[November 06, 2018] |
|
Ichor Holdings, Ltd. Announces Third Quarter 2018 Financial Results
Ichor Holdings, Ltd. (NASDAQ: ICHR), a leader in the design,
engineering, and manufacturing of critical fluid delivery subsystems for
semiconductor capital equipment, today announced financial results for
the third quarter of fiscal year 2018.
Highlights for the third quarter of 2018:
-
Revenues of $175 million;
-
Gross margin on a GAAP basis of 16.1% and 16.2% on a non-GAAP basis;
-
With net earnings of $0.39 per diluted share on a GAAP basis, our
non-GAAP diluted EPS was $0.55;
-
Completed $30 million of share repurchases, inclusive of $10 million
under the additional authorization of $50 million announced August 20th,
and in the fourth quarter to date, purchased an additional $20 million.
"We are pleased to deliver solid earnings performance in the third
quarter, demonstrating the resiliency of our variable operating model
during a period of reductions in semiconductor capital equipment
spending," commented Tom Rohrs, Chairman and CEO of Ichor. "Year to
date, Ichor's revenue growth has outperformed overall industry spending,
as we've done consistently for the last several years. For the first
nine months of 2018, revenues are up 44% from the same period last year,
and gross profits, operating profits, net income and EPS have all grown
in excess of that rate. Given our variable manufacturing cost structure,
we are able to take action to reduce expenditures in order to continue
delivering strong profitability. After four straight years of growing
demand for wafer fab equipment, during which period the only two pauses
in capital spending were very brief in duration, the industry is now
forecasting several quarters of spending levels significantly lower than
the first-half 2018 run-rate. Ichor is well-positioned to deliver strong
profitability during this period, as we continue executing on our
strategy to expand our customer footprint and overall market share
through close partnerships with the world's leading semiconductor
equipment companies."
|
|
|
Q3 2018
|
|
|
Q2 2018
|
|
|
Q3 2017
|
|
|
|
(in thousands, except per share amounts and percentages)
|
|
U.S. GAAP Financial Results:
|
|
|
|
|
|
Net sales
|
|
$
|
175,207
|
|
|
$
|
248,973
|
|
|
$
|
164,519
|
|
Gross profit percent
|
|
|
16.1
|
%
|
|
|
17.6
|
%
|
|
|
14.7
|
%
|
Operating income percent
|
|
|
6.6
|
%
|
|
|
10.4
|
%
|
|
|
5.2
|
%
|
Net income from continuing operations
|
|
$
|
9,637
|
|
|
$
|
28,040
|
|
|
$
|
14,298
|
|
Diluted EPS
|
|
$
|
0.39
|
|
|
$
|
1.07
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2018
|
|
|
Q2 2018
|
|
|
Q3 2017
|
|
|
|
(in thousands, except per share amounts and percentages)
|
|
Non-GAAP Financial Results:
|
|
|
|
|
|
Net sales
|
|
$
|
175,207
|
|
|
$
|
248,973
|
|
|
$
|
164,519
|
|
Gross profit percent
|
|
|
16.2
|
%
|
|
|
17.8
|
%
|
|
|
16.6
|
%
|
Operating income percent
|
|
|
9.8
|
%
|
|
|
12.7
|
%
|
|
|
10.6
|
%
|
Adjusted net income from continuing operations
|
|
$
|
13,601
|
|
|
$
|
26,721
|
|
|
$
|
16,325
|
|
Diluted EPS
|
|
$
|
0.55
|
|
|
$
|
1.02
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial Results Overview
For the third quarter of 2018, revenue was $175.2 million, net income
from continuing operations was $9.6 million, and net income from
continuing operations per diluted share ("diluted EPS") was $0.39. This
compares to revenue of $249.0 million and $164.5 million, net income
from continuing operations of $28.0 million and $14.3 million, and
diluted EPS of $1.07 and $0.54, for the second quarter of 2018 and third
quarter of 2017, respectively.
