3 $ 437,388 4,437,439 $ ( 91,578 ) $ 247,651 $ 593,464

For the three months ending April 1, 2022 Ordinary Shares Additional

Balance at June 30, 2023 29,241,561 $ 3 $ 441,883 4,437,439 $ ( 91,578 ) $ 226,995 $ 577,303

The accompanying notes are an integral part of these consolidated financial statements.

ICHOR HOLDINGS, LTD.

Consolidated Statements of Shareholders’ Equity

(in thousands, except share amounts)

For the three months ending July 1, 2022 Ordinary Shares Additional

Capital Treasury

3 unchanged sentences

Shares Amount Shares Amount

Balance at April 1, 2022 28,628,907 $ 3 $ 420,513 4,437,439 $ ( 91,578 ) $ 182,891 $ 511,829

Ordinary shares issued from exercise of stock options 5,015 — 83 — — — 83

Ordinary shares issued from vesting of restricted share units 59,741 — ( 563 ) — — — ( 563 )

Ordinary shares issued from employee share purchase plan 42,065 — 929 — — — 929

Share-based compensation expense — — 3,509 — — — 3,509

Net income — — — — — 21,537 21,537

Balance at July 1, 2022 28,735,728 $ 3 $ 424,471 4,437,439 $ ( 91,578 ) $ 204,428 $ 537,324

For the six months ending July 1, 2022 Ordinary Shares Additional

Capital Treasury

Shares Retained

Earnings Total

Shareholders'

Shares Amount Shares Amount

Balance at December 31, 2021 28,551,160 $ 3 $ 417,438 4,437,439 $ ( 91,578 ) $ 174,852 $ 500,715

1 unchanged sentence

Ordinary shares issued from vesting of restricted share units 94,735 — ( 1,340 ) — — — ( 1,340 )

Ordinary shares issued from employee share purchase plan 42,065 — 929 — — — 929

Share-based compensation expense — — 6,406 — — — 6,406

Net income — — — — — 29,576 29,576

Balance at April 1, 2022 28,628,907 $ 3 $ 420,513 4,437,439 $ ( 91,578 ) $ 182,891 $ 511,829

Balance at July 1, 2022 28,735,728 $ 3 $ 424,471 4,437,439 $ ( 91,578 ) $ 204,428 $ 537,324

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

2023 April 1,

Six Months Ended

Cash flows from operating activities:

12 unchanged sentences

Other liabilities ( 11,619 ) ( 3,360 )

Net cash used in operating activities ( 10,873 ) ( 36,278 )

Net cash provided by (used in) operating activities 16,070 ( 26,895 )

Cash flows from investing activities:

4 unchanged sentences

Employees' taxes paid upon vesting of restricted share units ( 2,329 ) ( 1,340 )

Borrowings on revolving credit facility — 25,000

Repayments on revolving credit facility ( 5,000 ) ( 10,000 )

Repayments on term loan ( 3,750 ) ( 3,750 )

22 unchanged sentences

Our fiscal years ending December 29, 2023 and December 30, 2022 each are 52 weeks.

References to 2023 and 2022 relate to the fiscal years then ended.

The three-month periods ended March 31, 2023 and April 1, 2022 each are 13 weeks.

References to the first quarter of 2023 and 2022 relate to the three-month periods then ended .

References to 2023 and 2022 relate to the fiscal years then ended, respectively.

The three-month periods ended June 30, 2023 and July 1, 2022 each are 13 weeks.

References to the second quarter of 2023 and 2022 relate to the three-month periods then ended .

Use of Estimates

19 unchanged sentences

Most of our contracts contain a single performance obligation and are generally completed within twelve months .

Product sales are recognized at a point-in-time, generally upon delivery, as such term is defined within the contract, as that is when control of the promised good has transferred.

Product sales are recognized at a point-in-time, generally upon delivery, as such term is defined within the contract, as that is when control of the product has transferred.

Products are covered by a standard assurance warranty, generally extended for a period of one to two years depending on the customer, which promises that delivered products conform to contract specifications.

As such, we account for such warranties under ASC 460, Guarantees , and not as a separate performance obligation .

As such, we account for such warranties under Accounting Standards Codification ("ASC") Topic 460, Guarantees , and not as a separate performance obligation .

Contract balances – Accounts receivable represents our unconditional right to receive consideration from our customers.

4 unchanged sentences

Accounting Pronouncements Recently Adopted

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") No.

2021‑08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) .

This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606.

At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts.

20 unchanged sentences

Total property and equipment, net $ 98,914 $ 98,055

Depreciation expense was $ 4.3 million and $ 4.0 million for the first quarter of 2023 and 2022, respectively.

Depreciation expense was $ 4.4 million and $ 4.4 million for the second quarter of 2023 and 2022, respectively, and $ 8.7 million and $ 8.4 million for the six months ended June 30, 2023 and July 1, 2022, respectively.

