ICHOR HOLDINGS, LTD. 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) ICHOR HOLDINGS, LTD. Consolidated Balance Sheets (in thousands, except share and per share amounts) (unaudited) September 29, 2023 December 30, 2022 Assets Current assets: Cash and cash equivalents $ 75,933 $ 86,470 Accounts receivable, net 103,350 136,321 Inventories 266,900 283,660 Prepaid expenses and other current assets 5,142 7,007 Total current assets 451,325 513,458 Property and equipment, net 96,240 98,055 Operating lease right-of-use assets 36,948 40,557 Other noncurrent assets 12,079 12,926 Deferred tax assets, net 1,934 11,322 Intangible assets, net 60,456 72,022 Goodwill 335,402 335,402 Total assets $ 994,384 $ 1,083,742 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 74,011 $ 110,165 Accrued liabilities 16,176 23,616 Other current liabilities 8,588 15,815 Current portion of long-term debt 7,500 7,500 Current portion of lease liabilities 9,393 9,196 Total current liabilities 115,668 166,292 Long-term debt, less current portion, net 272,942 293,218 Lease liabilities, less current portion 28,556 31,828 Deferred tax liabilities, net 29 29 Other non-current liabilities 4,510 4,879 Total liabilities 421,705 496,246 Shareholders’ equity: Preferred shares ($ 0.0001 par value; 20,000,000 shares authorized; 0 shares issued and outstanding) — — Ordinary shares ($ 0.0001 par value; 200,000,000 shares authorized; 29,375,388 and 28,861,949 shares outstanding, respectively; 33,812,827 and 33,299,388 shares issued, respectively) 3 3 Additional paid in capital 447,684 431,415 Treasury shares at cost ( 4,437,439 shares) ( 91,578 ) ( 91,578 ) Retained earnings 216,570 247,656 Total shareholders’ equity 572,679 587,496 Total liabilities and shareholders’ equity $ 994,384 $ 1,083,742 The accompanying notes are an integral part of these consolidated financial statements. 1 ICHOR HOLDINGS, LTD. Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited) Three Months Ended Nine Months Ended September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 Net sales $ 196,761 $ 355,643 $ 607,639 $ 978,349 Cost of sales 172,692 292,083 524,588 815,396 Gross profit 24,069 63,560 83,051 162,953 Operating expenses: Research and development 5,188 4,859 14,689 14,617 Selling, general, and administrative 20,066 22,195 59,733 66,565 Amortization of intangible assets 3,639 3,959 11,565 13,963 Total operating expenses 28,893 31,013 85,987 95,145 Operating income (loss) ( 4,824 ) 32,547 ( 2,936 ) 67,808 Interest expense, net 5,136 3,249 14,716 6,844 Other expense (income), net 29 ( 210 ) 913 ( 674 ) Income (loss) before income taxes ( 9,989 ) 29,508 ( 18,565 ) 61,638 Income tax expense 436 477 12,521 3,031 Net income (loss) $ ( 10,425 ) $ 29,031 $ ( 31,086 ) $ 58,607 Net income (loss) per share Basic $ ( 0.36 ) $ 1.01 $ ( 1.07 ) $ 2.04 Diluted $ ( 0.36 ) $ 1.00 $ ( 1.07 ) $ 2.02 Shares used to compute Net income (loss) per share: Basic 29,297,347 28,769,135 29,132,879 28,675,898 Diluted 29,297,347 29,050,396 29,132,879 28,965,834 The accompanying notes are an integral part of these consolidated financial statements. 2 ICHOR HOLDINGS, LTD. Consolidated Statements of Shareholders’ Equity (in thousands, except share amounts) (unaudited) For the three months ending September 29, 2023 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders' Equity Shares Amount Shares Amount Balance at June 30, 2023 29,241,561 $ 3 $ 441,883 4,437,439 $ ( 91,578 ) $ 226,995 $ 577,303 Ordinary shares issued from exercise of stock options 90,247 — 1,602 — — — 1,602 Ordinary shares issued from vesting of restricted share units 43,580 — ( 553 ) — — — ( 553 ) Share-based compensation expense — — 4,752 — — — 4,752 Net loss — — — — — ( 10,425 ) ( 10,425 ) Balance at September 29, 2023 29,375,388 $ 3 $ 447,684 4,437,439 $ ( 91,578 ) $ 216,570 $ 572,679 For the nine months ending September 29, 2023 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders' Equity Shares Amount Shares Amount Balance at December 30, 2022 28,861,949 $ 3 $ 431,415 4,437,439 $ ( 91,578 ) $ 247,656 $ 587,496 Ordinary shares issued from exercise of stock options 215,009 — 4,452 — — — 4,452 Ordinary shares issued from vesting of restricted share units 200,809 — ( 2,882 ) — — — ( 2,882 ) Ordinary shares issued from employee share purchase plan 97,621 — 2,033 — — — 2,033 Share-based compensation expense — — 12,666 — — — 12,666 Net loss — — — — — ( 31,086 ) ( 31,086 ) Balance at September 29, 2023 29,375,388 $ 3 $ 447,684 4,437,439 $ ( 91,578 ) $ 216,570 $ 572,679 The accompanying notes are an integral part of these consolidated financial statements. 