Ichor Holdings, Ltd. — FY2021 Form 10-K
Business and reporting period. Ichor designs and manufactures gas and chemical fluid-delivery systems, subsystems, and precision components, primarily for semiconductor equipment makers. The fiscal year ended December 31, 2021 comprised 53 weeks, including a 14-week fourth quarter; FY2020 comprised 52 weeks. The filing provides annual results, not a clear standalone Q4 financial summary.
Financial results
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $1,096.9 million | $914.2 million | +20.0% |
| Gross profit / margin | $177.5 million / 16.2% | $124.9 million / 13.7% | Margin +250 bps |
| Operating income / margin | $81.0 million / 7.4% | $41.6 million / 4.5% | — |
| Net income / diluted EPS | $70.9 million / $2.45 | $33.3 million / $1.42 | — |
| Non-GAAP net income / diluted EPS | $97.7 million / $3.37 | $59.0 million / $2.52 | — |
| Cash from operating activities | $15.3 million | $38.3 million | — |
| Capital expenditures | $20.8 million | $10.3 million | — |
Revenue growth reflected strong semiconductor equipment demand, partly offset by supply constraints. Improved gross margin was attributed to higher factory utilization, cost reductions, and customer mix; materials, logistics, and factory inefficiencies were offsets. GAAP net margin was approximately 6.5%. Non-GAAP figures exclude specified items and should be considered alongside GAAP results.
Liquidity, debt, and material changes
- Year-end cash was $75.5 million, down $177.4 million. Operating cash generation weakened as inventory rose $89.2 million and receivables rose $33.5 million, net of acquisitions.
- Principal debt outstanding was $295.0 million: $150.0 million term loan and $145.0 million drawn on a $250.0 million revolver. Debt net of cash was approximately $219.5 million before other adjustments. $7.5 million of principal was due within 12 months; the credit agreement matures in 2026.
- Management said cash, available credit, and operating cash flow should fund current obligations for at least 12 months and beyond. The filing does not state the exact undrawn revolver availability after other restrictions.
- In November 2021, Ichor acquired IMG for approximately $270 million, funded in part with additional borrowings. IMG contributed about $7.3 million of reported FY2021 revenue over approximately six weeks. Purchase accounting remained preliminary, including $161.0 million of goodwill.
- Comparisons are affected by FY2021’s extra week and the acquisition; reported growth is not purely organic.
Outlook, risks, and unusual items
- The filing gives no specific revenue, earnings, or margin guidance. Management expects R&D spending to rise in absolute dollars as it develops products and expands markets.
- Supply-chain constraints, component availability, logistics and labor costs, and COVID-related disruption—including Malaysian factory restrictions that reduced local output—pressured operations and could continue to affect revenue and margins.
- Customer concentration is substantial: Lam Research and Applied Materials represented approximately 53% and 32% of FY2021 sales, respectively. Ichor generally has no contracts requiring fixed or minimum customer purchases; customer forecasts may be changed or canceled.
- Other key risks include semiconductor-industry cyclicality, pricing pressure, supplier concentration, acquisition integration and impairment, and foreign-currency, regulatory, and geopolitical exposure.
- Internal control over financial reporting was ineffective at year-end because of material weaknesses in IT general controls over user access and program changes. The auditor issued an adverse ICFR opinion, while issuing an unqualified opinion on the financial statements. Management reported no identified financial-statement misstatement and expected remediation before FY2022 year-end.
- Unusual costs included $4.4 million in IMG transaction costs, $1.7 million in acquisition inventory fair-value charges, and a $0.7 million debt-extinguishment loss. The Singapore tax holiday provided a $9.7 million benefit versus the statutory rate. Management reported no pending environmental claims and did not expect ordinary-course legal matters to materially affect results.
Most important facts for investors to verify
- Whether IT-control remediation was completed and independently tested, and whether the next auditor report changes its ICFR conclusion.
- How IMG performs after integration, including realized growth, margins, synergies, and final purchase-price allocation.
- Whether working-capital investment—particularly inventory—and operating cash flow normalize as supply constraints ease.
- Customer concentration, order patterns, and any changes in outsourcing, pricing, or supplier qualification at Lam Research and Applied Materials.
- Debt covenant headroom, revolver availability, borrowing costs, and the company’s capacity to service debt while funding growth.