Non-GAAP Financial Results Overview
For the third quarter of 2018, non-GAAP adjusted net income from
continuing operations was $13.6 million and non-GAAP adjusted diluted
EPS was $0.55. This compares to non-GAAP adjusted net income from
continuing operations of $26.7 million and $16.3 million, and non-GAAP
adjusted diluted EPS of $1.02 and $0.62, for the second quarter of 2018
and third quarter of 2017, respectively.
Fourth Quarter 2018 Financial Outlook
For the fourth quarter of 2018, we expect revenue to be in the range of
$140 to $150 million. We expect GAAP diluted EPS to be in the range of
$0.11 to $0.19 and non-GAAP adjusted diluted EPS to be in the range of
$0.32 to $0.40.
This outlook for non-GAAP adjusted diluted EPS excludes known charges
related to amortization of intangible assets, share-based compensation
expense, tax adjustments related to these non-GAAP adjustments, and
non-recurring charges known at the time of providing this outlook. This
outlook for non-GAAP adjusted diluted EPS excludes any items that are
unknown at this time, such as non-recurring tax-related items or other
unusual items which we are not able to predict without unreasonable
efforts due to their inherent uncertainty.
Balance Sheet and Cash Flow Results
We ended the third quarter of 2018 with cash of $33.0 million, a net
decrease of $30.4 million from the second quarter of 2018, primarily due
to share repurchases of $30.3 million during the quarter.
The net decrease in cash of $36.3 million during the nine months ended
September 28, 2018 from December 29, 2017 was primarily due to cash flow
from operations of $27.4 million, proceeds from the issuance of ordinary
shares under our share-based compensation plans of $6.1 million, and net
borrowings on long-term debt of $5.4 million, offset by share
repurchases of $60.3 million, capital expenditures of $11.4 million,
debt modification costs from the refinancing of our credit facilities in
February 2018 of $2.1 million, and net cash paid in connection with
acquisitions of $1.4 million.
Our cash from operations during the nine months ended September 28, 2018
of $27.4 million was due to net income of $54.4 million and net non-cash
charges of $18.2 million, partially offset by an increase in our net
operating assets and liabilities of $45.2 million, net of acquired
assets and liabilities. Non-cash charges primarily consist of
depreciation and amortization of $17.4 million and share-based
compensation of $6.3 million, partially offset by deferred income taxes
of $6.2 million. The increase in our net operating assets and
liabilities, net of acquired assets and liabilities, was primarily due
to a decrease in accounts payable of $48.1 million and an increase in
accounts receivable of $14.6 million, partially offset by a decrease in
inventories of $22.6 million.
Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release also contains
non-GAAP financial results, including non-GAAP gross profit, non-GAAP
operating income, non-GAAP adjusted net income from continuing
operations, and non-GAAP adjusted diluted EPS. These non-GAAP metrics
exclude amortization of intangible assets, share-based compensation
expense, non-recurring expenses including adjustments to the cost of
goods sold, tax adjustments related to those non-GAAP adjustments, and
non-recurring discrete tax items including tax impacts from releasing a
valuation allowance related to foreign tax credits, to the extent they
are present in gross profit, operating income, and net income from
continuing operations. A table showing these metrics on a GAAP and
non-GAAP basis, with reconciliation footnotes thereto, is included at
the end of this press release. Non-GAAP adjusted diluted EPS is defined
as non-GAAP adjusted net income from continuing operations divided by
weighted average diluted ordinary shares outstanding during the period.
Management uses non-GAAP gross profit, non-GAAP operating income,
non-GAAP adjusted net income from continuing operations, and non-GAAP
adjusted diluted EPS to evaluate our operating and financial results. We
believe the presentation of non-GAAP results is useful to investors for
analyzing business trends and comparing performance to prior periods,
along with enhancing investors' ability to view our results from
management's perspective. A table presenting the reconciliation of
non-GAAP adjusted net income from continuing operations to U.S. GAAP net
income from continuing operations is also included at the end of this
press release.
