What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-06 · 112 added, 67 removed, 209 unchanged (46% 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 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;

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 tax, 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;

reliance on a very small number of original equipment manufacturers (“OEMs”) for a significant portion of sales;

being unable to attract, hire, integrate and retain key personnel and other necessary employees;

negotiating leverage held by our customers;

2 unchanged sentences

designing, developing and introducing new products that are accepted by OEMs in order to retain our existing customers and obtain new customers;

becoming involved in litigation and regulatory proceedings, which could require significant attention from our management and result in significant expense to us and disruptions in our business;

managing our manufacturing and procurement process effectively;

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

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.

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.

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.

1 unchanged sentence

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.

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

The following table summarizes key financial information for the periods indicated.

1 unchanged sentence

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

2025 March 29,

Three Months Ended Six Months Ended

2025 June 28,

2024 June 27,

2025 June 28,

(dollars in thousands, except per share amounts)

6 unchanged sentences

Non-GAAP net income (loss)

$ 1,097 $ 1,819 $ 5,333 $ (893)

Diluted EPS $ (0.28) $ (0.15) $ (0.41) $ (0.44)

2 unchanged sentences

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.

Overall semiconductor equipment spending in 2025 is anticipated to grow over 2024 levels, particularly in our primary markets of etch and deposition, where current demand remains healthy among our customers.

However, the global trade environment and the outcome of ongoing negotiations between the United States and other countries with respect to tariffs remains uncertain and could materially affect our costs for materials, prices for our products, and demand.

To date, although we have experienced modest increases in costs for certain of our materials, tariffs have not materially impacted demand for our products or costs for materials.

Currently, semiconductors are excluded from the "reciprocal tariffs" and our tariff exemption under the U.S.-Mexico-Canada Agreement remains 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.

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

Three Months Ended

2025 March 29,

Three Months Ended Six Months Ended

2025 June 28,

2024 June 27,

2025 June 28,

(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

2025 March 29,

Three Months Ended Six Months Ended

2025 June 28,

2024 June 27,

2025 June 28,

Net sales 100.0 100.0 100.0 100.0

12 unchanged sentences

Net loss (3.9) (2.5) (2.9) (3.5)

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

Three Months Ended Change

2025 March 29,

Comparison of the Three and Six Months Ended June 27, 2025 and June 28, 2024

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

1 unchanged sentence

Net sales $ 240,285 $ 203,227 $ 37,058 18.2 % $ 484,750 $ 404,610 $ 80,140 19.8 %

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,

The increase in net sales from the three and six months ended June 28, 2024 to the three and six months ended June 27, 2025 was primarily due to increased customer demand as a result of a stronger semiconductor capital equipment spending environment.

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

2 unchanged sentences

Gross profit $ 27,202 $ 25,557 $ 1,645 6.4% $ 55,724 $ 48,551 $ 7,173 14.8%

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.

Gross margin 11.3 % 12.6 % -130 bps 11.5 % 12.0 % -50 bps

The decrease in gross margin from the second quarter of 2024 to the second quarter of 2025 was primarily due to increased material costs, unfavorable sales mix, and inventory write-off costs of $1.6 million associated with the planned exit from our Scotland operations, partially offset by reduced excess and obsolete inventory expense of $1.3 million.

The decrease in gross margin from the six months ended June 28, 2024 to the six months ended June 27, 2025 was primarily due to increased material costs, unfavorable sales mix, and inventory write-off costs of $1.6 million associated with the planned exit from our Scotland operations, partially offset by reduced excess and obsolete inventory expense of $2.9 million.

Research and development

Three Months Ended Change

2025 March 29,

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

1 unchanged sentence

Research and development $ 5,710 $ 5,926 $ (216) (3.6) % $ 11,584 $ 11,296 $ 288 2.5 %

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.

The decrease and increase in research and development expenses from the three and six months ended June 28, 2024 to the three and six months ended June 27, 2025, respectively, was primarily due to fluctuations in material and service costs from our new product development programs and in employee-related expenses, inclusive of share-based compensation expense, and professional legal expenses.

Selling, general, and administrative

Three Months Ended Change

2025 March 29,

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

1 unchanged sentence

Selling, general, and administrative $ 24,254 $ 19,807 $ 4,447 22.5 % $ 45,996 $ 39,026 $ 6,970 17.9 %

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.

The increase in selling, general, and administrative expenses from the second quarter of 2024 to the second quarter of 2025 was primarily due to increased exit disposal costs of $2.0 million associated with the planned exit from our Scotland operations, increased employee health insurance claims of $1.3 million, increased costs associated with software and IT services of $0.5 million, increased outside service provider costs of $0.3 million, increased share-based compensation expense of $0.2 million, and increased severance costs of $0.1 million.

The increase in selling, general, and administrative expenses from the six months ended June 28, 2024 to the six months ended June 27, 2025 was primarily due to increased share based compensation expense of $2.0 million, increased exit disposal costs of $2.0 million associated with the planned exit from our Scotland operations, increased employee health insurance claims of $1.5 million, increased costs associated with software and IT services of $1.0 million, increased outside service provider costs of $0.8 million, and increased severance costs of $0.4 million, partially offset by reduced transaction-related costs associated with our acquisitions pipeline of $0.8 million.

Amortization of intangible assets

Three Months Ended Change

2025 March 29,

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

1 unchanged sentence

Amortization of intangible assets $ 2,078 $ 2,086 $ (8) (0.4) % $ 4,156 $ 4,232 $ (76) (1.8) %

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.

Amortization expense remained substantially unchanged from the three and six months ended June 28, 2024 to the three and six months ended June 27, 2025.

Interest expense, net

Three Months Ended Change

2025 March 29,

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

2 unchanged sentences

Weighted average borrowings outstanding $ 125,666 $ 133,104 $ (7,438) (5.6) % $ 126,614 $ 188,520 $ (61,906) (32.8) %

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.

Weighted average borrowing rate 6.06 % 7.45 % -139 bps 6.15 % 7.53 % -138 bps

The decrease in interest expense, net from the three and six months ended June 28, 2024 to the three and six months ended June 27, 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).

The decrease in our weighted average borrowing rate was due to lower applicable margin as a result of a lower leverage ratio (-49 and -46 bps, respectively) and lower Secured Overnight Financing Rate ("SOFR") rates, the variable portion of our borrowing rate (-90 and -92 bps, respectively).

Other expense, net

Three Months Ended Change

2025 March 29,

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

1 unchanged sentence

Other expense, net $ 193 $ 50 $ 143 286.0 % $ 274 $ 289 $ (15) (5.2) %

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.

The change in other expense, net from the three and six months ended June 28, 2024 to the three and six months ended June 27, 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

2025 March 29,

Three Months Ended Change Six Months Ended Change

2025 June 28,

2024 Amount % June 27,

2025 June 28,

2024 Amount %

2 unchanged sentences

Loss before income taxes $ (6,668) $ (4,170) $ (2,498) 59.9 % $ (9,567) $ (12,246) $ 2,679 (21.9) %

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.

Effective income tax rate -41.1 % -22.6 % -1,850 bps -46.0 % -15.1 % -3,090 bps

The increase in income tax expense from the three and six months ended June 28, 2024 to the three and six months ended June 27, 2025 was primarily due to additional tax expense provisioned in Singapore in connection with Pillar Two minimum tax rules and increased withholding taxes.

Non‑GAAP Financial Results

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Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income, respectively, divided by net sales.

Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP.

Other companies may calculate non-GAAP results differently or may use other measures to evaluate their performance, both of which could reduce the usefulness of our non-GAAP results as a tool for comparison.

Non-GAAP results have limitations as analytical tools, and you should not consider them in isolation or as substitutes for our results reported under GAAP.

Because of these limitations, you should consider non-GAAP results alongside other financial performance measures and results presented in accordance with GAAP.

1 unchanged sentence

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

2025 March 29,

Three Months Ended Six Months Ended

2025 June 28,

2024 June 27,

2025 June 28,

(dollars in thousands)

2 unchanged sentences

Share-based compensation 774 717 1,481 1,493

Facility shutdown costs (1)

1,619 — 1,923 —

Other (2) 378 160 1,161 908

2 unchanged sentences

Non-GAAP gross margin 12.5 % 13.0 % 12.4 % 12.6 %

(1) 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.

(1) Represents costs associated with the exit from our Scotland operations.

