What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-05 · 78 added, 134 removed, 198 unchanged (52% of the section changed)

12 unchanged sentences

All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected.

Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, include geopolitical, economic and market conditions, including high inflation, changes to fiscal and monetary policy, high interest rates, currency fluctuations, challenges in the supply chain and any disruptions in the global economy as a result of the conflicts in Ukraine and the Middle East;

Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, include geopolitical, economic and market conditions, including high inflation, changes to trade, fiscal and monetary policy, high interest rates, currency fluctuations, challenges in the supply chain and any disruptions in the global economy as a result of the conflicts in Ukraine and the Middle East;

dependence on expenditures by manufacturers and cyclical downturns in the semiconductor capital equipment industry;

21 unchanged sentences

Our chemical delivery systems and subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning.

We also provide precision-machined components, weldments, e‑beam and laser-welded components, precision vacuum and hydrogen brazing, surface treatment technologies, and other proprietary products.

We also provide precision-machined components, weldments, electron beam (“e‑beam”) and laser-welded components, precision vacuum and hydrogen brazing and surface treatment technologies, and other proprietary products for the commercial space, aerospace, defense, medical device, and general-industrial industries.

This vertically integrated portion of our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively.

1 unchanged sentence

Any malfunction or material degradation in fluid delivery reduces yields and increases the likelihood of manufacturing defects in these processes.

Most OEMs outsource all or a portion of the design, engineering, and manufacturing of their gas delivery subsystems to a few specialized suppliers, including us.

Most original equipment manufacturers (“OEMs”) outsource all or a portion of the design, engineering, and manufacturing of their gas delivery subsystems to a few specialized suppliers, including us.

Additionally, many OEMs are outsourcing the design, engineering, and manufacturing of their chemical delivery subsystems due to the increased fluid expertise required to manufacture these subsystems.

Outsourcing these subsystems has allowed OEMs to leverage suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes.

Outsourcing these subsystems allows OEMs to leverage suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes.

Outsourcing enables OEMs to reduce their costs and development time, as well as provide growth opportunities for specialized subsystems suppliers like us.

We have a global footprint with production facilities in California, Minnesota, Oregon, Texas, Singapore, Malaysia, the United Kingdom, Korea, and Mexico.

2 unchanged sentences

For a description of our non-GAAP metrics and reconciliations to the most comparable GAAP metrics, please refer below to the section entitled Non-GAAP Financial Results within this report.

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Three Months Ended

2025 March 29,

(dollars in thousands, except per share amounts)

5 unchanged sentences

Net loss $ (4,559) $ (8,989)

Non-GAAP net income $ 4,020 $ 2,097 $ 3,127 $ 13,932

Non-GAAP Net Income (Loss) $ 4,236 $ (2,712)

Diluted EPS $ (0.13) $ (0.30)

1 unchanged sentence

Macroeconomic Conditions and Business Update

The semiconductor industry is cyclical in nature.

The industry entered a cyclical downturn in the fourth quarter of 2022 for the primary markets we serve, leading to reductions in spending on semiconductor capital equipment, which resulted in weakened customer demand.

In particular, industry overcapacity and a number of macroeconomic factors may have contributed to this reduced spending environment, which combined with increased export controls for advanced semiconductor-related goods and services shipped to China and delayed business investment in electronic memory capacity had varying levels of unfavorable consequences to our business.

Although the total market for semiconductor capital equipment has experienced year-over-year stability and growth, inventory digestion at our customers and the relative spending levels within our primary served markets, in particular lower spending levels for deposition and etch equipment, has resulted in demand from our customers persisting at lower levels over the past two years relative to the total semiconductor capital equipment market.

To help mitigate these impacts and to better align our resources and cost structure with current and expected future levels of business, we initiated labor cost reduction initiatives starting in the fourth quarter of 2022, which continued through the second quarter of 2024.

We did not initiate further, or continue, labor cost reduction initiatives in the third quarter of 2024.

While challenging macroeconomic conditions have impacted and will continue to impact our business and customers in the near term, we believe demand for semiconductors, semiconductor capital equipment, and our products will return to growth, fueled by the long-term growing need for more semiconductor productive capacity and enhanced process technologies.

The semiconductor capital equipment industry is inherently cyclical.

Overall semiconductor equipment spending in 2025 is anticipated to grow, particularly in our primary markets of etch and deposition, where current demand remains healthy among our customers.

