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 27, 2024 December 29, 2023 Assets Current assets: Cash and cash equivalents $ 116,447 $ 79,955 Accounts receivable, net 84,150 66,721 Inventories 239,359 245,885 Prepaid expenses and other current assets 7,105 8,804 Total current assets 447,061 401,365 Property and equipment, net 89,283 92,755 Operating lease right-of-use assets 35,136 36,611 Other noncurrent assets 14,675 11,912 Deferred tax assets, net 3,366 3,148 Intangible assets, net 50,979 57,288 Goodwill 335,402 335,402 Total assets $ 975,902 $ 938,481 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 80,963 $ 60,490 Accrued liabilities 17,338 14,871 Other current liabilities 6,899 6,638 Current portion of long-term debt 7,500 7,500 Current portion of lease liabilities 10,239 9,463 Total current liabilities 122,939 98,962 Long-term debt, less current portion, net 122,782 241,183 Lease liabilities, less current portion 26,090 28,187 Deferred tax liabilities, net 1,169 1,169 Other non-current liabilities 5,647 4,303 Total liabilities 278,627 373,804 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; 33,724,917 and 29,435,398 shares outstanding, respectively; 38,162,356 and 33,872,837 shares issued, respectively) 3 3 Additional paid in capital 601,056 451,581 Treasury shares at cost ( 4,437,439 shares) ( 91,578 ) ( 91,578 ) Retained earnings 187,794 204,671 Total shareholders’ equity 697,275 564,677 Total liabilities and shareholders’ equity $ 975,902 $ 938,481 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 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023 Net sales $ 211,139 $ 196,761 $ 615,749 $ 607,639 Cost of sales 183,348 172,692 539,407 524,588 Gross profit 27,791 24,069 76,342 83,051 Operating expenses: Research and development 5,872 5,188 17,168 14,689 Selling, general, and administrative 20,227 20,066 59,253 59,733 Amortization of intangible assets 2,077 3,639 6,309 11,565 Total operating expenses 28,176 28,893 82,730 85,987 Operating loss ( 385 ) ( 4,824 ) ( 6,388 ) ( 2,936 ) Interest expense, net 1,638 5,136 7,592 14,716 Other expense, net 587 29 876 913 Loss before income taxes ( 2,610 ) ( 9,989 ) ( 14,856 ) ( 18,565 ) Income tax expense 166 436 2,021 12,521 Net loss $ ( 2,776 ) $ ( 10,425 ) $ ( 16,877 ) $ ( 31,086 ) Net loss per share Basic $ ( 0.08 ) $ ( 0.36 ) $ ( 0.52 ) $ ( 1.07 ) Diluted $ ( 0.08 ) $ ( 0.36 ) $ ( 0.52 ) $ ( 1.07 ) Shares used to compute Net loss per share: Basic 33,700,246 29,297,347 32,419,762 29,132,879 Diluted 33,700,246 29,297,347 32,419,762 29,132,879 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 27, 2024 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders' Equity Shares Amount Shares Amount Balance at June 28, 2024 33,629,331 $ 3 $ 595,881 4,437,439 $ ( 91,578 ) $ 190,570 $ 694,876 Ordinary shares issued from exercise of stock options 7,309 — 170 — — — 170 Ordinary shares issued from vesting of restricted share units 43,290 — ( 953 ) — — — ( 953 ) Ordinary shares issued from employee share purchase plan 44,987 — 1,286 — — — 1,286 Share-based compensation expense — — 4,672 — — — 4,672 Net loss — — — — — ( 2,776 ) ( 2,776 ) Balance at September 27, 2024 33,724,917 $ 3 $ 601,056 4,437,439 $ ( 91,578 ) $ 187,794 $ 697,275 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 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 nine months ending September 27, 2024 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders' Equity Shares Amount Shares Amount 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 149,640 — 3,670 — — — 3,670 Ordinary shares issued from vesting of restricted share units 225,505 — ( 4,225 ) — — — ( 4,225 ) Ordinary shares issued from employee share purchase plan 81,040 — 2,307 — — — 2,307 Share-based compensation expense — — 10,985 — — — 10,985 Net loss — — — — — ( 16,877 ) ( 16,877 ) Balance at September 27, 2024 33,724,917 $ 3 $ 601,056 4,437,439 $ ( 91,578 ) $ 187,794 $ 697,275 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. 4 ICHOR HOLDINGS, LTD. Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 27, 2024 September 29, 2023 Cash flows from operating activities: Net loss $ ( 16,877 ) $ ( 31,086 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 22,768 26,036 Share-based compensation 10,985 12,666 Deferred income taxes ( 218 ) 9,388 Amortization of debt issuance costs 349 349 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net ( 17,429 ) 32,971 Inventories 6,526 16,760 Prepaid expenses and other assets 3,060 8,610 Accounts payable 22,746 ( 34,756 ) Accrued liabilities 2,845 ( 7,106 ) Other liabilities ( 4,387 ) ( 13,774 ) Net cash provided by operating activities 30,368 20,058 Cash flows from investing activities: Capital expenditures ( 13,238 ) ( 13,239 ) Net cash used in investing activities ( 13,238 ) ( 13,239 ) Cash flows from financing activities: Issuance of ordinary shares, net of fees 136,738 — Issuance of ordinary shares