Ichor Holdings Ltd.
02/20/2026 | Press release | Distributed by Public on 02/20/2026 07:40
Annual Report for Fiscal Year Ending December 26, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements based upon our current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the section entitled Item 1A. - Risk Factors. For a comparison of our financial condition, results of operations, and cash flows for 2024 to 2023, refer to Part II, Item 7. in our 2024 Annual Report on Form 10-K, which was filed with the SEC on February 21, 2025.
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Overview
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We are a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components primarily for semiconductor capital equipment, as well as other industries such as defense/aerospace and medical. 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 provide precision-machined components, weldments, e-beam and laser welded components, precision vacuum and hydrogen brazing and surface treatment technologies, and other proprietary products.
Fluid delivery subsystems ensure accurate measurement and uniform delivery of specialty gases and chemicals at critical steps in the semiconductor manufacturing processes. Any malfunction or material degradation in fluid delivery reduces yields and increases the likelihood of manufacturing defects in these processes. Most OEMs outsource all or a portion of the design, engineering, and manufacturing of their gas delivery subsystems to a few specialized suppliers, including us. Additionally, many OEMs are outsourcing the design, engineering, and manufacturing of their chemical delivery subsystems due to the increased fluid expertise required to manufacture these subsystems. Outsourcing these subsystems allows OEMs to leverage their suppliers' highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes. Outsourcing enables OEMs to reduce their costs and development time, as well as provide growth opportunities for specialized subsystems suppliers like us.
We have a global footprint with production facilities in California, Minnesota, Oregon, Texas, Singapore, Malaysia, and Mexico.
The following table summarizes key financial information for the periods indicated. Amounts are presented in accordance with GAAP unless explicitly identified as being a non-GAAP metric. For a description of our non-GAAP metrics and reconciliations to the most comparable GAAP metrics, please refer to Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Resultswithin this Annual Report on Form 10-K.
| Year Ended | |||||||||||
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December 26, 2025 |
December 27, 2024 |
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| (dollars in thousands, except per share amounts) | |||||||||||
| Net sales | $ | 947,652 | $ | 849,040 | |||||||
| Gross margin | 9.3 | % | 12.2 | % | |||||||
| Gross margin, non-GAAP | 12.2 | % | 12.7 | % | |||||||
| Operating margin | (4.1) | % | (0.9) | % | |||||||
| Operating margin, non-GAAP | 2.2 | % | 2.2 | % | |||||||
| Net loss | $ | (52,781) | $ | (20,820) | |||||||
| Net income, non-GAAP | $ | 7,915 | $ | 5,888 | |||||||
| Diluted EPS | $ | (1.54) | $ | (0.64) | |||||||
| Diluted EPS, non-GAAP | $ | 0.23 | $ | 0.18 | |||||||
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Key Factors Affecting Our Business
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Investment in Semiconductor Manufacturing Equipment
The design and manufacturing of semiconductor devices is constantly evolving and becoming more complex in order to achieve greater performance and efficiency. To keep pace with these changes, OEMs need to refine their existing products and invest in developing new products. In addition, semiconductor device manufacturers will continue to invest in new wafer fabrication equipment to expand their production capacity and to support new manufacturing processes.
Outsourcing of Subsystems by Semiconductor OEMs
Faced with increasing manufacturing complexities, more complex subsystems, shorter product lead times, shorter industry spend cycles, and significant capital requirements, outsourcing of subsystems and components by OEMs has continued to grow. In the past two decades, OEMs have outsourced most of their gas delivery systems to suppliers such as us. OEMs have also started to outsource their chemical delivery systems in recent years. Our results will be affected by the degree to which outsourcing of these fluid delivery systems by OEMs continues to grow.