Conference Call
We will conduct a conference call to discuss our third quarter 2018
results and business outlook on November 6, 2018, at 2:30 p.m. Pacific
time.
To listen to the conference call via the Internet, please visit the
investor relations section of our web site at ir.ichorsystems.com.
To listen to the conference call via telephone, please call 844-395-9251
(domestic) or 478-219-0504 (international), conference ID: 8782499.
A taped replay of the webcast will be available shortly after the call
on our website or by calling 855-859-2056 (domestic) or 404-537-3406
(international), conference ID: 8782499.
About Ichor
We are a leader in the design, engineering and manufacturing of critical
fluid delivery subsystems and components for semiconductor capital
equipment. Our product offerings include gas and chemical delivery
subsystems, collectively known as fluid delivery subsystems, which are
key elements of the process tools used in the manufacturing of
semiconductor devices. Our gas delivery subsystems deliver, monitor and
control precise quantities of the specialized gases used in
semiconductor manufacturing processes such as etch and deposition. Our
chemical delivery subsystems precisely blend and dispense the reactive
liquid chemistries used in semiconductor manufacturing processes such as
chemical-mechanical planarization, electroplating, and cleaning. We also
manufacture precision machined components, weldments, and proprietary
products for use in fluid delivery systems for direct sales to our
customers. We also manufacture certain components for internal use in
fluid delivery systems and for direct sales to our customers. This
vertically integrated portion of our business is primarily focused on
metal and plastic parts that are used in gas and chemical systems,
respectively. We are headquartered in Fremont, CA. www.ichorsystems.com.
We use a 52 or 53 week fiscal year ending on the last Friday in
December. The three months ended September 28, 2018, June 29, 2018, and
September 29, 2017 were all 13 weeks. References to the third and second
quarters of 2018 and the third quarter of 2017 relate to the three
months ended September 28, 2018, June 29, 2018, and September 29, 2017,
respectively.
Safe Harbor Statement
Certain statements in this release are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Words such as "guidance," "expects,"
"intends," "projects," "plans," "believes," "estimates," "targets,"
"anticipates," "look forward," and similar expressions are used to
identify these forward-looking statements.
Examples of forward-looking statements include, but are not limited to,
statements regarding expected revenue, growth, earnings, profitability,
and industry trends for the fourth quarter of 2018, as well as any other
statement that does not directly relate to any historical or current
fact. Forward-looking statements are based on management's current
expectations and assumptions regarding Ichor's business and industry,
the economy and other future conditions, which may not prove to be
accurate. These statements are not guarantees and are subject to risks,
uncertainties and changes in circumstances that are difficult to
predict. Accordingly, you are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date they
are made. Many factors could cause actual results to differ
materially and adversely from these forward-looking statements,
including: (1) dependence on expenditures by manufacturers and cyclical
downturns in the semiconductor capital equipment industry, (2) reliance
on a very small number of original equipment manufacturers for a
significant portion of sales, (3) negotiating leverage held by our
customers, (4) competitiveness and rapid evolution of the industries in
which we participate, (5) risks associated with weakness in the global
economy and geopolitical instability, (6) keeping pace with developments
in the industries we serve and with technological innovation generally,
(7) designing, developing and introducing new products that are accepted
by original equipment manufacturers in order to retain our existing
customers and obtain new customers, (8) managing our manufacturing and
procurement process effectively, (9) defects in our products that could
damage our reputation, decrease market acceptance and result in
potentially costly litigation, (10) dependence on a limited number of
suppliers and (11) the integration of recent acquisitions with Ichor,
including the ability to retain customers, suppliers and key employees.
Additional information concerning these and other factors can be found
in Ichor's filings with the Securities and Exchange Commission (the
"SEC"), including other risks, relevant factors and uncertainties
identified in the "Risk Factors" section of Ichor's Annual Report on
Form 10-K filed with the SEC on March 13, 2018, and subsequent filings
with the SEC.