However, the global trade environment is uncertain and rapidly evolving as numerous countries propose new, increased or retaliatory tariffs.

The outcome of ongoing negotiations between the United States and other countries with respect to these tariffs is highly uncertain, and could significantly affect our costs, prices for our products, and demand.

To date, tariffs have not materially impacted demand for our products, as semiconductors are currently excluded from the "reciprocal tariffs" and our existing tariff exemption under the U.S.-Mexico-Canada Agreement applicable to imports from our operations in Mexico.

However, we cannot provide any assurance that these exclusions and exemptions will remain in place indefinitely, or that any new or expanded tariffs will not have a material adverse impact on our business in the future.

While challenging macroeconomic conditions may persist in the near and intermediate term, we remain confident in our belief that the long-term demand for semiconductors, semiconductor capital equipment, and our products will continue to grow, driven by an increasing need for expanded semiconductor productive capacity and advanced manufacturing process technologies.

Results of Operations

1 unchanged sentence

The period‑to‑period comparison of results is not necessarily indicative of results for future periods.

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Three Months Ended

2025 March 29,

(in thousands)

14 unchanged sentences

The following table sets forth our unaudited results of operations as a percentage of our total sales for the periods presented.

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Three Months Ended

2025 March 29,

Net sales 100.0 100.0

12 unchanged sentences

Net loss (1.9) (4.5)

Comparison of the Three and Nine Months Ended September 27, 2024 and September 29, 2023

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

Comparison of the Three Months Ended March 28, 2025 and March 29, 2024

Three Months Ended Change

2025 March 29,

2024 Amount %

1 unchanged sentence

Net sales $ 244,465 $ 201,383 $ 43,082 21.4 %

The increase in net sales from the three and nine months ended September 29, 2023 to the three and nine months ended September 27, 2024 was primarily due to increased customer demand as a result of a stronger semiconductor capital equipment spending environment.

Further detail is provided above under the section entitled Macroeconomic Conditions and Business Update .

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

The increase in net sales from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to increased customer demand as a result of a stronger semiconductor capital equipment spending environment.

Three Months Ended Change

2025 March 29,

2024 Amount %

2 unchanged sentences

Gross profit $ 28,522 $ 22,994 $ 5,528 24.0%

Gross margin 13.2 % 12.2 % +100 bps 12.4 % 13.7 % -130 bps

The increase in gross margin from the third quarter of 2023 to the third quarter of 2024 was primarily due to lower excess and obsolete inventory expense (+120bps), lower severance costs associated with our global reduction-in-force programs (+40bps), partially offset by unfavorable sales mix and higher fixed factory overhead costs (-20bps).

The decrease in gross margin from the nine months ended September 29, 2023 to the nine months ended September 27, 2024 was primarily due to unfavorable sales mix, increased fixed factory overhead costs (-40bps), and increased excess and obsolete inventory expense (-10bps), partially offset by lower severance costs associated with our global reduction-in-force programs (+20bps).

Gross margin 11.7 % 11.4 % +30 bps

The increase in gross margin from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to lower excess and obsolete inventory expense (+65bps), partially offset by unfavorable sales mix and increased factory overhead costs.

Research and development

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

Three Months Ended Change

2025 March 29,

2024 Amount %

1 unchanged sentence

Research and development $ 5,874 $ 5,370 $ 504 9.4 %

The increase in research and development expenses from the third quarter of 2023 to the third quarter of 2024 was primarily due to increased material and service costs from our new product development programs of $0.5 million and increased employee-related expenses of $0.2 million, inclusive of share-based compensation expense.

The increase from the nine months ended September 29, 2023 to the nine months ended September 27, 2024 was primarily due to increased material and service costs from our new product development programs of $1.7 million and increased employee-related expenses of $0.8 million, inclusive of share-based compensation expense.

The increase in research and development expenses from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to increased material and service costs from our new product development programs of $0.2 million and increased employee-related expenses of $0.3 million, inclusive of share-based compensation expense.

Selling, general, and administrative

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

Three Months Ended Change

2025 March 29,

2024 Amount %

1 unchanged sentence

Selling, general, and administrative $ 21,742 $ 19,219 $ 2,523 13.1 %

Overall, our selling, general, and administrative expenses remained approximately unchanged from the third quarter of 2023 to the third quarter of 2024.