Cyclicality of Semiconductor Capital Equipment Industry
Our business is subject to the cyclicality of the capital expenditures of the semiconductor industry, which drives cyclicality in the semiconductor capital equipment industry in which we operate. In 2025, we derived over 90% of our sales from the semiconductor capital equipment industry. Demand for semiconductor capital equipment can fluctuate significantly based on changes in regulatory intervention and general economic conditions, including consumer spending, increased tariffs and trade restrictions, demand for semiconductor products, pricing, and other factors. In the past, these fluctuations have resulted in significant variations in the levels of spending within the semiconductor capital equipment industry, and as a result, our results of operations. The cyclicality of the semiconductor industry will continue to impact our results of operations in the future.
Customer Concentration
The number of capital equipment manufacturers for the semiconductor device industry is significantly consolidated, resulting in a small number of large manufacturers. Our customers are a significant component of this consolidation, resulting in our sales being concentrated in a few customers. For 2025, two customers with individual sales over 10%, Lam Research and Applied Materials, accounted for a combined 76% of total sales. Our customers often require reduced prices or other pricing, quality, or delivery commitments as a condition to their purchasing from us or increasing their purchase volume, which can, among other things, result in reduced gross margins in order to maintain or expand our market share. Although we do not have any long-term contracts that require customers to place certain order quantities with us, Lam Research and Applied Materials have been our customers for over 20 years.
Macroeconomic Conditions
The semiconductor capital equipment industry is inherently cyclical. Overall semiconductor equipment spending in 2025 increased compared to 2024 levels, characterized by healthy demand in our primary markets of etch and deposition. During fiscal year 2025, our revenue grew 11.6% to $947.7 million, driven by sustained demand from our primary customers, including Lam Research and Applied Materials. To better align our global operations with evolving customer demand and drive operational efficiencies, we initiated a geographic footprint rationalization and restructuring plan in 2025. As part of this realignment, we began transitioning certain manufacturing activities and relocating machining assets to our expanded high-volume facilities, while concurrently consolidating our footprint through the closure of our facilities in Scotland and Korea. During fiscal year 2025, we incurred restructuring, exit, severance, and related asset impairment charges of approximately $35 million in connection with these activities.
While we continue to benefit from the broader growth and cyclical recovery in the semiconductor equipment industry, our operations and financial results remain subject to significant risks and uncertainties within the global trade and regulatory landscape. Specifically, the global trade environment remains complex. The outcome of ongoing negotiations between the United States and other countries regarding "reciprocal tariffs" and national security-based trade measures remains uncertain and could materially affect our material costs, product pricing, and overall demand. To date, although we have experienced modest increases in the costs of certain materials, tariffs have not had a material adverse impact on our overall demand or cost structure. Additionally, our operations in Mexico currently benefit from exemptions under the U.S.-Mexico-Canada Agreement; however, we cannot provide any assurance that these exclusions and exemptions will remain in place indefinitely, particularly as the USMCA undergoes its scheduled joint review in July 2026. Any new, expanded, or reciprocal tariffs could have a material adverse impact on our business, financial condition, and results of operations in the future. The U.S. government also continues to expand and refine export controls and similar regulations aimed at restricting access to advanced semiconductor technology, particularly in China. These controls, which require specific export licenses for many of our customers' products, create ongoing market uncertainty, could reduce demand for our equipment, and may disrupt our global supply chain.
While challenging macroeconomic and geopolitical conditions may persist in the near and intermediate term, we remain confident in our belief that the long-term demand for semiconductors, semiconductor capital equipment, and our products will continue to grow, driven by an increasing need for expanded semiconductor productive capacity and advanced manufacturing process technologies.
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Components of Our Results of Operations
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The following discussion sets forth certain components of our statements of operations as well as significant factors impacting those items.
Net sales
We generate sales primarily from the design, manufacture, and sale of subsystems and components for semiconductor capital equipment. Sales are recognized when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Sales are recognized at a point-in-time, upon "delivery," as such term is defined within the contract, which is generally at the time of shipment, as that is when control of the promised good has transferred.