All forward-looking statements in this press release are based upon
information available to us as of the date hereof, and qualified in
their entirety by this cautionary statement. We undertake no obligation
to update or revise any forward-looking statements contained herein,
whether as a result of actual results, changes in Ichor's expectations,
future events or developments, or otherwise, except as required by law.
|
ICHOR HOLDINGS, LTD.
|
Consolidated Balance Sheets
|
(dollars in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
September 28, 2018
|
|
|
December 29, 2017
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
33,021
|
|
|
$
|
68,794
|
Restricted cash
|
|
|
-
|
|
|
|
510
|
Accounts receivable, net
|
|
|
65,358
|
|
|
|
49,249
|
Inventories, net
|
|
|
133,663
|
|
|
|
154,541
|
Prepaid expenses and other current assets
|
|
|
4,373
|
|
|
|
5,357
|
Current assets from discontinued operations
|
|
|
-
|
|
|
|
3
|
Total current assets
|
|
|
236,415
|
|
|
|
278,454
|
Property and equipment, net
|
|
|
40,359
|
|
|
|
34,380
|
Other noncurrent assets
|
|
|
860
|
|
|
|
1,052
|
Deferred tax assets
|
|
|
994
|
|
|
|
994
|
Intangible assets, net
|
|
|
60,728
|
|
|
|
73,405
|
Goodwill
|
|
|
173,004
|
|
|
|
169,399
|
Total assets
|
|
$
|
512,360
|
|
|
$
|
557,684
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
77,697
|
|
|
$
|
121,405
|
Accrued liabilities
|
|
|
9,249
|
|
|
|
12,211
|
Other current liabilities
|
|
|
4,281
|
|
|
|
6,715
|
Current portion of long-term debt
|
|
|
8,750
|
|
|
|
6,490
|
Current liabilities from discontinued operations
|
|
|
-
|
|
|
|
400
|
Total current liabilities
|
|
|
99,977
|
|
|
|
147,221
|
Long-term debt, less current portion, net
|
|
|
182,065
|
|
|
|
180,247
|
Deferred tax liabilities
|
|
|
4,032
|
|
|
|
10,558
|
Other non-current liabilities
|
|
|
3,062
|
|
|
|
2,896
|
Total liabilities
|
|
|
289,136
|
|
|
|
340,922
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Preferred shares ($0.0001 par value; 20,000,000 shares authorized;
zero shares issued and outstanding)
|
|
|
-
|
|
|
|
-
|
Ordinary shares ($0.0001 par value; 200,000,000 shares authorized;
23,881,249 and 25,892,162 shares outstanding, respectively;
26,563,213 and 25,892,162 shares issued, respectively)
|
|
|
2
|
|
|
|
3
|
Additional paid in capital
|
|
|
227,079
|
|
|
|
214,697
|
Treasury shares at cost (2,681,964 and zero shares, respectively)
|
|
|
(60,317
|
)
|
|
|
-
|
Retained earnings
|
|
|
56,460
|
|
|
|
2,062
|
Total shareholders' equity
|
|
|
223,224
|
|
|
|
216,762
|
Total liabilities and shareholders' equity
|
|
$
|
512,360
|
|
|
$
|
557,684
|
|
|
|
|
|
|
|
|
ICHOR HOLDINGS, LTD.