3 ICHOR HOLDINGS, LTD. Consolidated Statements of Shareholders’ Equity (in thousands, except share amounts) (unaudited) For the three months ending September 30, 2022 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders' Equity Shares Amount Shares Amount Balance at July 1, 2022 28,735,728 $ 3 $ 424,471 4,437,439 $ ( 91,578 ) $ 204,428 $ 537,324 Ordinary shares issued from exercise of stock options 29,777 — 652 — — — 652 Ordinary shares issued from vesting of restricted share units 35,769 — ( 881 ) — — — ( 881 ) Share-based compensation expense — — 3,719 — — — 3,719 Net income — — — — — 29,031 29,031 Balance at September 30, 2022 28,801,274 $ 3 $ 427,961 4,437,439 $ ( 91,578 ) $ 233,459 $ 569,845 For the nine months ending September 30, 2022 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders' Equity Shares Amount Shares Amount Balance at December 31, 2021 28,551,160 $ 3 $ 417,438 4,437,439 $ ( 91,578 ) $ 174,852 $ 500,715 Ordinary shares issued from exercise of stock options 77,545 — 1,690 — — — 1,690 Ordinary shares issued from vesting of restricted share units 130,504 — ( 2,221 ) — — — ( 2,221 ) Ordinary shares issued from employee share purchase plan 42,065 — 929 — — — 929 Share-based compensation expense — — 10,125 — — — 10,125 Net income — — — — — 58,607 58,607 Balance at September 30, 2022 28,801,274 $ 3 $ 427,961 4,437,439 $ ( 91,578 ) $ 233,459 $ 569,845 The accompanying notes are an integral part of these consolidated financial statements. 4 ICHOR HOLDINGS, LTD. Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 29, 2023 September 30, 2022 Cash flows from operating activities: Net income (loss) $ ( 31,086 ) $ 58,607 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 26,036 26,743 Share-based compensation 12,666 10,125 Deferred income taxes 9,388 ( 3,022 ) Amortization of debt issuance costs 349 349 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net 32,971 ( 40,307 ) Inventories 16,760 ( 54,525 ) Prepaid expenses and other assets 8,610 4,031 Accounts payable ( 34,756 ) ( 18,508 ) Accrued liabilities ( 7,106 ) 6,823 Other liabilities ( 13,774 ) 2,363 Net cash provided by (used in) operating activities 20,058 ( 7,321 ) Cash flows from investing activities: Capital expenditures ( 13,239 ) ( 22,458 ) Cash paid for acquisitions, net of cash acquired — 500 Net cash used in investing activities ( 13,239 ) ( 21,958 ) Cash flows from financing activities: Issuance of ordinary shares under share-based compensation plans 6,151 3,093 Employees' taxes paid upon vesting of restricted share units ( 2,882 ) ( 2,221 ) Borrowings on revolving credit facility — 25,000 Repayments on revolving credit facility ( 15,000 ) ( 10,000 ) Repayments on term loan ( 5,625 ) ( 5,625 ) Net cash provided by (used in) financing activities ( 17,356 ) 10,247 Net decrease in cash ( 10,537 ) ( 19,032 ) Cash at beginning of period 86,470 75,495 Cash at end of period $ 75,933 $ 56,463 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 15,132 $ 6,457 Cash paid during the period for taxes, net of refunds $ 3,852 $ 2,335 Supplemental disclosures of non-cash activities: Capital expenditures included in accounts payable $ 145 $ 1,625 Right-of-use assets obtained in exchange for new operating lease liabilities, including those acquired through acquisitions $ 3,103 $ 11,158 The accompanying notes are an integral part of these consolidated financial statements. 5 ICHOR HOLDINGS, LTD. Notes to Consolidated Financial Statements (dollar figures in tables in thousands, except per share amounts) (unaudited) Note 1 – Basis of Presentation and Selected Significant Accounting Policies Basis of Presentation These consolidated unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). All intercompany balances and transactions have been eliminated upon consolidation. All dollar figures presented in tables in the notes to consolidated financial statements are in thousands, except per share amounts. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by the U.S. Securities and Exchange Commission's rules and regulations for interim reporting. These consolidated financial statements should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10‑K for the year ended December 30, 2022. Year End We use a 52- or 53-week fiscal year ending on the last Friday in December. Our fiscal years ending December 29, 2023 and December 30, 2022 are each 52 weeks. References to 2023 and 2022 relate to the fiscal years then ended, respectively. The three-month periods ended September 29, 2023 and September 30, 2022 are each 13 weeks. References to the third quarter of 2023 and 2022 relate to the three-month periods then ended . Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods presented. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from the estimates made by management. Significant estimates include inventory valuation and impairment analysis for both definite‑lived intangible assets and goodwill. Cash and Cash Equivalents Cash and cash equivalents consist of deposits and financial instruments which are readily convertible into cash and have original maturities of 90 days or less at the time of acquisition. Fair Value of Financial Instruments The carrying values of our financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, and long-term debt, net of unamortized debt issuance costs, approximate fair value. 6 Revenue Recognition We recognize revenue when control of promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. This amount is recorded as net sales in our consolidated statements of operations. Transaction price – In most of our contracts, prices are generally determined by a customer-issued purchase order and generally remain fixed over the duration of the contract. Certain contracts contain variable consideration, including early-payment discounts and rebates. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal will not occur. Variable consideration estimates are updated at each reporting date. Historically, we have not incurred significant costs to obtain a contract. All amounts billed to a customer relating to shipping and handling are classified as net sales, while all costs incurred by us for shipping and handling are classified as cost of sales. Performance obligations – Substantially all of our performance obligations pertain to promised goods (“products”), which are primarily comprised of fluid delivery subsystems, weldments, and other components. 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 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 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. Accounts receivable are carried at invoice price less an estimate for doubtful accounts and estimated payment discounts. Payment terms vary by customer, but payment is generally due within 15 - 60 days of purchase. Historically, we have not incurred significant payment issues with our customers. We had no significant contract assets or liabilities on our consolidated balance sheets in any of the periods presented herein . Accounting Pronouncements Recently Adopted 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 ASC Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. We adopted the ASU on the first day of 2023, and it did not have a material impact on our consolidated financial statements. Note 2 – Inventories Inventories consist of the following: September 29, 2023 December 30, 2022 Raw materials $ 201,991 $ 197,726 Work in process 42,857 56,291 Finished goods 45,532 47,186 Excess and obsolete adjustment ( 23,480 ) ( 17,543 ) Total inventories $ 266,900 $ 283,660 7 Note 3 – Property and Equipment and Other Noncurrent Assets Property and equipment consist of the following: September 29, 2023 December 30, 2022 Machinery $ 113,503 $ 90,507 Leasehold improvements 45,296 43,129 Computer software, hardware, and equipment 10,613 9,664 Office furniture, fixtures, and equipment 1,495 1,337 Vehicles 397 401 Construction-in-process 6,038 19,869 177,342 164,907 Less accumulated depreciation ( 81,102 ) ( 66,852 ) Total property and equipment, net $ 96,240 $ 98,055 Depreciation expense was $ 4.9 million and $ 4.4 million for the third quarter of 2023 and 2022, respectively, and $ 13.7 million and $ 12.8 million for the nine months ended September 29, 2023 and September 30, 2022, respectively. Cloud Computing Implementation Costs We capitalize implementation costs associated with hosting arrangement that are service contracts. These costs are recorded to prepaid expenses or other noncurrent assets. To date, these costs have been 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 $ 10.8 million and $ 11.6 million as of September 29, 2023 and December 30, 2022, respectively, and is included in other assets on our consolidated balance sheets. The related amortization expense was $ 0.3 million and $ 0.2 million for the third quarter of 2023 and 2022, respectively, and $ 0.8 million and $ 0.6 million for the nine months ended September 29, 2023 and September 30, 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: September 29, 2023 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 105,542 $ ( 50,782 ) $ — $ 54,760 8.7 years Developed technology 11,047 ( 5,351 ) — 5,696 10.0 years Total intangible assets $ 116,589 $ ( 56,133 ) $ — $ 60,456 December 30, 2022 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 117,022 $ ( 51,337 ) $ — $ 65,685 8.4 years Developed technology 11,047 ( 4,710 ) — 6,337 10.0 years Total intangible assets $ 128,069 $ ( 56,047 ) $ — $ 72,022 8 Note 5 – Leases Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, we use the non-cancelable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. 