ICHOR HOLDINGS, LTD.

Previous wording

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. You should not place undue reliance on these statements. All statements other than statements of historical fact included in this report are forward-looking statements. These statements relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. These forward-looking statements are identified by the use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” and similar terms and phrases, including references to assumptions. However, these words are not the exclusive means of identifying such statements. These statements are contained in many sections of this report, including in this Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or expectations. 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 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; competitiveness and rapid evolution of the industries in which we participate; keeping pace with developments in the industries we serve and with technological innovation generally; 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; defects in our products that could damage our reputation, decrease market acceptance and result in potentially costly litigation; our dependence on a limited …

Excerpt shortened here; the source contains the full paragraph.

Current wording

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. You should not place undue reliance on these statements. All statements other than statements of historical fact included in this report are forward-looking statements. These statements relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. These forward-looking statements are identified by the use of terms and phrases such as “anticipate," “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” and similar terms and phrases, including references to assumptions. However, these words are not the exclusive means of identifying such statements. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or expectations. 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 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; competitiveness and rapid evolution of the industries in which we participate; keeping pace with developments in the industries we serve and with technological innovation generally; 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; defects in our products that could damage our reputation, decrease market acceptance and result in potentially costly litigation; our dependence on a limited number of suppliers; and other factors set forth in this report, and those set forth in Part I – Item 1A. Risk Factors of our Annual Report on Form 10‑K for the fiscal year ended Decembe…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The semiconductor capital equipment industry is inherently cyclical. 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.

Current wording

The semiconductor capital equipment industry is inherently cyclical. 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. Additionally, recent and potential future expansions of U.S. export controls and similar regulations aimed at restricting China's access to advanced semiconductor technology create market uncertainty and could adversely impact our sales. These controls, which require specific export licenses, could reduce demand for our equipment, disrupt our supply chain, and negatively affect our financial results.

Previous wording

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

Current wording

Comparison of the Three and Nine Months Ended September 26, 2025 and September 27, 2024

Previous wording

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.

Current wording

The increase in net sales from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025 was primarily due to increased customer demand as a result of a stronger semiconductor capital equipment spending environment.

Previous wording

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.

Current wording

The decrease in gross margin from the third quarter of 2024 to the third quarter of 2025 was primarily due to increased inventory write-off costs of $16.7 million associated with our ongoing Consolidation Restructuring Plan, partially offset by higher volume.

Previous wording

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.

Current wording

The decrease in gross margin from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to inventory write-off costs of $18.3 million associated with our Consolidation Restructuring Plan and the planned exit from our Scotland operations, and additional employee expenses, partially offset by higher volume.

Previous wording

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.

Current wording

The increase in research and development expenses from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 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.

Previous wording

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.

Current wording

The increase in selling, general, and administrative expenses from the third quarter of 2024 to the third quarter of 2025 was primarily due to restructuring costs associated with the Consolidation Restructuring Plan of $0.9 million, increased employee salary cost of $0.7 million, increased legal and professional consulting costs of $0.4 million, increased employee health insurance claims of $0.2 million, and increased severance costs of $0.2 million, partially offset by reduced stock based compensation of $0.2 million.

Previous wording

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.

Current wording

The increase in selling, general, and administrative expenses from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to increased exit disposal costs of $2.1 million associated with the planned exit from our Scotland operations, increased employee salary cost of $1.9 million, increased share based compensation expense of $1.8 million, increased employee health insurance claims of $1.6 million, restructuring costs associated with the Consolidation Restructuring Plan of $0.9 million, increased costs associated with software and IT services of $0.9 million, increased outside service provider costs of $0.7 million, and increased severance costs of $0.6 million, partially offset by reduced transaction-related costs associated with our acquisitions pipeline of $0.8 million.

Previous wording

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.

Current wording

Amortization expense remained substantially unchanged from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025.

Previous wording

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 (-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).

Current wording

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 (-25 and -40 bps for the third quarter of 2025 and 2024, respectively) and lower Secured Overnight Financing Rate ("SOFR") rates, the variable portion of our borrowing rate (-90 bps for both the nine months ended September 26, 2025 and September 27, 2024).

Previous wording

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.

Current wording

The change in other expense, net from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025 was primarily due to $0.7 million in costs associated with executing an amended and restated credit agreement during the third quarter, offset by currency exchange rate fluctuations related to our local currency payables and cash holdings of our foreign operations.

Previous wording

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.

Current wording

The increase in income tax expense from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025 was primarily due to additional tax expense provisioned in Singapore in connection with Pillar Two minimum tax rules and increased withholding taxes.

Previous wording

Management uses certain non-GAAP metrics 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. All non-GAAP adjustments are presented on a gross basis. Non-GAAP gross profit, operating income, and net income (loss) are defined as: gross profit, operating income (loss), or net income (loss), respectively, excluding (1) amortization of intangible assets, share-based compensation expense, and discrete or infrequent charges and gains that are outside of normal business operations, including transaction-related costs, contract and legal settlement gains and losses, facility shutdown costs, and severance costs associated with reduction-in-force programs, to the extent they are present in gross profit, operating income (loss), and net income (loss), respectively; and (2) with respect to non-GAAP net income (loss), the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items, including deferred tax asset valuation allowance charges. All non-GAAP adjustments are presented on a gross basis; 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". Non-GAAP diluted earnings per share ("EPS") is defined as non-GAAP net income divided by weighted average diluted ordinary shares outstanding during the period. 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.