|
Consolidated Statement of Operations
|
(dollars in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 28, 2018
|
|
|
June 29, 2018
|
|
|
September 29, 2017
|
|
|
September 28, 2018
|
|
|
September 29, 2017
|
|
Net sales
|
|
$
|
175,207
|
|
|
$
|
248,973
|
|
|
$
|
164,519
|
|
|
$
|
682,209
|
|
|
$
|
472,956
|
|
Cost of sales
|
|
|
146,993
|
|
|
|
205,098
|
|
|
|
140,323
|
|
|
|
567,521
|
|
|
|
401,239
|
|
Gross profit
|
|
|
28,214
|
|
|
|
43,875
|
|
|
|
24,196
|
|
|
|
114,688
|
|
|
|
71,717
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
2,123
|
|
|
|
2,577
|
|
|
|
1,992
|
|
|
|
7,152
|
|
|
|
5,686
|
|
Selling, general, and administrative
|
|
|
10,658
|
|
|
|
11,647
|
|
|
|
11,430
|
|
|
|
38,016
|
|
|
|
26,272
|
|
Amortization of intangible assets
|
|
|
3,885
|
|
|
|
3,772
|
|
|
|
2,220
|
|
|
|
11,536
|
|
|
|
5,818
|
|
Total operating expenses
|
|
|
16,666
|
|
|
|
17,996
|
|
|
|
15,642
|
|
|
|
56,704
|
|
|
|
37,776
|
|
Operating income
|
|
|
11,548
|
|
|
|
25,879
|
|
|
|
8,554
|
|
|
|
57,984
|
|
|
|
33,941
|
|
Interest expense
|
|
|
2,553
|
|
|
|
2,303
|
|
|
|
739
|
|
|
|
7,360
|
|
|
|
2,104
|
|
Other expense (income), net
|
|
|
(84
|
)
|
|
|
(217
|
)
|
|
|
73
|
|
|
|
(60
|
)
|
|
|
(325
|
)
|
Income from continuing operations before income taxes
|
|
|
9,079
|
|
|
|
23,793
|
|
|
|
7,742
|
|
|
|
50,684
|
|
|
|
32,162
|
|
Income tax benefit from continuing operations
|
|
|
(558
|
)
|
|
|
(4,247
|
)
|
|
|
(6,556
|
)
|
|
|
(3,714
|
)
|
|
|
(5,558
|
)
|
Net income from continuing operations
|
|
|
9,637
|
|
|
|
28,040
|
|
|
|
14,298
|
|
|
|
54,398
|
|
|
|
37,720
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations before taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(721
|
)
|
Income tax expense from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
8
|
|
|
|
-
|
|
|
|
9
|
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
(730
|
)
|
Net income
|
|
$
|
9,637
|
|
|
$
|
28,040
|
|
|
$
|
14,290
|
|
|
|
54,398
|
|
|
|
36,990
|
|
Net income per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.40
|
|
|
$
|
1.09
|
|
|
$
|
0.57
|
|
|
$
|
2.15
|
|
|
$
|
1.51
|
|
Diluted
|
|
$
|
0.39
|
|
|
$
|
1.07
|
|
|
$
|
0.54
|
|
|
$
|
2.11
|
|
|
$
|
1.45
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.40
|
|
|
$
|
1.09
|
|
|
$
|
0.57
|
|
|
$
|
2.15
|
|
|
$
|
1.48
|
|
Diluted
|
|
$
|
0.39
|
|
|
$
|
1.07
|
|
|
$
|
0.54
|
|
|
$
|
2.11
|
|
|
$
|
1.42
|
|
Shares used to compute net income from continuing operations per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
24,352,995
|
|
|
|
25,674,173
|
|
|
|
25,267,113
|
|
|
|
25,352,489
|
|
|
|
24,923,298
|
|
Diluted
|
|
|
24,674,912
|
|
|
|
26,120,717
|
|
|
|
26,278,147
|
|
|
|
25,840,494
|
|
|
|
26,008,346
|
|
Shares used to compute net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
24,352,995
|
|
|
|
25,674,173
|
|
|
|
25,267,113
|
|
|
|
25,352,489
|
|
|
|
24,923,298
|
|
Diluted
|
|
|
24,674,912
|
|
|
|
26,120,717
|
|
|
|
26,278,147
|
|
|
|
25,840,494
|
|
|
|
26,008,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICHOR HOLDINGS, LTD.