The decrease in selling, general, and administrative expense from the nine months ended September 29, 2023 to the nine months ended September 27, 2024 was primarily due to reduced share-based compensation expense of $2.0 million, partially offset by $0.8 million in transaction-related costs from our acquisitions pipeline and $0.5 million in costs from exiting and consolidating one of our U.S.-based manufacturing facilities incurred during the nine months ended September 27, 2024 only.

The increase in selling, general, and administrative expense from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to increased share based compensation expense of $1.7 million, increased IT system and related support costs of $0.6 million, increase outside service and software provider costs of $0.5 million, and increased severance costs associated with our global reduction-in-force programs of $0.3, partially offset by reduced transaction-related costs associated with our acquisitions pipeline of $0.8 million.

Amortization of intangible assets

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

Three Months Ended Change

2025 March 29,

2024 Amount %

1 unchanged sentence

Amortization of intangible assets $ 2,078 $ 2,146 $ (68) (3.2) %

The decrease in amortization expense from the three and nine months ended September 29, 2023 to the three and nine months ended September 27, 2024 was due to certain intangible assets becoming fully amortized in the second half of 2023.

The decrease in amortization expense from the three months ended March 29, 2024 to the three months ended March 28, 2025 was due to certain intangible assets becoming fully amortized in the second half of 2024.

Interest expense, net

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

Three Months Ended Change

2025 March 29,

2024 Amount %

2 unchanged sentences

Weighted average borrowings outstanding $ 127,562 $ 243,935 $ (116,373) (47.7) %

Weighted average borrowing rate 7.23 % 7.06 % +17 bps 7.43 % 6.60 % +83 bps

The decrease in interest expense, net from the three and nine months ended September 29, 2023 to the three and nine months ended September 27, 2024 was primarily due to decreases in the weighted average amounts borrowed, partially offset by an increase in our weighted average borrowing rate.

Weighted average borrowing rate 6.24 % 7.61 % -137 bps

The decrease in interest expense, net from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to a decrease in our weighted average borrowings outstanding and a decrease in our weighted average borrowing rate.

The reduction in our weighted average borrowings outstanding was primarily due to paying off our revolving credit facility near the end of the first quarter of 2024.

The decrease in our weighted average borrowing rate was due to lower applicable margin as a result of a lower leverage ratio (-41 bps) and lower Secured Overnight Financing Rate ("SOFR") rates, the variable portion of our borrowing rate (-96 bps).

Other expense, net

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

Three Months Ended Change

2025 March 29,

2024 Amount %

1 unchanged sentence

Other expense, net $ 81 $ 239 $ (158) (66.1) %

The change in other expense, net from the three and nine months ended September 29, 2023 to the three and nine months ended September 27, 2024 was primarily due to currency exchange rate fluctuations during the periods related to our local currency payables of our foreign operations.

The change in other expense, net from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to currency exchange rate fluctuations related to our local currency payables and cash holdings of our foreign operations.

Income tax expense

Three Months Ended Change Nine Months Ended Change

September 27,

2024 September 29,

2023 Amount % September 27,

2024 September 29,

Three Months Ended Change

2025 March 29,

2024 Amount %

2 unchanged sentences

Loss before income taxes $ (2,899) $ (8,076) $ 5,177 (64.1) %

Effective income tax rate -6.4 % -4.4 % -200 bps -13.6 % -67.4 % +5,380 bps

The decrease in income tax expense from the third quarter of 2023 to the third quarter of 2024 was primarily due to decreased foreign taxable income.

The decrease in income tax expense from the nine months ended September 29, 2023 to the nine months ended September 27, 2024 was primarily due to recording a valuation allowance against our U.S.

federal and state deferred tax assets in the second quarter of 2023, resulting in an $11.1 million charge to income tax expense.

Because we have a valuation allowance recorded against our U.S.

state and federal deferred income taxes, we did not record tax benefits from our U.S.

taxable losses during the nine months ended September 27, 2024.

Effective income tax rate -57.3 % -11.3 % -4,600 bps

The increase in income tax expense from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to additional tax expense provisioned in Singapore in connection with Pillar Two minimum tax rules and discrete expense from recording a valuation allowance against our Scotland and Korea deferred tax assets in the first quarter of 2025.

Non‑GAAP Financial Results

14 unchanged sentences

The following table presents our unaudited non‑GAAP gross profit and non-GAAP gross margin and a reconciliation from GAAP gross profit, the most comparable GAAP measure, for the periods indicated:

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Three Months Ended

2025 March 29,

(dollars in thousands)

7 unchanged sentences

(1) Represents severance costs associated with our global reduction-in-force programs.

