What changed in this filing

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Item 1. Financial Statements

2024-05-08 compared with 2023-11-07 · 85 added, 129 removed, 300 unchanged (42% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 29,

2024 December 29,

43 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended Nine Months Ended

September 29,

2023 September 30,

2022 September 29,

2023 September 30,

Three Months Ended

2024 March 31,

Net sales $ 201,383 $ 225,870

8 unchanged sentences

Interest expense, net 4,096 4,550

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

Other expense, net 239 784

Loss before income taxes ( 8,076 ) ( 540 )

Income tax expense (benefit) 913 ( 535 )

Net loss $ ( 8,989 ) $ ( 5 )

Net loss per share

Basic $ ( 0.30 ) $ 0.00

Diluted $ ( 0.30 ) $ 0.00

Shares used to compute Net income (loss) per share:

Shares used to compute Net loss per share:

Basic 30,010,971 28,984,878

4 unchanged sentences

(in thousands, except share amounts)

For the three months ending September 29, 2023 Ordinary Shares Additional

Capital Treasury

Shares Retained

Earnings Total

Shareholders'

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

For the three months ending March 29, 2024 Ordinary Shares Additional

Capital Treasury

4 unchanged sentences

Balance at December 29, 2023 29,435,398 $ 3 $ 451,581 4,437,439 $ ( 91,578 ) $ 204,671 $ 564,677

Ordinary shares issued, net of transaction costs 3,833,334 — 136,738 — — — 136,738

Ordinary shares issued from exercise of stock options 110,950 — 2,753 — — — 2,753

3 unchanged sentences

Net loss — — — — — ( 8,989 ) ( 8,989 )

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.

ICHOR HOLDINGS, LTD.

Consolidated Statements of Shareholders’ Equity

(in thousands, except share amounts)

For the three months ending September 30, 2022 Ordinary Shares Additional

Capital Treasury

Shares Retained

Earnings Total

Shareholders'

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

Balance at March 29, 2024 33,467,846 $ 3 $ 593,125 4,437,439 $ ( 91,578 ) $ 195,682 $ 697,232

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

Capital Treasury

8 unchanged sentences

Share-based compensation expense — — 3,637 — — — 3,637

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

Net loss — — — — — ( 5 ) ( 5 )

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

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

2 unchanged sentences

(in thousands)

Nine Months Ended

September 29,

2023 September 30,

Three Months Ended

2024 March 31,

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:

Net loss $ ( 8,989 ) $ ( 5 )

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

Depreciation and amortization 7,556 8,489

12 unchanged sentences

Capital expenditures ( 4,490 ) ( 6,819 )

Cash paid for acquisitions, net of cash acquired — 500

Net cash used in investing activities ( 4,490 ) ( 6,819 )

Cash flows from financing activities:

Issuance of ordinary shares, net of fees 136,738 —

Issuance of ordinary shares under share-based compensation plans 3,335 2,626

Employees' taxes paid upon vesting of restricted share units ( 1,343 ) ( 692 )

Borrowings on revolving credit facility — 25,000

Repayments on revolving credit facility ( 115,000 ) —

Repayments on term loan ( 1,875 ) ( 1,875 )

Net cash provided by (used in) financing activities ( 17,356 ) 10,247

Net decrease in cash ( 10,537 ) ( 19,032 )

Net cash provided by financing activities 21,855 59

Net increase (decrease) in cash 22,169 ( 17,633 )

Cash at beginning of period 79,955 86,470

5 unchanged sentences

Capital expenditures included in accounts payable $ 267 $ 2,426

Right-of-use assets obtained in exchange for new operating lease liabilities, including those acquired through acquisitions $ 3,103 $ 11,158

Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,810 $ 2,261

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

6 unchanged sentences

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.

All dollar figures presented in tables in the notes to the 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.

4 unchanged sentences

References to 2024 and 2023 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 .

The three-month periods ended March 29, 2024 and March 31, 2023 are each 13 weeks.

References to the first quarter of 2024 and 2023 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.

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, 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.

Significant estimates include inventory valuation, uncertain tax positions, valuation allowance on deferred tax assets, and impairment analysis for both definite‑lived intangible assets and goodwill.

Cash and Cash Equivalents

13 unchanged sentences

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.

Most of our contracts contain a single performance obligation and are generally completed within 12 months.

Product sales are recognized at a point-in-time, upon "delivery," as such term is defined within the contract, which is generally at the time of shipment, 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.

2 unchanged sentences

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.

Payment terms vary by customer, but payment is generally due within 15 to 60 days of purchase.

Historically, we have not experienced 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.

Public Offering of Shares

In March 2024, we completed an underwritten public offering of 3.8 million ordinary shares, which included the exercise in full of the underwriters' option to purchase additional ordinary shares.

We received net proceeds from the offering of approximately $ 136.7 million, after deducting the underwriting discount of $ 1.59 per share and incremental offering expenses of $ 0.9 million.

Accounting Pronouncements Recently Issued

In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures (Topic 280).

This ASU updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements.

We are currently evaluating the effect that the adoption of this ASU may have on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740).

This ASU is intended to enhance the transparency, decision usefulness, and effectiveness of income tax disclosures.

