ichr-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission File Number: 001-37961

_________________________________________________________________________________________________________________________

ICHOR HOLDINGS, LTD.

(Exact Name of Registrant as Specified in its Charter)

_________________________________________________________________________________________________________________________


Cayman Islands						Not Applicable
( State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
3185 Laurelview Ct. Fremont, CA						94538
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (510) 897-5200

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, par value $0.0001	ICHR	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non‑accelerated filer

Small reporting company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes o No x

As of May 5, 2023, the registrant had 29,055,904 ordinary shares, $0.0001 par value per share, outstanding.


PART I
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	22
ITEM 4.	CONTROLS AND PROCEDURES	22

PART II
ITEM 1.	LEGAL PROCEEDINGS	24
ITEM 1A.	RISK FACTORS	24
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	24
ITEM 4.	MINE SAFETY DISCLOSURES	24
ITEM 5.	OTHER INFORMATION	24
ITEM 6.	EXHIBITS	24

SIGNATURES		25


	March 31, 2023		December 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	68,837	$	86,470
Accounts receivable, net	122,693		136,321
Inventories	271,538		283,660
Prepaid expenses and other current assets	6,530		7,007
Total current assets	469,598		513,458
Property and equipment, net	101,481		98,055
Operating lease right-of-use assets	40,609		40,557
Other noncurrent assets	12,660		12,926
Deferred tax assets, net	12,345		11,322
Intangible assets, net	68,056		72,022
Goodwill	335,402		335,402
Total assets	$	1,040,151	$	1,083,742
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	68,030	$	110,165
Accrued liabilities	21,417		23,616
Other current liabilities	11,821		15,815
Current portion of long-term debt	7,500		7,500
Current portion of lease liabilities	9,457		9,196
Total current liabilities	118,225		166,292
Long-term debt, less current portion, net	291,459		293,218
Lease liabilities, less current portion	31,988		31,828
Deferred tax liabilities, net	29		29
Other non-current liabilities	4,986		4,879
Total liabilities	446,687		496,246
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; 29,034,946 and 28,861,949 shares outstanding, respectively; 33,472,385 and 33,299,388 shares issued, respectively)	3		3
Additional paid in capital	437,388		431,415
Treasury shares at cost (4,437,439 shares)	(91,578)		(91,578)
Retained earnings	247,651		247,656
Total shareholders’ equity	593,464		587,496
Total liabilities and shareholders’ equity	$	1,040,151	$	1,083,742


	Three Months Ended
	March 31, 2023		April 1, 2022
Net sales	$	225,870	$	293,146
Cost of sales	192,630		249,214
Gross profit	33,240		43,932
Operating expenses:
Research and development	4,313		4,851
Selling, general, and administrative	20,167		23,267
Amortization of intangible assets	3,966		5,349
Total operating expenses	28,446		33,467
Operating income	4,794		10,465
Interest expense, net	4,550		1,532
Other expense, net	784		84
Income (loss) before income taxes	(540)		8,849
Income tax expense (benefit)	(535)		810
Net income (loss)	$	(5)	$	8,039
Net income (loss) per share
Basic	$	0.00	$	0.28
Diluted	$	0.00	$	0.28
Shares used to compute Net income (loss) per share:
Basic	28,984,878		28,592,629
Diluted	28,984,878		29,023,455


For the three months ending March 31, 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	92,766	—		2,126		—	—		—		2,126
Ordinary shares issued from vesting of restricted share units	32,527	—		(692)		—	—		—		(692)
Ordinary shares issued from employee share purchase plan	47,704	—		902		—	—		—		902
Share-based compensation expense	—	—		3,637		—	—		—		3,637
Net loss	—	—		—		—	—		(5)		(5)
Balance at March 31, 2023	29,034,946	$	3	$	437,388	4,437,439	$	(91,578)	$	247,651	$	593,464