|
Consolidated Statements of Cash Flows
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 28, 2018
|
|
|
September 29, 2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
54,398
|
|
|
$
|
36,990
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
17,405
|
|
|
|
8,351
|
|
Gain on sale of investments and settlement of note receivable
|
|
|
-
|
|
|
|
(241
|
)
|
Share-based compensation
|
|
|
6,277
|
|
|
|
1,536
|
|
Deferred income taxes
|
|
|
(6,246
|
)
|
|
|
(6,207
|
)
|
Amortization of debt issuance costs
|
|
|
731
|
|
|
|
412
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(14,646
|
)
|
|
|
(22,632
|
)
|
Inventories
|
|
|
22,569
|
|
|
|
(18,915
|
)
|
Prepaid expenses and other assets
|
|
|
1,336
|
|
|
|
4,112
|
|
Accounts payable
|
|
|
(48,104
|
)
|
|
|
(2,081
|
)
|
Accrued liabilities
|
|
|
(3,711
|
)
|
|
|
(1,280
|
)
|
Other liabilities
|
|
|
(2,639
|
)
|
|
|
881
|
|
Net cash provided by operating activities
|
|
|
27,370
|
|
|
|
926
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(11,385
|
)
|
|
|
(6,609
|
)
|
Cash paid for acquisitions, net of cash acquired
|
|
|
(1,443
|
)
|
|
|
(49,542
|
)
|
Proceeds from sale of investments and settlement note receivable
|
|
|
-
|
|
|
|
2,430
|
|
Net cash used in investing activities
|
|
|
(12,828
|
)
|
|
|
(53,721
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares, net of fees
|
|
|
-
|
|
|
|
7,278
|
|
Issuance of ordinary shares under share-based compensation plans
|
|
|
6,215
|
|
|
|
6,331
|
|
Employees' taxes paid upon vesting of restricted share units
|
|
|
(70
|
)
|
|
|
-
|
|
Repurchase of ordinary shares
|
|
|
(60,318
|
)
|
|
|
-
|
|
Debt issuance and modification costs
|
|
|
(2,092
|
)
|
|
|
(319
|
)
|
Borrowings on revolving credit facility
|
|
|
17,162
|
|
|
|
10,000
|
|
Repayments on revolving credit facility
|
|
|
(5,000
|
)
|
|
|
-
|
|
Proceeds from term loan
|
|
|
-
|
|
|
|
20,000
|
|
Repayments on term loan
|
|
|
(6,722
|
)
|
|
|
(295
|
)
|
Net cash provided by (used in) financing activities
|
|
|
(50,825
|
)
|
|
|
42,995
|
|
Net decrease in cash
|
|
|
(36,283
|
)
|
|
|
(9,800
|
)
|
Cash at beginning of year
|
|
|
69,304
|
|
|
|
52,648
|
|
Cash at end of quarter
|
|
$
|
33,021
|
|
|
$
|
42,848
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
$
|
5,987
|
|
|
$
|
2,518
|
|
Cash paid during the period for taxes
|
|
$
|
2,166
|
|
|
$
|
150
|
|
Supplemental disclosures of non-cash activities:
|
|
|
|
|
|
|
|
|
Capital expenditures included in accounts payable
|
|
$
|
790
|
|
|
$
|
267
|
|
|
|
|
|
|
|
|
|
|
ICHOR HOLDINGS, LTD.