The ASU requires a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories.

The ASU also requires a public entity to provide a qualitative description of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state, and foreign taxes as well as by individual jurisdictions.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted.

We are currently evaluating the effect that the adoption of this ASU may have on our consolidated financial statements.

Note 2 – Inventories

Inventories consist of the following:

September 29,

2024 December 29,

6 unchanged sentences

Property and equipment consist of the following:

September 29,

2024 December 29,

8 unchanged sentences

Total property and equipment, net $ 92,792 $ 92,755

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.

Depreciation expense was $ 5.2 million and $ 4.3 million for the first quarter of 2024 and 2023, respectively.

Cloud Computing Implementation Costs

We capitalize implementation costs associated with hosting arrangement that are service contracts.

We capitalize implementation costs associated with hosting arrangements 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.

The balance of capitalized cloud computing implementation costs, net of accumulated amortization, was $ 7.8 million and $ 8.1 million as of March 29, 2024 and December 29, 2023, 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 first quarter of 2024 and 2023, 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

March 29, 2024

Gross value Accumulated

15 unchanged sentences

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.

For purposes of calculating operating lease ROU assets and 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.

As such, we use our incremental borrowing rate based on the information available at the 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.

2 unchanged sentences

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,

Three Months Ended

2024 March 31,

Operating lease cost $ 2,492 $ 2,411

Supplemental cash flow information related to leases is as follows:

Nine Months Ended

September 29,

2023 September 30,

Three Months Ended

2024 March 31,

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

1 unchanged sentence

Supplemental balance sheet information related to leases is as follows:

September 29,

2024 December 29,

1 unchanged sentence

Weighted-average discount rate of operating leases 3.8 % 3.4 %

Future minimum lease payments under non-cancelable leases are as follows as of September 29, 2023:

Future minimum lease payments under non-cancelable leases are as follows as of March 29, 2024:

2024, remaining $ 7,468

5 unchanged sentences

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,

Income tax expense $ 436 $ 477 $ 12,521 $ 3,031

Income (loss) before income taxes $ ( 9,989 ) $ 29,508 $ ( 18,565 ) $ 61,638

Three Months Ended

2024 March 31,

Income tax expense (benefit) $ 913 $ ( 535 )

Loss before income taxes $ ( 8,076 ) $ ( 540 )

Effective income tax rate ( 11.3 ) % 99.1 %

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.

Our effective tax rate for the three months ended March 29, 2024 differs from the statutory rate primarily due to taxes on foreign income that differs from the U.S.

tax rate, including a tax holiday in Singapore from which we will benefit through 2026, and a valuation allowance against U.S.

deferred tax assets.

The ending balance for the unrecognized tax benefits for uncertain tax positions was approximately $ 3.8 million as of March 29, 2024.

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.

As of March 29, 2024, we were not under examination by tax authorities.

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 $ 0.7 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.

Matching contributions were $ 0.7 million and $ 0.9 million for the first quarter of 2024 and 2023, respectively.

Note 8 – Long-Term Debt

Long‑term debt consists of the following:

September 29,

2024 December 29,

15 unchanged sentences

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 %.

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

As of March 29, 2024, our credit facilities bore interest under the BSBY rate option at 7.72 %.

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.

The 2016 Omnibus Incentive 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.

3 unchanged sentences

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.

Share‑based compensation expense across all plans for options, RSUs, and employee share purchase rights was $ 2.4 million and $ 3.6 million for the first quarter of 2024 and 2023.

Stock Options

8 unchanged sentences

Forfeited or expired ( 639 ) $ 21.76

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

Outstanding, March 29, 2024 470,574 $ 24.25 1.6 years $ 6,762

Exercisable, March 29, 2024 464,504 $ 24.28 1.6 years $ 6,660

Restricted Share Units

9 unchanged sentences

Forfeited ( 65,795 ) ( 13,021 ) ( 23,419 ) $ 30.18

Unvested, September 29, 2023 1,059,614 97,299 171,101 $ 30.85

Unvested, March 29, 2024 966,246 77,669 139,065 $ 30.14

Employee Share Purchase Plan

2 unchanged sentences

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.

As of March 29, 2024, approximately 2.1 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,

Net income (loss) $ ( 10,425 ) $ 29,031 $ ( 31,086 ) $ 58,607

Three Months Ended

2024 March 31,

Net loss $ ( 8,989 ) $ ( 5 )

Basic weighted average ordinary shares outstanding 30,010,971 28,984,878

4 unchanged sentences

Securities excluded from the calculation of diluted weighted average ordinary shares outstanding (1) 1,952,000 1,879,000

Net income (loss) per share:

Net loss per share:

Basic $ ( 0.30 ) $ 0.00

2 unchanged sentences

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.

Our CODM, 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.

4 unchanged sentences

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,

Three Months Ended

2024 March 31,

United States of America $ 64,394 $ 89,052

3 unchanged sentences

Total net sales $ 201,383 $ 225,870

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 .

Foreign long-lived assets, exclusive of deferred tax assets, were $ 47.8 million and $ 48.2 million as of March 29, 2024 and December 29, 2023, 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