The following table presents our unaudited non‑GAAP operating income and non-GAAP operating margin and a reconciliation from GAAP operating income (loss), the most comparable GAAP measure, for the periods indicated:

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

(dollars in thousands)

GAAP operating income (loss) $ (385) $ (4,824) $ (6,388) $ (2,936)

Additionally, the first quarter of 2025 includes severance costs incurred in connection with the planned exit from our Scotland operations.

The following table presents our unaudited non‑GAAP operating loss and non-GAAP operating margin and a reconciliation from GAAP operating loss, the most comparable GAAP measure, for the periods indicated:

Three Months Ended

2025 March 29,

(dollars in thousands, except per share amounts)

GAAP operating loss $ (1,172) $ (3,741)

Non-GAAP adjustments:

8 unchanged sentences

(2) Represents severance costs associated with our global reduction-in-force programs.

Additionally, for the nine months ended September 27, 2024, this amount includes $0.5 million of costs incurred in connection with exiting and consolidating one of our U.S.-based manufacturing facilities.

Additionally, the first quarter of 2025 includes severance costs incurred in connection with the planned exit from our Scotland operations.

The following table presents our unaudited non‑GAAP net income (loss) and non-GAAP diluted EPS and a reconciliation from GAAP net loss, the most comparable GAAP measure, for the periods indicated.

1 unchanged sentence

the related income tax effects, including current and deferred income tax expense, are included in the adjustment line under the heading "Tax adjustments related to non-GAAP adjustments".

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Three Months Ended

2025 March 29,

(dollars in thousands, except per share amounts)

13 unchanged sentences

(2) Represents severance costs associated with our global reduction-in-force programs.

Additionally, the first quarter of 2025 includes severance costs incurred in connection with the planned exit from our Scotland operations.

(3) Adjusts GAAP income tax expense for the impact of our non-GAAP adjustments, which are presented on a gross basis.

During the second quarter of 2023, we recorded a valuation allowance against our U.S.

federal and state deferred tax assets on a GAAP basis.

In the first quarter of 2024, we determined that the valuation allowance should be recognized against our U.S.

federal and state deferred tax assets on a non-GAAP basis as we were not in a three-year cumulative U.S.

income position on a non-GAAP basis.

Accordingly, from the first quarter of 2024 and forward, tax expense on a GAAP and non-GAAP basis reflects a valuation allowance against our U.S.

federal and state deferred tax assets.

(4) During the second quarter of 2023, we recorded a valuation allowance of $11.1 million against our U.S.

federal and state deferred tax assets.

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.

(4) During the first quarter of 2025, we recorded a valuation allowance against the deferred tax assets from Scotland and Korea operations.

Liquidity and Capital Resources

3 unchanged sentences

Our primary liquidity requirements arise from:

(i) working capital requirements, including procurement of raw materials inventory for use in our factories and employee-related costs, (ii) business acquisitions, (iii) interest and principal payments under our credit facilities, (iv) research and development investments, (v) capital expenditures, and (vi) payment of income taxes.

(i) working capital requirements, including procurement of raw materials inventory for use in our factories and employee-related costs, (ii) business acquisitions, (iii) interest and principal payments under our credit facilities, (iv) research and development investments and capital expenditures, (v) payment of income taxes, and (vi) payments associated with our noncancellable leases and related occupancy costs.

We have no significant long-term purchase commitments related to procuring raw materials inventory.

Our ability to fund these material cash requirements will depend, in part, on our future cash flows, which are determined by our future operating performance, and our continued access to the capital markets and are therefore subject to prevailing global macroeconomic conditions and financial, business, and other factors, some of which are beyond our control.

Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and are therefore subject to prevailing global macroeconomic conditions, such as interest rates, increased tariffs and retaliatory trade policies, geopolitical events, and financial, business, and other factors, some of which are beyond our control.

We believe that our cash and cash equivalents, the amounts available under our credit facilities, and our operating cash flow will be sufficient to fund our business and our current obligations for at least the next 12 months and beyond.

2 unchanged sentences

(i) sales to our customers and the related changes in our net operating assets and liabilities and (ii) proceeds from our credit facilities and equity offerings, when applicable.

Our credit facilities are comprised of a $150.0 million term loan facility and a $250.0 million revolving credit facility, of which $250.0 million remained available to draw on as of September 27, 2024.