Cost of sales, gross profit, and gross margin
Cost of sales consists primarily of purchased materials, direct labor, indirect labor, factory overhead cost, and depreciation expense for our manufacturing facilities and equipment. Our business has a variable cost structure, with fixed costs comprising a smaller percentage of cost of sales compared to variable costs. Our existing global manufacturing plant capacity is scalable, and we are able to adjust to increased customer demand for our products without significant additional capital investment. We operate our business in this manner to avoid having excessive fixed costs during a cyclical downturn, while retaining flexibility to expand our production volumes during periods of growth. However, during a cyclical downturn, fixed costs become a larger percentage of cost of sales, which could result in a decrease to gross margin. Additionally, since the gross margin on each of our products can differ, our overall gross margin as a percentage of our sales can change based on the mix of products we sell in any period.
Operating expenses
Our operating expenses primarily include research and development and sales, general, and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, and share-based compensation. Operating expenses also include overhead costs for facilities, IT, and depreciation. In addition, our operating expenses include amortization expense of acquired intangible assets.
Research and development- Research and development expense consists primarily of activities related to product design and other development activities, new component testing and evaluation, and test equipment and fixture development. We expect research and development expense will continue to increase in absolute dollars due to continued development of our own intellectual property and product offerings for existing and new customer markets and increases in our customers' demand for new product designs.
Selling, general, and administrative- Selling expense consists primarily of salaries and commissions paid to our sales and sales support employees and other costs related to the sales of our products. General and administrative expense consists primarily of salaries, professional fees, and overhead associated with our administrative staff. We expect selling expenses to increase in absolute dollars as we continue to invest in expanding our markets and as we expand our international operations. We expect general and administrative expenses to also increase in absolute dollars as our business grows, due to an increase in employee-related costs, regulatory compliance, and accounting-related expenses.
Amortization of intangibles- Amortization of intangible assets is related to our finite-lived intangible assets and is computed using the straight-line method over the estimated economic life of the asset.
Interest expense, net
Interest expense, net of interest income on our cash deposits, consists of interest on our outstanding debt under our credit facilities, including amortization of debt issuance costs, and any other indebtedness we may incur in the future. Borrowings under our credit facilities are generally subject to variable interest rates, which fluctuate depending on macroeconomic factors and can result in increased interest expense in periods of rising interest rates.
Other expense, net
The functional currency of our international operations is the U.S. dollar. Transactions denominated in currencies other than the functional currency generate foreign exchange gains and losses that are included in other expense, net on the accompanying consolidated statements of operations. Substantially all of our sales contracts, and most of our agreements with third-party suppliers, provide for pricing and payment in U.S. dollars. Accordingly, these transactions are not subject to material exchange rate fluctuations.
Income tax expense
Income tax expense consists primarily of taxes on our taxable income related to our domestic and foreign operations, offset by the benefit of our tax holiday in Singapore, which expires in 2026. In 2025, the tax benefit resulting from our Singapore tax holiday, compared to the Singapore statutory tax rate, was approximately $3.4 million. During 2025, we maintained a valuation allowance against our U.S. state and federal deferred tax assets; therefore, we are not recording income tax benefits related to our U.S. GAAP losses. Income tax is also impacted by certain withholding taxes, Pillar 2 top-up taxes, stock option and restricted share unit ("RSU") activity, and credit generation.
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Critical Accounting Estimates
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Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. The majority of our inventories are valued on a standard cost basis, which approximates actual costs on a first-in, first-out basis. The remainder of our inventories are valued on an average cost basis, which approximates actual costs on a first-in, first-out basis. Quarterly, we assess the value of our inventory and periodically write it down for excess quantities or obsolescence to its estimated net realizable value. This assessment is based on estimated future consumption compared to inventory quantities on-hand. The estimate for future consumption is based on how assumptions of historical consumption, recency of purchases, backlog, and other factors indicate future consumption. Once the value of inventory is adjusted, the original cost of our inventory, less the write-down, represents its new cost basis. During 2025, 2024, and 2023, we wrote down inventory determined to be excessive or obsolete by $3.6 million, $8.6 million, and $9.8 million, respectively. We believe the accounting estimate related to excess and obsolete inventory is a critical accounting estimate because it requires us to make assumptions about future inventory consumption and recoverability of cost, which can be uncertain. Changes in these estimates can have a material impact on our financial statements.