Cloud Computing Implementation Costs

1 unchanged sentence

These costs are recorded to prepaid expenses or other noncurrent assets.

To-date, these costs are those incurred to implement a new company-wide ERP system.

The balance of capitalized cloud computing implementation costs, net of accumulated amortization, was $ 11.4 million and $ 11.6 million as of March 31, 2023 and December 30, 2022, respectively, and is included in other assets on our consolidated balance sheets.

The related amortization expense was $ 0.2 million and $ 0.2 million during the first quarter of 2023 and 2022, respectively, and is included in selling, general, and administrative expense on our consolidated statements of operations.

To-date, these costs are those incurred to implement a new company-wide enterprise resource planning ("ERP") system.

The balance of capitalized cloud computing implementation costs, net of accumulated amortization, was $ 11.1 million and $ 11.6 million as of June 30, 2023 and December 30, 2022, respectively, and is included in other assets on our consolidated balance sheets.

The related amortization expense was $ 0.2 million and $ 0.2 million for the second quarter of 2023 and 2022, respectively, and $ 0.5 million and $ 0.4 million for the six months ended June 30, 2023 and July 1, 2022, respectively, and is included in selling, general, and administrative expense on our consolidated statements of operations.

Note 4 – Intangible Assets

Definite‑lived intangible assets consist of the following:

March 31, 2023

June 30, 2023

Gross value Accumulated

19 unchanged sentences

As such, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

We lease facilities under various non-cancelable operating leases expiring through 2031 .

We lease facilities under non-cancelable operating leases that expire at various dates during the years 2024 through 2031 .

In addition to base rental payments, we are generally responsible for our proportionate share of operating expenses, including facility maintenance, insurance, and property taxes.

1 unchanged sentence

The components of lease expense are as follows:

Three Months Ended

2023 April 1,

Three Months Ended Six Months Ended

2022 June 30,

Operating lease cost $ 2,393 $ 2,239 $ 4,804 $ 4,284

Supplemental cash flow information related to leases is as follows:

Three Months Ended

2023 April 1,

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

Weighted-average discount rate of operating leases 3.2 % 3.0 %

Future minimum lease payments under non-cancelable leases are as follows as of March 31, 2023:

Future minimum lease payments under non-cancelable leases are as follows as of June 30, 2023:

2023, remaining $ 4,816

5 unchanged sentences

Income tax information for the periods reported is as follows:

Three Months Ended

2023 April 1,

Income tax expense (benefit) $ ( 535 ) $ 810

Three Months Ended Six Months Ended

2022 June 30,

Income tax expense $ 12,620 $ 1,744 $ 12,085 $ 2,554

Income (loss) before income taxes $ ( 8,036 ) $ 23,281 $ ( 8,576 ) $ 32,130

Effective income tax rate ( 157.0 ) % 7.5 % ( 140.9 ) % 7.9 %

Our effective tax rates for the three months ended March 31, 2023 and April 1, 2022 differ from the statutory rate primarily due to taxes on foreign income that differ from the U.S.

tax rate, including a tax holiday in Singapore.

Our effective tax rate of 99.1 % for the first quarter of 2023 is primarily due to projected pre-tax loss in the U.S.

for 2023, which generates tax benefits, partially offset by projected pre-tax income in Singapore, our primary source of non-U.S.

pre-tax income and for which we participate in a tax holiday through 2026.

The ending balance for the unrecognized tax benefits for uncertain tax positions was approximately $ 4.5 million at March 31, 2023.

Our effective tax rates for the three and six months ended June 30, 2023 differ from the statutory rate primarily due to an $ 11.1 million valuation allowance recorded against our U.S.

federal and state deferred tax assets during the second quarter of 2023, as well as taxes on foreign income that differ from the U.S.

tax rate, including a tax holiday in Singapore, from which we will benefit through 2026.

The valuation allowance was recorded based on an assessment of available positive and negative evidence, including an estimate of being in a three-year cumulative loss position in the U.S.

by the end of 2023, projections of future taxable income, and other quantitative and qualitative information.

We intend to maintain a full valuation allowance on our U.S.

federal and state net deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of the valuation allowance.

Our effective tax rates for the three and six months ended July 1, 2022 differ from the statutory rate primarily due to taxes on foreign income that differ from the U.S.

tax rate, including our tax holiday in Singapore, and the impact of share-based compensation activity.

The ending balance for the unrecognized tax benefits for uncertain tax positions was approximately $ 3.8 million as of June 30, 2023.

The related interest and penalties were insignificant.

The uncertain tax positions that are reasonably possible to decrease in the next twelve months are insignificant.

As of March 31, 2023, we were under examination by the Inland Revenue Board of Malaysia for the years 2016 to 2020.

As of June 30, 2023, we were under examination by the Inland Revenue Board of Malaysia for the years 2016 through 2020.