Current wording

Management uses certain non-GAAP metrics 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. All non-GAAP adjustments are presented on a gross basis. Non-GAAP gross profit, operating income, and net income (loss) are defined as: gross profit, operating income (loss), or net income (loss), respectively, excluding (1) amortization of intangible assets, share-based compensation expense, and discrete or infrequent charges and gains that are outside of normal business operations, including transaction-related costs, contract and legal settlement gains and losses, facility shutdown costs, inventory impairment charges, and severance costs associated with reduction-in-force programs, to the extent they are present in gross profit, operating income (loss), and net income (loss), respectively; and (2) with respect to non-GAAP net income (loss), the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items, including deferred tax asset valuation allowance charges. 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". Non-GAAP diluted earnings per share ("EPS") is defined as non-GAAP net income divided by weighted average diluted ordinary shares outstanding during the period. 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.

Previous wording

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:

Current wording

The following table presents our unaudited non‑GAAP gross profit and non-GAAP gross margin and a reconciliation from GAAP gross profit and GAAP gross margin, the most comparable GAAP measures, for the periods indicated:

Previous wording

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:

Current wording

The following table presents our unaudited non‑GAAP operating income and non-GAAP operating margin and a reconciliation from GAAP operating loss and GAAP operating margin, the most comparable GAAP measures, for the periods indicated:

Previous wording

(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.

Current wording

(2)Represents costs associated with the exit from our Scotland and Korea operations. Included in this amount for the three and nine months ended September 26, 2025 are inventory write-off charges of $1.6 million, an impairment of the facility lease right-of-use asset of $1.3 million, severance costs associated with affected employees of $0.7 million, other direct and incremental facility exit-related costs of $0.7 million, and accelerated depreciation charges of $0.6 million.

Previous wording

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

Current wording

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

Previous wording

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. All non-GAAP adjustments are presented on a gross basis; 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".

Current wording

The following table presents our unaudited non‑GAAP net income and non-GAAP diluted EPS and a reconciliation from GAAP net loss and GAAP diluted EPS, the most comparable GAAP measures, for the periods indicated. All non-GAAP adjustments are presented on a gross basis; 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".

Previous wording

(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.

Current wording

(2)Represents costs associated with the exit from our Scotland and Korea operations. Included in this amount for the three and nine months ended September 26, 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, severance costs associated with affected employees of $0.7 million, other direct and incremental facility exit-related costs of $0.7 million, and accelerated depreciation charges of $0.6 million.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

(5)During the first quarter of 2025, we recorded a valuation allowance against the deferred tax assets from Scotland and Korea operations.

Current wording

(7)During the first quarter of 2025, we recorded a valuation allowance against the deferred tax assets of our Scotland and Korea operations. During the third quarter, we reversed the valuation allowance on our Scotland deferred tax assets due to a change in the facts and circumstances around our ability to utilize our deferred tax assets.

Previous wording

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.

Current wording

We ended the third quarter of 2025 with cash and cash equivalents of $92.5 million, a decrease of $16.2 million from the prior year ended December 27, 2024. The decrease was primarily due to capital expenditures of $32.9 million, net payments on our credit facilities of $4.4 million, and payments for debt issuance and modification costs of $1.2 million, partially offset by cash provided by operating activities of $20.7 million and net cash receipts related to share-based compensation of $1.6 million.

Previous wording

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.

Current wording

Our cash provided by operating activities of $20.7 million for the nine months ended September 26, 2025 consisted of net non-cash charges of $57.6 million, consisting primarily of depreciation and amortization of $23.5 million, inventory impairment of $16.7 million, and share-based compensation expense of $12.6 million, partially offset by a net loss of $36.8 million.

Previous wording

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.

Current wording

The increase in our net operating assets and liabilities of $0.1 million for the nine months ended September 26, 2025, was primarily due to an increase in inventory of $8.3 million and a decrease in other liabilities of $6.2 million, partially offset by a decrease in prepaid expense and other assets of $7.6 million, an increase in accrued liabilities of $2.8 million, a decrease in accounts receivable of $2.2 million, and an increase in accounts payable of $1.9 million.

Previous wording

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.

Current wording

The decrease in cash provided by operating activities from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to an increase in net loss of $19.9 million and unfavorable changes in working capital of $13.4 million, partially offset by an increase in net non-cash charges of $23.7 million.

Previous wording

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

Current wording

Cash used in investing activities during the nine months ended September 26, 2025 and September 27, 2024 consisted of capital expenditures.

Previous wording

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.

Current wording

Cash used in financing activities during the nine months ended September 26, 2025 consisted of net payments on our credit facilities of $4.4 million and payments for debt issuance and modification costs of $1.2 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 nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to 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 $115.0 million in the first quarter of 2024.