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Results of Operations
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The following table sets forth our results of operations for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.
| Year Ended | |||||||||||
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December 26, 2025 |
December 27, 2024 |
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| (in thousands) | |||||||||||
| Net sales | $ | 947,652 | $ | 849,040 | |||||||
| Cost of sales | 859,877 | 745,706 | |||||||||
| Gross profit | 87,775 | 103,334 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 23,086 | 23,018 | |||||||||
| Selling, general, and administrative | 95,650 | 79,384 | |||||||||
| Amortization of intangible assets | 8,311 | 8,572 | |||||||||
| Total operating expenses | 127,047 | 110,974 | |||||||||
| Operating loss | (39,272) | (7,640) | |||||||||
| Interest expense, net | 6,620 | 9,266 | |||||||||
| Other expense, net | 1,674 | 1,148 | |||||||||
| Loss before income taxes | (47,566) | (18,054) | |||||||||
| Income tax expense | 5,215 | 2,766 | |||||||||
| Net loss | $ | (52,781) | $ | (20,820) | |||||||
The following table sets forth our results of operations as a percentage of our total net sales for the periods presented.
| Year Ended | |||||||||||
| December 26, 2025 | December 27, 2024 | ||||||||||
| Net sales | 100.0 | 100.0 | |||||||||
| Cost of sales | 90.7 | 87.8 | |||||||||
| Gross profit | 9.3 | 12.2 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 2.4 | 2.7 | |||||||||
| Selling, general, and administrative | 10.1 | 9.3 | |||||||||
| Amortization of intangible assets | 0.9 | 1.0 | |||||||||
| Total operating expenses | 13.4 | 13.1 | |||||||||
| Operating loss | (4.1) | (0.9) | |||||||||
| Interest expense, net | 0.7 | 1.1 | |||||||||
| Other expense, net | 0.2 | 0.1 | |||||||||
| Loss before income taxes | (5.0) | (2.1) | |||||||||
| Income tax expense | 0.6 | 0.3 | |||||||||
| Net loss | (5.6) | (2.5) | |||||||||
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Comparison of 2025 and 2024
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Net sales
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 947,652 | $ | 849,040 | $ | 98,612 | 11.6 | % | |||||||||||||||
The increase in net sales from 2024 to 2025 was primarily due to increased customer demand stemming from increased spending within the semiconductor capital equipment industry. Further detail is provided above under the section entitled "Key Factors Affecting Our Business".
Gross margin
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Cost of sales | $ | 859,877 | $ | 745,706 | $ | 114,171 | 15.3 | % | |||||||||||||||
| Gross profit | $ | 87,775 | $ | 103,334 | $ | (15,559) | (15.1 | %) | |||||||||||||||
| Gross margin | 9.3 | % | 12.2 | % | -290 | bps | |||||||||||||||||
The decrease in gross margin from 2024 to 2025 was primarily due to increased restructuring, country exit, and reduction-in-force related costs; increased supplies and tooling, employee, and occupancy costs; and unfavorable sales mix, partially offset by lower excess and obsolete inventory expense.
Research and development
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
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| Research and development | $ | 23,086 | $ | 23,018 | $ | 68 | 0.3 | % | |||||||||||||||
Research and development expenses remained approximately unchanged from 2024 to 2025.
Selling, general, and administrative
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Selling, general, and administrative | $ | 95,650 | $ | 79,384 | $ | 16,266 | 20.5 | % | |||||||||||||||
The increase in selling, general, and administrative expenses from 2024 to 2025 was primarily due to increased non-recurring restructuring, country exit, and reduction-in-force related costs of $9.4 million, increased employee-related costs of $2.8 million, increased legal and professional consulting costs of $1.3 million, increased outside service provider costs of $1.0 million, increased costs associated with software and IT services of $0.8 million, and increased share-based compensation of $1.7 million, partially offset by reduced transaction-related costs associated with our acquisitions pipeline of $0.8 million.