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 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. As these amounts are variable, they are not included in lease liabilities. The components of lease expense are as follows: Three Months Ended Nine Months Ended September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 Operating lease cost $ 2,384 $ 2,120 $ 7,188 $ 6,404 Supplemental cash flow information related to leases is as follows: Nine Months Ended September 29, 2023 September 30, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,953 $ 5,801 Supplemental balance sheet information related to leases is as follows: September 29, 2023 December 30, 2022 Weighted-average remaining lease term of operating leases 4.8 years 5.3 years Weighted-average discount rate of operating leases 3.2 % 3.0 % Future minimum lease payments under non-cancelable leases are as follows as of September 29, 2023: 2023, remaining $ 2,443 2024 9,212 2025 8,559 2026 8,113 2027 7,120 Thereafter 5,464 Total future minimum lease payments 40,911 Less imputed interest ( 2,962 ) Total lease liabilities $ 37,949 9 Note 6 – Income Taxes Income tax information for the periods reported is as follows: Three Months Ended Nine Months Ended September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 Income tax expense $ 436 $ 477 $ 12,521 $ 3,031 Income (loss) before income taxes $ ( 9,989 ) $ 29,508 $ ( 18,565 ) $ 61,638 Effective income tax rate ( 4.4 ) % 1.6 % ( 67.4 ) % 4.9 % Our effective tax rates for the three and nine months ended September 29, 2023 differ from the statutory rate primarily due to a valuation allowance recorded against our U.S. federal and state deferred tax assets, 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. We recorded an $ 11.1 million valuation allowance in the second quarter of 2023 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. The ending balance for the unrecognized tax benefits for uncertain tax positions was approximately $ 4.0 million as of September 29, 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 September 29, 2023, we were under examination by the Inland Revenue Board of Malaysia for the years 2016 through 2020. Note 7 – Employee Benefit Programs 401(k) Plan We sponsor a 401(k) plan available to employees of our U.S.‑based subsidiaries. Participants may make salary deferral contributions not to exceed 50 % of a participant’s annual compensation or the maximum amount otherwise allowed by law. 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 $ 0.7 million and $ 0.7 million for the third quarter of 2023 and 2022, respectively, and $ 2.2 million and $ 2.3 million for the nine months ended September 29, 2023 and September 30, 2022, respectively. Note 8 – Long-Term Debt Long‑term debt consists of the following: September 29, 2023 December 30, 2022 Term loan $ 136,875 $ 142,500 Revolving credit facility 145,000 160,000 Total principal amount of long-term debt 281,875 302,500 Less unamortized debt issuance costs ( 1,433 ) ( 1,782 ) Total long-term debt, net 280,442 300,718 Less current portion ( 7,500 ) ( 7,500 ) Total long-term debt, less current portion, net $ 272,942 $ 293,218 10 On October 29, 2021, we entered into an amended and restated credit agreement, which includes a group of financial institutions as direct lenders under the agreement. The credit agreement includes a $ 150.0 million term loan facility and a $ 250.0 million revolving credit facility (together, “credit facilities”). Term loan principal payments of $ 1.9 million are due on a quarterly basis. 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. The Base Rate is equal to the higher of i) the Prime Rate, ii) the Federal Funds Rate plus 0.5 %, or iii) the BSBY Rate plus 1.00 %. The applicable margin on Base Rate and BSBY Rate loans is 0.375 to 1.375 % and 1.375 to 2.375 % per annum, respectively, depending on our leverage ratio, which is based on trailing 12-month Consolidated EBITDA, as defined in our credit agreement. We are also charged a commitment fee of 0.175 % to 0.350 %, depending on our leverage ratio, on the unused portion of our revolving credit facility. Base Rate interest payments and commitment fees are due quarterly. 