|
Reconciliation of U.S. GAAP Net Income from Continuing
Operations to Non-GAAP Adjusted Net Income from Continuing
Operations
|
(dollars in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 28, 2018
|
|
|
June 29, 2018
|
|
|
September 29, 2017
|
|
|
September 28, 2018
|
|
|
September 29, 2017
|
|
Net income from continuing operations
|
|
$
|
9,637
|
|
|
$
|
28,040
|
|
|
$
|
14,298
|
|
|
$
|
54,398
|
|
|
$
|
37,720
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
3,885
|
|
|
|
3,772
|
|
|
|
2,220
|
|
|
|
11,536
|
|
|
|
5,818
|
|
Share-based compensation (1)
|
|
|
1,271
|
|
|
|
1,215
|
|
|
|
623
|
|
|
|
6,277
|
|
|
|
1,536
|
|
Other non-recurring expense, net (2)
|
|
|
397
|
|
|
|
447
|
|
|
|
2,076
|
|
|
|
2,283
|
|
|
|
2,528
|
|
Tax adjustments related to non-GAAP adjustments
|
|
|
(1,589
|
)
|
|
|
(2,928
|
)
|
|
|
(20
|
)
|
|
|
(7,421
|
)
|
|
|
(62
|
)
|
Tax benefit from acquisitions (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,281
|
)
|
|
|
-
|
|
|
|
(5,281
|
)
|
Tax benefit from re-characterizing intercompany debt to equity (4)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,627
|
)
|
|
|
-
|
|
|
|
(1,627
|
)
|
Tax benefit from release of valuation allowance (5)
|
|
|
-
|
|
|
|
(4,140
|
)
|
|
|
-
|
|
|
|
(4,140
|
)
|
|
|
-
|
|
Adjustments to cost of goods sold (6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,752
|
|
Fair value adjustment to inventory from acquisitions (7)
|
|
|
-
|
|
|
|
315
|
|
|
|
3,004
|
|
|
|
4,839
|
|
|
|
3,004
|
|
Loss on Ajax acquisition arbitration settlement (8)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,032
|
|
|
|
-
|
|
|
|
1,032
|
|
Non-GAAP adjusted net income from continuing operations
|
|
$
|
13,601
|
|
|
$
|
26,721
|
|
|
$
|
16,325
|
|
|
$
|
67,772
|
|
|
$
|
46,420
|
|
Non-GAAP adjusted diluted EPS
|
|
$
|
0.55
|
|
|
$
|
1.02
|
|
|
$
|
0.62
|
|
|
$
|
2.62
|
|
|
$
|
1.78
|
|
Shares used to compute diluted EPS
|
|
|
24,674,912
|
|
|
|
26,120,717
|
|
|
|
26,278,147
|
|
|
|
25,840,494
|
|
|
|
26,008,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Included in share-based compensation for the nine months ended
September 28, 2018 is $2.9 million from accelerating the vesting of
our former CFO's equity awards pursuant to separation benefits that
became effective in January 2018.
|
|
|
|
(2)
|
|
Included in this amount for the second and third quarters of 2018
are acquisition-related expenses, comprised primarily of expense
associated with a two year retention agreement between key
management personnel of IAN.
|
|
|
|
|
|
Included in this amount for the third quarter of 2017 are (i)
expenses incurred in connection with the secondary offering of our
ordinary shares by affiliates of Francisco Partners and (ii)
acquisition related expenses.
|
|
|
|
(3)
|
|
We recorded a $5.3 million in tax benefit in the third quarter of
2017 in connection with our acquisition of Cal-Weld.
|
|
|
|
(4)
|
|
In the third quarter of 2017 we re-characterized intercompany debt
to equity between our U.S. and Singapore entities resulting in a tax
benefit of $1.6 million related to the reversal of previously
accrued withholding taxes.
|
|
|
|
(5)
|
|
Represents the release of a valuation allowance against our foreign
tax credit carryforwards we now expect to realize as a result of
additional analysis of the Tax Cuts and Jobs Act.
|
|
|
|
(6)
|
|
During the second quarter of 2017, we corrected an error relating to
translated inventory balances at our Malaysia and Singapore
subsidiaries using an incorrect foreign currency rate. The error
arose in prior period financial statements beginning in periods
prior to 2014 and through 2016. The correction resulted in a $1.75
million increase in cost of sales and a corresponding decrease in
gross profit in our consolidated statement of operations and a
decrease to inventories in our consolidated balance sheet during the
second quarter of 2017.
|
|
|
|
(7)
|
|
As part of our purchase price allocation for our acquisition of
Cal-Weld in July 2017 and our preliminary purchase price allocations
for our acquisitions Talon in December 2017 and IAN in April 2018,
we recorded acquired-inventory at fair value, resulting in a fair
value step-up of $3.6 million, $6.2 million, and $0.3 million,
respectively. These amounts were subsequently released to cost of
sales as acquired-inventory was sold.
