Ichor Anticipates Growth from Market Recovery and New Products

Ichor Holdings, Ltd., a prominent player in the design, engineering, and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment, has reported impressive financial performance for the second quarter, achieving $203 million in sales, which is at the upper range of their expectations. The company also recorded improved gross margins and a positive earnings per share (EPS) of $0.05.

Looking ahead, Ichor is optimistic about a stronger second half of the year, driven by a recovery in the wafer fab equipment market. The company is dedicated to enhancing gross margins while efficiently managing costs and working capital, with growth aspirations targeting revenue and market expansion by 2025.

Key Highlights:

• Q2 revenues were $203 million, with a gross margin of 13%.
• EPS for the second quarter was $0.05.
• Q3 revenue guidance ranges from $195 million to $210 million, with improved gross margins anticipated.
• Operating expenses for Q3 projected at approximately $22.6 million.
• Ichor expects a tax expense of $800,000 and forecasts an EPS range of $0.05 to $0.15 for Q3.
• The company has shipped over 20 gas panels and is advancing its proprietary products pipeline.
• Ichor aims to return to $250 million to $300 million in quarterly revenues and believes a 15% year-over-year growth is achievable.
• Customer inventory levels have normalized, and ordering patterns have returned to regular schedules.
• There is significant growth potential in the EV silicon carbide business, which is expected to possibly double.

Company Outlook:
Ichor anticipates strong growth in its primary markets by 2025. Revenue growth is expected to be propelled by developments in high-bandwidth memory and gate-all-around technology in the FoundryLogic market. The company has positive expectations for growth in lithography next year, despite some uncertainty regarding the timing. An improvement in the EUV business is also anticipated in the second half of the year following a temporary decline in Q2.

Concerns and Optimisms:
While there are concerns regarding the impact of Intel’s capital expenditure reductions, Ichor has not observed significant shifts in its business as a result. Nonetheless, the spike in the component segment has not met expectations.

On the positive side, Ichor has seen a sequential improvement in gross margins and continues to progress in its proprietary product pipeline, which is projected to enhance gross margins further. The strength in the EV silicon carbide business, especially from European manufacturers in China, is a bright spot.

Q&A Highlights:
During the Q&A session, executives addressed several points, including the performance of different markets and future expectations for various product lines. The next-generation gas panel is set for new product introductions and will be compatible with existing OEM products. The adoption of the new gas panel is expected to span two to three years.

Overall, Ichor’s solid performance in the second quarter and the detailed outlook shared during the earnings call indicate a strategic focus on growth and market expansion. The company is eager to engage with its stakeholders and plans to increase interaction with the investment community at future investor conferences.

With a market capitalization close to $972.79 million, Ichor’s price-to-earnings (P/E) ratio suggests some challenges, as it remains unprofitable over the last twelve months. However, certain indicators, such as the Relative Strength Index (RSI), may hint at a potential price rebound depending on market conditions.