under share-based compensation plans 5,599 6,151 Employees' taxes paid upon vesting of restricted share units ( 4,225 ) ( 2,882 ) Repayments on revolving credit facility ( 115,000 ) ( 15,000 ) Repayments on term loan ( 3,750 ) ( 5,625 ) Net cash provided by (used in) financing activities 19,362 ( 17,356 ) Net increase (decrease) in cash 36,492 ( 10,537 ) Cash at beginning of period 79,955 86,470 Cash at end of period $ 116,447 $ 75,933 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 9,201 $ 15,132 Cash paid during the period for taxes, net of refunds $ 1,804 $ 3,852 Supplemental disclosures of non-cash activities: Capital expenditures included in accounts payable $ 569 $ 145 Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,671 $ 3,103 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 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. 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 29, 2023. Year End We use a 52- or 53-week fiscal year ending on the last Friday in December. Our fiscal years ending December 27, 2024 and December 29, 2023 are each 52 weeks. References to 2024 and 2023 relate to the fiscal years then ended, respectively. The three-month periods ended September 27, 2024 and September 29, 2023 are each 13 weeks. References to the third 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, 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, uncertain tax positions, valuation allowance on deferred tax assets, 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 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. 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 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 . 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 ASU 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 prese nted in the financial statements. We are currently evaluating the ASU's impact on the required disclosures. 7 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 27, 2024 December 29, 2023 Raw materials $ 188,553 $ 190,027 Work in process 44,898 36,849 Finished goods 39,908 47,449 Excess and obsolete adjustment ( 34,000 ) ( 28,440 ) Total inventories $ 239,359 $ 245,885 Note 3 – Property and Equipment and Other Noncurrent Assets Property and equipment consist of the following: September 27, 2024 December 29, 2023 Machinery $ 118,387 $ 113,529 Leasehold improvements 47,815 46,129 Computer software, hardware, and equipment 9,054 10,316 Office furniture, fixtures, and equipment 1,327 1,320 Vehicles 395 396 Construction-in-process 8,858 4,216 185,836 175,906 Less accumulated depreciation ( 96,553 ) ( 83,151 ) Total property and equipment, net $ 89,283 $ 92,755 Depreciation expense was $ 5.2 million and $ 4.9 million for the third quarter of 2024 and 2023, respectively. Depreciation expense was $ 15.6 million and $ 13.7 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. Cloud Computing Implementation Costs 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 system. The balance of capitalized cloud computing implementation costs, net of accumulated amortization, was $ 10.0 million and $ 8.1 million as of September 27, 2024 and December 29, 2023, respectively, and is included in other noncurrent assets on our consolidated balance sheets. The related amortization expense, which is included in selling, general, and administrative expense on our consolidated statements of operations, was $ 0.3 million and $ 0.3 million for the third quarter of 2024 and 2023, respectively, and $ 0.8 million and $ 0.8 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. 8 Note 4 – Intangible Assets Definite‑lived intangible assets consist of the following: September 27, 2024 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 73,142 $ ( 26,784 ) $ — $ 46,358 9.9 years Developed technology 11,047 ( 6,426 ) — 4,621 10.0 years Total intangible assets $ 84,189 $ ( 33,210 ) $ — $ 50,979 December 29, 2023 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 105,542 $ ( 53,680 ) $ — $ 51,862 8.7 years Developed technology 11,047 ( 5,621 ) — 5,426 10.0 years Total intangible assets $ 116,589 $ ( 59,301 ) $ — $ 57,288 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 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 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. 