|
|
|
|
(8)
|
|
During the third quarter of 2017, we received a final arbitration
ruling on our working capital claim with the sellers of Ajax. The
ruling was outside the one year measurement period and therefore
could not be considered an adjustment to goodwill, resulting in a
charge to selling, general, and administrative expense.
|
|
|
|
ICHOR HOLDINGS, LTD.
|
U.S. GAAP and Non-GAAP Summary Consolidated Statements of
Operations
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
September 28, 2018
|
|
|
June 29, 2018
|
|
|
September 29, 2017
|
|
|
U.S. GAAP
|
|
|
Non-GAAP
|
|
|
U.S. GAAP
|
|
|
Non-GAAP
|
|
|
U.S. GAAP
|
|
|
Non-GAAP
|
Net sales
|
|
$
|
175,207
|
|
|
$
|
175,207
|
|
|
$
|
248,973
|
|
|
$
|
248,973
|
|
|
$
|
164,519
|
|
|
$
|
164,519
|
Cost of sales (1)
|
|
|
146,993
|
|
|
|
146,815
|
|
|
|
205,098
|
|
|
|
204,606
|
|
|
|
140,323
|
|
|
|
137,277
|
Gross profit
|
|
|
28,214
|
|
|
|
28,392
|
|
|
|
43,875
|
|
|
|
44,367
|
|
|
|
24,196
|
|
|
|
27,242
|
Operating expenses (2)
|
|
|
16,666
|
|
|
|
11,291
|
|
|
|
17,996
|
|
|
|
12,739
|
|
|
|
15,642
|
|
|
|
9,733
|
Operating income
|
|
|
11,548
|
|
|
|
17,101
|
|
|
|
25,879
|
|
|
|
31,628
|
|
|
|
8,554
|
|
|
|
17,509
|
Interest expense
|
|
|
2,553
|
|
|
|
2,553
|
|
|
|
2,303
|
|
|
|
2,303
|
|
|
|
739
|
|
|
|
739
|
Other expense (income), net
|
|
|
(84
|
)
|
|
|
(84
|
)
|
|
|
(217
|
)
|
|
|
(217
|
)
|
|
|
73
|
|
|
|
73
|
Income from continuing operations before income taxes
|
|
|
9,079
|
|
|
|
14,632
|
|
|
|
23,793
|
|
|
|
29,542
|
|
|
|
7,742
|
|
|
|
16,697
|
Income tax expense (benefit) from continuing operations (3)
|
|
|
(558
|
)
|
|
|
1,031
|
|
|
|
(4,247
|
)
|
|
|
2,821
|
|
|
|
(6,556
|
)
|
|
|
372
|
Net income from continuing operations
|
|
$
|
9,637
|
|
|
$
|
13,601
|
|
|
$
|
28,040
|
|
|
$
|
26,721
|
|
|
$
|
14,298
|
|
|
$
|
16,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Non-GAAP cost of sales excludes share-based compensation expense, an
adjustment resulting from the correction of an immaterial error (see
footnote 6 on page 8), and impacts from a step up in the fair value
of acquired inventory in connection with our acquisitions of IAN,
Talon, and Cal-Weld (see footnote 7 on page 8).
|
|
|
|
(2)
|
|
Non-GAAP operating expenses excludes amortization of intangible
assets, share-based compensation expense, an arbitration settlement
loss related to our acquisition of Ajax (see footnote 8 on page 8),
and other net non-recurring expenses (see footnote 2 on page 8).
|
|
|
|
(3)
|
|
Non-GAAP income tax expense from continuing operations excludes the
a tax benefit from our acquisition of Cal-Weld (see footnote 3 on
page 8), a tax benefit from re-characterizing intercompany debt to
equity (see footnote 4 on page 8), the tax impact from releasing a
valuation allowance related to foreign tax credits (see footnote 5
on page 8), and the tax effects of our other non-GAAP adjustments.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181106005910/en/
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