Summary of Cash Flows

We ended the third quarter of 2024 with cash and cash equivalents of $116.4 million, an increase of $36.5 million from the prior year ended December 29, 2023.

The increase was primarily due to net proceeds of $136.7 million from our issuance of 3.8 million ordinary shares in March 2024 in connection with an underwritten public offering and net cash provided by operating activities of $30.4 million, partially offset by net payments on credit facilities of $118.8 million and capital expenditures of $13.2 million.

We ended the first quarter of 2025 with cash and cash equivalents of $109.3 million, an increase of $0.6 million from the prior year ended December 27, 2024.

The increase was primarily due to net cash provided by operating activities of $19.0 million and net cash received from share-based compensation of $2.0 million, partially offset by capital expenditures of $18.5 million and net payments on credit facilities of $1.9 million.

The following table sets forth a summary of operating, investing, and financing activities for the periods presented:

Nine Months Ended

September 27,

2024 September 29,

Three Months Ended

2025 March 29,

(in thousands)

1 unchanged sentence

Cash used in investing activities (18,481) (4,490)

Cash provided by (used in) financing activities 19,362 (17,356)

Cash provided by financing activities 116 21,855

Net increase (decrease) in cash $ 612 $ 22,169

Our cash provided by operating activities of $30.4 million for the nine months ended September 27, 2024 consisted of net non-cash charges of $33.9 million, consisting primarily of depreciation and amortization of $22.8 million and share-based compensation expense of $11.0 million, and a decrease in our net operating assets and liabilities of $13.4 million, partially offset by net loss of $16.9 million.

The decrease in our net operating assets and liabilities of $13.4 million during the nine months ended September 27, 2024 was primarily due to an increase in accounts payable of $22.7 million and a decrease in inventories of $6.5 million, partially offset by an increase in accounts receivable of $17.4 million.

Compared to the nine months ended September 29, 2023, higher cash provided by operating activities of $10.3 million in the nine months ended September 27, 2024 was primarily due to $10.7 million in favorable changes in the balances of our working capital accounts.

Cash used in investing activities during the nine months ended September 27, 2024 and September 29, 2023 consisted of capital expenditures.

Cash provided by financing activities during the nine months ended September 27, 2024 consisted of net proceeds of $136.7 million from our issuance of 3.8 million ordinary shares in March 2024 in connection with an underwritten public offering and net proceeds from share-based compensation activity of $1.4 million, partially offset by net payment on our credit facilities of $118.8 million.

Cash used in financing activities during the nine months ended September 29, 2023 consisted of net payments on our credit facilities of $20.6 million, partially offset by net proceeds from share-based compensation activity of $3.3 million.

Our cash provided by operating activities of $19.0 million for the three months ended March 28, 2025 consisted of net non-cash charges of $12.5 million, consisting primarily of depreciation and amortization of $8.1 million and share-based compensation expense of $4.1 million, and a decrease in our net operating assets and liabilities of $11.0 million, partially offset by net loss of $4.6 million.

The decrease in our net operating assets and liabilities of $11.0 million during the three months ended March 28, 2025 was primarily due to an increase in accounts payable of $14.3 million and a decrease in accounts receivable of $6.8 million, partially offset by an increase in inventories of $13.4 million.

The increase in cash provided by operating activities from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to favorable changes in working capital of $7.4 million, a reduction in net loss of $4.4 million, and an increase in net non-cash charges of $2.4 million.

Cash used in investing activities during the three months ended March 28, 2025 and March 29, 2024 consisted of capital expenditures.

Cash provided by financing activities during the three months ended March 28, 2025 consisted of net proceeds from share-based compensation activity of $2.0 million, partially offset by net payment on our credit facilities of $1.9 million.

The decrease in cash provided by financing activities from the three months ended March 29, 2024 to the three months ended March 28, 2025 was primarily due to 2024 net proceeds of $136.7 million from our issuance of 3.8 million ordinary shares in March 2024 in connection with an underwritten public offering which were partially used to make net payments on our credit facilities of $116.9 million.

Critical Accounting Estimates

6 unchanged sentences

The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are identified and described in our annual consolidated financial statements and the notes included in our 2024 Annual Report on Form 10‑K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Please see our 2024 Annual Report on Form 10-K (Part II, Item 7A).

There have been no material changes to this information.

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 2. Management’s Discussion and Analysis