For the three months ending April 1, 2022	Ordinary Shares			Additional Paid-In Capital		Treasury Shares			Retained Earnings		Total Shareholders' Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2021	28,551,160	$	3	$	417,438	4,437,439	$	(91,578)	$	174,852	$	500,715
Ordinary shares issued from exercise of stock options	42,753	—		955		—	—		—		955
Ordinary shares issued from vesting of restricted share units	34,994	—		(777)		—	—		—		(777)

Share-based compensation expense	—	—		2,897		—	—		—		2,897
Net income	—	—		—		—	—		8,039		8,039
Balance at April 1, 2022	28,628,907	$	3	$	420,513	4,437,439	$	(91,578)	$	182,891	$	511,829


Note 1 – Basis of Presentation and Selected Significant Accounting Policies


	March 31, 2023		December 30, 2022
Raw materials	$	196,504	$	197,726
Work in process	39,733		56,291
Finished goods	54,306		47,186
Excess and obsolete adjustment	(19,005)		(17,543)
Total inventories	$	271,538	$	283,660


Note 3 – Property and Equipment and Other Noncurrent Assets


	March 31, 2023		December 30, 2022
Machinery	$	96,338	$	90,507
Leasehold improvements	43,556		43,129
Computer software, hardware, and equipment	10,053		9,664
Office furniture, fixtures, and equipment	1,354		1,337
Vehicles	401		401
Construction-in-process	21,510		19,869
	173,212		164,907
Less accumulated depreciation	(71,731)		(66,852)
Total property and equipment, net	$	101,481	$	98,055


	March 31, 2023
	Gross value		Accumulated amortization		Accumulated impairment charges		Carrying amount		Weighted average useful life
Customer relationships	117,022		(55,202)		—		61,820		8.4 years
Developed technology	11,047		(4,811)		—		6,236		10.0 years
Total intangible assets	$	128,069	$	(60,013)	$	—	$	68,056


	March 31, 2023	December 30, 2022
Weighted-average remaining lease term of operating leases	5.2 years	5.3 years
Weighted-average discount rate of operating leases	3.2%	3.0%


2023, remaining	$	7,117
2024	9,074
2025	8,418
2026	7,968
2027	6,968
Thereafter	5,367
Total future minimum lease payments	44,912
Less imputed interest	(3,467)
Total lease liabilities	$	41,445


Note 7 – Employee Benefit Programs


Note 8 – Long-Term Debt


	December 30, 2022
	Gross value		Accumulated amortization		Accumulated impairment charges		Carrying amount		Weighted average useful life
Customer relationships	117,022		(51,337)		—		65,685		8.4 years
Developed technology	11,047		(4,710)		—		6,337		10.0 years
Total intangible assets	$	128,069	$	(56,047)	$	—	$	72,022


	March 31, 2023		December 30, 2022
Term loan	$	140,625	$	142,500
Revolving credit facility	160,000		160,000
Total principal amount of long-term debt	300,625		302,500
Less unamortized debt issuance costs	(1,666)		(1,782)
Total long-term debt, net	298,959		300,718
Less current portion	(7,500)		(7,500)
Total long-term debt, less current portion, net	$	291,459	$	293,218


	Number of Stock Options
	Service condition	Weighted average exercise price per share		Weighted average remaining contractual term	Aggregate intrinsic value
Outstanding, December 30, 2022	805,115	$	23.35
Granted	—	$	0.00
Exercised	(92,766)	$	22.91
Forfeited or expired	(1,444)	$	22.18
Outstanding, March 31, 2023	710,905	$	23.41	2.6 years	$	6,634
Exercisable, March 31, 2023	634,134	$	23.36	2.4 years	$	5,951


	Number of Restricted Share Units
	Service condition	Performance condition	Market condition	Weighted average grant-date fair value per share
Unvested, December 30, 2022	860,595	57,562	86,342	$	30.26
Granted	69,675	—	—	$	27.04
Vested	(51,938)	—	—	$	33.57
Forfeited	(11,936)	—	—	$	31.81
Unvested, March 31, 2023	866,396	57,562	86,342	$	29.78

SEC Form 10-Q filed by Ichor Holdings