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. As of September 29, 2023, our credit facilities bore interest under the BSBY rate option at 7.26 %. Note 9 – Share‑Based Compensation The 2016 Omnibus Incentive Plan (the “2016 Plan”) provides for grants of share‑based awards to employees, directors, and consultants. Awards may be in the form of stock options (“options”), tandem and non‑tandem stock appreciation rights, restricted share awards or restricted share units (“RSUs”), performance awards, and other share‑based awards. 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 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 $ 4.8 million and $ 3.7 million for the third quarter of 2023 and 2022, respectively, and $ 12.7 million and $ 10.1 million for the nine months ended September 29, 2023 and September 30, 2022, respectively. Stock Options The following table summarizes option activity: Number of Stock Options Service condition Weighted average exercise price per share Weighted average remaining contractual term Aggregate intrinsic value Outstanding, December 30, 2022 805,115 $ 23.35 Granted — $ — Exercised ( 215,009 ) $ 20.71 Forfeited or expired ( 7,068 ) $ 21.84 Outstanding, September 29, 2023 583,038 $ 24.34 2.3 years $ 3,915 Exercisable, September 29, 2023 556,326 $ 24.35 2.2 years $ 3,728 11 Restricted Share Units The following table summarizes RSU activity: Number of Restricted Share Units Service condition Performance condition Market condition Weighted average grant-date fair value per share Unvested, December 30, 2022 860,595 57,562 86,342 $ 30.26 Granted 551,256 47,433 96,301 $ 31.40 Vested ( 294,461 ) — — $ 29.46 Forfeited ( 57,776 ) ( 7,696 ) ( 11,542 ) $ 30.55 Unvested, September 29, 2023 1,059,614 97,299 171,101 $ 30.85 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 six-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 September 29, 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 Nine Months Ended September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 Numerator: Net income (loss) $ ( 10,425 ) $ 29,031 $ ( 31,086 ) $ 58,607 Denominator: Basic weighted average ordinary shares outstanding 29,297,347 28,769,135 29,132,879 28,675,898 Dilutive effect of options — 139,045 — 191,909 Dilutive effect of RSUs — 136,733 — 96,199 Dilutive effect of ESPP — 5,483 — 1,828 Diluted weighted average ordinary shares outstanding 29,297,347 29,050,396 29,132,879 28,965,834 Securities excluded from the calculation of diluted weighted average ordinary shares outstanding (1) 2,068,000 462,000 2,505,000 880,000 Net income (loss) per share: Basic $ ( 0.36 ) $ 1.01 $ ( 1.07 ) $ 2.04 Diluted $ ( 0.36 ) $ 1.00 $ ( 1.07 ) $ 2.02 (1) Represents potentially dilutive options and RSUs excluded from the calculation of diluted weighted average ordinary shares outstanding, because including them would have been antidilutive under the treasury stock method. 12 Note 11 – Segment Information Our Chief Operating Decision Maker, the Chief Executive Officer, reviews our results of operations on a consolidated level, and executive staff is structured by function rather than by product category. Additionally, key resources, decisions, and assessment of performance are analyzed at a company‑wide level. Therefore, we operate in one operating segment. Foreign operations are conducted primarily through our wholly owned subsidiaries in Singapore and Malaysia and, to a lesser degree, Scotland, Korea, and Mexico. Our principal markets include North America, Asia, and, to a lesser degree, Europe. Sales by geographic area represents sales to unaffiliated customers based upon the location to which the products were shipped. The following table sets forth sales by geographic area: Three Months Ended Nine Months Ended September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 United States of America $ 64,529 $ 156,909 $ 215,204 $ 457,753 Singapore 80,223 132,562 232,881 350,255 Europe 28,875 26,886 86,625 76,084 Other 23,134 39,286 72,929 94,257 Total net sales $ 196,761 $ 355,643 $ 607,639 $ 978,349 Foreign long-lived assets, exclusive of deferred tax assets, were $ 48.9 million and $ 52.8 million as of September 29, 2023 and December 30, 2022, respectively . 13