Note 7 – Employee Benefit Programs

2 unchanged sentences

Eligible employees receive a discretionary matching contribution equal to 50 % of a participant’s deferral, up to an annual matching maximum of 4 % of a participant’s annual compensation.

Matching contributions were $ 0.9 million and $ 1.0 million for the first quarter of 2023 and 2022, respectively.

Matching contributions were $ 0.6 million and $ 0.7 million for the second quarter of 2023 and 2022, respectively, and $ 1.5 million and $ 1.6 million for the six months ended June 30, 2023 and July 1, 2022, respectively.

Note 8 – Long-Term Debt

11 unchanged sentences

Term loan principal payments of $ 1.9 million are due on a quarterly basis.

The credit facilities mature on October 29, 2026.

The credit facilities mature and amounts due thereunder become payable on October 29, 2026.

Interest is charged at either the Base Rate or the Bloomberg Short-Term Bank Yield (“BSBY”) Rate (as such terms are defined in the credit agreement) at our option, plus an applicable margin.

4 unchanged sentences

BSBY Rate interest payments are due on the last day of the applicable interest period, or quarterly for applicable interest periods longer than 3 months.

At March 31, 2023, our credit facilities bore interest under the BSBY rate option of 6.51 %.

As of June 30, 2023, our credit facilities bore interest under the BSBY rate option of 6.79 %.

Note 9 – Share‑Based Compensation

2 unchanged sentences

Forfeited or expired awards are returned to the incentive plan pool for future grants.

Awards generally vest over four years , 25 % on the first anniversary of the date of grant and quarterly thereafter over the remaining 3 years.

Awards generally vest over four years , 25 % on the first anniversary of the date of grant and quarterly thereafter over the remaining three years .

Upon vesting of RSUs, shares are withheld to cover statutory minimum withholding taxes.

Shares withheld are not reflected as an issuance of ordinary shares within our consolidated statements of shareholders’ equity, as the shares were never issued, and the associated tax payments are reflected as financing activities within our consolidated statements of cash flows.

Share‑based compensation expense across all plans for options, RSUs, and employee share purchase rights was $ 3.6 million and $ 2.9 million for the first quarter of 2023 and 2022.

Share‑based compensation expense across all plans for options, RSUs, and employee share purchase rights was $ 4.3 million and $ 3.5 million for the second quarter of 2023 and 2022, respectively, and $ 7.9 million and $ 6.4 million for the six months ended June 30, 2023 and July 1, 2022, respectively.

Stock Options

8 unchanged sentences

Forfeited or expired ( 7,068 ) $ 21.84

Outstanding, March 31, 2023 710,905 $ 23.41 2.6 years $ 6,634

Exercisable, March 31, 2023 634,134 $ 23.36 2.4 years $ 5,951

Outstanding, June 30, 2023 673,285 $ 23.46 2.3 years $ 9,452

Exercisable, June 30, 2023 635,441 $ 23.40 2.2 years $ 8,961

Restricted Share Units

9 unchanged sentences

Forfeited ( 57,543 ) ( 6,336 ) ( 9,502 ) $ 30.17

Unvested, March 31, 2023 866,396 57,562 86,342 $ 29.78

Unvested, June 30, 2023 1,087,570 98,659 173,141 $ 30.80

Employee Share Purchase Plan

The 2017 Employee Stock Purchase Plan (the “2017 ESPP”) grants employees the ability to designate a portion of their base-pay to purchase ordinary shares at a price equal to 85 % of the fair market value of our ordinary shares on the first or last day of each 6 month purchase period.

Purchase periods begin on January 1 or July 1 and end on June 30 or December 31, or the next business day if such date is not a business day.

Shares are purchased on the last day of the purchase period.

As of March 31, 2023, approximately 2.2 million ordinary shares remain available for purchase under the 2017 ESPP.

As of June 30, 2023, approximately 2.2 million ordinary shares remain available for purchase under the 2017 ESPP.

Note 10 – Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share and a reconciliation of the numerator and denominator used in the calculation:

Three Months Ended

2023 April 1,

Three Months Ended Six Months Ended

2022 June 30,

Net income (loss) $ ( 20,656 ) $ 21,537 $ ( 20,661 ) $ 29,576

17 unchanged sentences

The following table sets forth sales by geographic area:

Three Months Ended

2023 April 1,

Three Months Ended Six Months Ended

2022 June 30,

United States of America $ 61,623 $ 158,374 $ 150,675 $ 300,844

3 unchanged sentences

Total net sales $ 185,008 $ 329,560 $ 410,878 $ 622,706

Foreign long-lived assets, exclusive of deferred tax assets, were $ 52.5 million and $ 52.8 million at March 31, 2023 and December 30, 2022, respectively .

Foreign long-lived assets, exclusive of deferred tax assets, were $ 50.5 million and $ 52.8 million as of June 30, 2023 and December 30, 2022, respectively .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements