Ichor Holdings, Ltd. has recently released its 10-K report, detailing its business operations and financial performance. The company is engaged in the design, engineering, and manufacture of fluid delivery subsystems and components for semiconductor capital equipment, including gas and chemical delivery systems and precision machined components. Ichor primarily markets its products to equipment OEMs in the semiconductor equipment industry, with a global footprint including production facilities in various locations such as California, Minnesota, Oregon, Texas, Singapore, Malaysia, the United Kingdom, Korea, and Mexico.
Financial Metrics:
- Net sales for the year ended December 29, 2023, were $811,120, a decrease from $1,280,069 in the previous year.
- Gross margin was 12.7% in 2023, down from 16.6% in 2022. The non-GAAP gross margin was 13.4% in 2023, down from 17.0% in 2022.
- Operating margin was (1.3)% in 2023, a significant decrease from 6.7% in 2022. The non-GAAP operating margin was 2.9% in 2023, down from 9.8% in 2022.
- The company reported a net loss of $42,985 in 2023, compared to a net income of $72,804 in 2022. The non-GAAP net income was $12,257 in 2023, down from $104,863 in 2022.
- Diluted EPS was $(1.47) in 2023, a decrease from $2.51 in 2022. The non-GAAP diluted EPS was $0.42 in 2023, down from $3.62 in 2022.
Key Factors Affecting the Business:
- Investment in Semiconductor Manufacturing Equipment: The company highlighted the need for OEMs to invest in refining existing products and developing new products to keep pace with the evolving and complex semiconductor device manufacturing.
- Outsourcing of Subsystems by Semiconductor OEMs: Ichor emphasized the continued growth in outsourcing of gas and chemical delivery systems by OEMs, which has impacted its results.
- Cyclicality of Semiconductor Capital Equipment Industry: The company noted the impact of the cyclicality of the semiconductor industry on its sales and results of operations.
- Customer Concentration: Ichor highlighted the significant concentration of its sales in a few customers, particularly Applied Materials, Lam Research, and ASML, which accounted for a combined 82% of sales in 2023.
- Acquisitions: The company discussed the impact of recent acquisitions, including the acquisition of IMG in 2021, on its financial position and results of operations.
- Macroeconomic Conditions: Ichor addressed the challenging macroeconomic conditions, including industry overcapacity, high inflation, supply chain disruptions, and other factors, impacting its ability to fulfill high customer demand.
The company also provided insights into critical accounting estimates and policies that significantly impact its financial statements. As a result of these announcements, the company's shares have moved -2.8% on the market, and are now trading at a price of $43.16. For more information, read the company's full 10-K submission here.