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 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023 Operating lease cost $ 2,603 $ 2,384 $ 7,587 $ 7,188 Supplemental cash flow information related to leases is as follows: Nine Months Ended September 27, 2024 September 29, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 7,404 $ 6,953 Supplemental balance sheet information related to leases is as follows: September 27, 2024 December 29, 2023 Weighted-average remaining lease term of operating leases 4.2 years 4.6 years Weighted-average discount rate of operating leases 4.1 % 3.4 % 9 Future minimum lease payments under non-cancelable leases are as follows as of September 27, 2024: 2024, remaining $ 2,537 2025 10,252 2026 9,732 2027 8,883 2028 4,270 Thereafter 3,944 Total future minimum lease payments 39,618 Less imputed interest ( 3,289 ) Total lease liabilities $ 36,329 Note 6 – Income Taxes Income tax information for the periods reported is as follows: Three Months Ended Nine Months Ended September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023 Income tax expense $ 166 $ 436 $ 2,021 $ 12,521 Loss before income taxes $ ( 2,610 ) $ ( 9,989 ) $ ( 14,856 ) $ ( 18,565 ) Effective income tax rate ( 6.4 ) % ( 4.4 ) % ( 13.6 ) % ( 67.4 ) % Our effective tax rate for the three and nine months ended September 27, 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. Our effective tax rate for the three and nine months ended September 29, 2023 differs 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 $ 4.4 million as of September 27, 2024, of which $ 0.5 million relates to estimated interest and penalties. The uncertain tax positions that are reasonably possible to decrease in the next twelve months are insignificant. As of September 27, 2024, we were under examination by California tax authorities. 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 $ 0.6 million and $ 0.7 million for the third quarter of 2024 and 2023, respectively, and $ 2.0 million and $ 2.2 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. 10 Note 8 – Long-Term Debt Long‑term debt consists of the following: September 27, 2024 December 29, 2023 Term loan $ 131,250 $ 135,000 Revolving credit facility — 115,000 Total principal amount of long-term debt 131,250 250,000 Less unamortized debt issuance costs ( 968 ) ( 1,317 ) Total long-term debt, net 130,282 248,683 Less current portion ( 7,500 ) ( 7,500 ) Total long-term debt, less current portion, net $ 122,782 $ 241,183 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. As of September 27, 2024, i nterest 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 BSBY Rate is equal to BSBY for a particular tenor matching the respective interest period. 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 three months. As of September 27, 2024, our credit facilities bore interest under the BSBY rate option at 7.19 %. Note 9 – Share‑Based Compensation 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. 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 are 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 $ 4.7 million and $ 4.8 million for the third quarter of 2024 and 2023, respectively, and $ 11.0 million and $ 12.7 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. 11 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 29, 2023 582,163 $ 24.36 Granted — $ — Exercised ( 149,640 ) $ 24.52 Forfeited or expired ( 639 ) $ 21.76 Outstanding, September 27, 2024 431,884 $ 24.30 1.2 years $ 3,285 Exercisable, September 27, 2024 431,884 $ 24.30 1.2 years $ 3,285 Restricted Share Units The following table summarizes RSU activity: Number of RSUs Service condition Performance condition Market condition Weighted average grant-date fair value per share Unvested, December 29, 2023 1,088,083 97,299 171,101 $ 30.37 Granted 410,033 100,941 62,776 $ 40.12 Vested ( 326,285 ) ( 6,609 ) ( 8,617 ) $ 32.15 Forfeited ( 75,277 ) ( 13,021 ) ( 23,419 ) $ 30.22 Unvested, September 27, 2024 1,096,554 178,610 201,841 $ 33.68 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 27, 2024, approximately 2.1 million ordinary shares remain available for purchase under the 2017 ESPP. 12 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 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023 Numerator: Net loss $ ( 2,776 ) $ ( 10,425 ) $ ( 16,877 ) $ ( 31,086 ) Denominator: Basic weighted average ordinary shares outstanding 33,700,246 29,297,347 32,419,762 29,132,879 Dilutive effect of options — — — — Dilutive effect of RSUs — — — — Dilutive effect of ESPP — — — — Diluted weighted average ordinary shares outstanding 33,700,246 29,297,347 32,419,762 29,132,879 Securities excluded from the calculation of diluted weighted average ordinary shares outstanding (1) 1,992,000 2,068,000 2,512,000 2,505,000 Net loss per share: Basic $ ( 0.08 ) $ ( 0.36 ) $ ( 0.52 ) $ ( 1.07 ) Diluted $ ( 0.08 ) $ ( 0.36 ) $ ( 0.52 ) $ ( 1.07 ) (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. Note 11 – Segment Information 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. 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 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023 United States of America $ 64,245 $ 64,529 $ 197,898 $ 215,204 Singapore 87,823 80,223 248,490 232,881 Europe 24,818 28,875 77,474 86,625 Other 34,253 23,134 91,887 72,929 Total net sales $ 211,139 $ 196,761 $ 615,749 $ 607,639 Foreign long-lived assets, exclusive of deferred tax assets, were $ 49.4 million and $ 48.2 million as of September 27, 2024 and December 29, 2023, respectively . 13