Included in this amount for the three and six months ended June 27, 2025 are write-off costs of inventories determined to be obsolete of $1.6 million and severance costs associated with affected employees.

Severance costs totaling $0.3 million incurred during the first quarter of 2025 and previously presented under the heading "Other" have been re-allocated to facility shutdown costs for the three and six months ended June 27, 2025.

(2) Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland operations, as described above).

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,

Three Months Ended Six Months Ended

2025 June 28,

2024 June 27,

2025 June 28,

(dollars in thousands, except per share amounts)

4 unchanged sentences

Transaction-related costs (1) — — — 785

Facility shutdown costs (2)

4,296 — 4,888 —

Other (3) 386 733 1,340 1,600

3 unchanged sentences

(1) Represents transaction-related costs incurred in connection with our acquisitions pipeline.

(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.

(2) Represents costs associated with the exit from our Scotland operations.

Included in this amount for the three and six months ended June 27, 2025 are write-off costs of inventories determined to be obsolete of $1.6 million, an impairment of the facility lease right-of-use asset of $1.3 million, accelerated depreciation charges of $0.6 million, other direct and incremental facility exit-related costs of $0.6 million, and severance costs associated with affected employees.

Severance costs totaling $0.6 million incurred during the first quarter of 2025 and previously presented under the heading "Other" have been re-allocated to facility shutdown costs for the three and six months ended June 27, 2025.

(3) Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland operations, as described above).

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

2025 March 29,

Three Months Ended Six Months Ended

2025 June 28,

2024 June 27,

2025 June 28,

(dollars in thousands, except per share amounts)

4 unchanged sentences

Transaction-related costs (1) — — — 785

Facility shutdown costs (2)

4,296 — 4,888 —

Other (3) 386 733 1,340 1,600

6 unchanged sentences

(1) Represents transaction-related costs incurred in connection with our acquisitions pipeline.

(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.

(2) Represents costs associated with the exit from our Scotland operations.

(3) Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland operations, as described above).

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

13 unchanged sentences

Summary of Cash Flows

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.

We ended the second quarter of 2025 with cash and cash equivalents of $92.2 million, a decrease of $16.4 million from the prior year ended December 27, 2024.

The decrease was primarily due to capital expenditures of $25.8 million and net payments on credit facilities of $3.8 million, partially offset by net cash provided by operating activities of $11.5 million.

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

Three Months Ended

2025 March 29,

Six Months Ended

2025 June 28,

(in thousands)

1 unchanged sentence

Cash used in investing activities (25,772) (7,337)

Cash provided by financing activities 116 21,855

Cash provided by (used in) financing activities (2,142) 19,435

Net increase (decrease) in cash $ (16,445) $ 34,394

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.

Our cash provided by operating activities of $11.5 million for the six months ended June 27, 2025 consisted of net non-cash charges of $27.2 million, consisting primarily of depreciation and amortization of $16.1 million and share-based compensation expense of $8.4 million, partially offset by a net loss of $14.0 million and an increase in net operating assets and liabilities of $1.8 million.

The increase in our net operating assets and liabilities of $1.8 million for the six months ended June 27, 2025, was primarily due to an increase in inventory of $9.3 million and a decrease in other liabilities of $2.9 million, partially offset by a decrease in accounts receivable of $5.8 million and a decrease in prepaid expense and other assets of $4.8 million.

The decrease in cash provided by operating activities from the six months ended June 28, 2024 to the six months ended June 27, 2025 was primarily due to unfavorable changes in working capital of $15.9 million, partially offset by an increase in net non-cash charges of $4.9 million and a decrease in net loss of $0.1 million.

Cash used in investing activities during the six months ended June 27, 2025 and June 28, 2024 consisted of capital expenditures.

Cash used in financing activities during the six months ended June 27, 2025 consisted of net payments on our credit facilities of $3.8 million, partially offset by net proceeds from share-based compensation activity of $1.6 million.

The decrease in cash provided by financing activities from the six months ended June 28, 2024 to the six months ended June 27, 2025 was primarily due to 2024 net proceeds of $136.7 million from our issuance of 3.8 million ordinary shares in the first quarter of 2024 in connection with an underwritten public offering, partially offset by the payoff of our revolving credit facility of $115 million in the first quarter of 2024.

Critical Accounting Estimates

10 unchanged sentences

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