Amortization of intangible assets
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Amortization of intangibles assets | $ | 8,311 | $ | 8,572 | $ | (261) | (3.0) | % | |||||||||||||||
The decrease in amortization expense from 2024 to 2025 was primarily due to certain intangible assets becoming fully amortized in the fourth quarter of 2024.
Interest expense, net
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
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| Interest expense, net | $ | 6,620 | $ | 9,266 | $ | (2,646) | (28.6 | %) | |||||||||||||||
| Weighted average borrowings outstanding | $ | 125,508 | $ | 159,427 | $ | (33,919) | (21.3 | %) | |||||||||||||||
| Weighted average borrowing rate | 6.16 | % | 7.31 | % | -115 | bps | |||||||||||||||||
The decrease in interest expense, net from 2024 to 2025 was primarily due to decreases in the weighted average amounts borrowed and decreases in our weighted average borrowing rate. The reduction in our weighted average borrowings outstanding was primarily due to paying off our revolving credit facility in the first quarter of 2024. The decrease in our weighted average borrowing rate was due to lower average Secured Overnight Financing Rate ("SOFR") rates (-93bps), the variable component of our borrowing rate, and lower applicable margin (-22bps), the fixed component of our borrowing rate, as a result of lower average leverage ratios in 2025.
Other expense, net
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
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| Other expense, net | $ | 1,674 | $ | 1,148 | $ | 526 | 45.8 | % | |||||||||||||||
The change in other expense, net from 2024 to 2025 was primarily due to debt issuance and modification costs connected to amending our credit agreement.
Income tax expense
| Year Ended | Change | ||||||||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Income tax expense | $ | 5,215 | $ | 2,766 | $ | 2,449 | 88.5 | % | |||||||||||||||
| Loss before income taxes | $ | (47,566) | $ | (18,054) | $ | (29,512) | 163.5 | % | |||||||||||||||
| Effective tax rate | (11.0) | % | (15.3) | % | +430 | bps | |||||||||||||||||
The increase in income tax expense from 2024 to 2025 was primarily due to the impact of Organization for Economic Co-operation and Development ("OECD") Global Anti-Base Erosion Model Rules ("Pillar Two") on our Singapore operations, resulting in an increased tax accrual of $2.0 million. Because we have a valuation allowance recorded against our U.S. state and federal deferred income taxes, we did not record tax benefits from our U.S. taxable losses during 2025.
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Non-GAAP Financial Results
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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. 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.
Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP. Other companies may calculate non-GAAP results differently or may use other measures to evaluate their performance, both of which could reduce the usefulness of our non-GAAP results as a tool for comparison.
Because of these limitations, you should consider non-GAAP results alongside other financial performance measures and results presented in accordance with GAAP. In addition, in evaluating non-GAAP results, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving non-GAAP results and you should not infer from our presentation of non-GAAP results that our future results will not be affected by these expenses or other discrete or infrequent charges and gains that are outside of normal business operations.
The following table presents our unaudited non-GAAP gross profit and non-GAAP gross margin and a reconciliation from gross profit, the most comparable GAAP measure, for the periods indicated:
| Year Ended | |||||||||||
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December 26, 2025 |
December 27, 2024 |
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(dollars in thousands)
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| U.S. GAAP gross profit | $ | 87,775 | $ | 103,334 | |||||||
| Non-GAAP adjustments: | |||||||||||
| Restructuring plan costs (1) | 20,711 | - | |||||||||
| Share-based compensation | 2,856 | 3,360 | |||||||||
| Facility shutdown costs (2) | 2,760 | - | |||||||||
| Other (3) | 1,171 | 908 | |||||||||
| Non-GAAP gross profit | $ | 115,273 | $ | 107,602 | |||||||
| U.S. GAAP gross margin | 9.3 | % | 12.2 | % | |||||||
| Non-GAAP gross margin | 12.2 | % | 12.7 | % | |||||||
(1)Represents the costs associated with our Consolidation Restructuring Plan. Included in this amount for the twelve months ended December 26, 2025 are: (i) inventory impairment costs of $19.8 million; and (ii) severance costs associated with affected employees of $0.9 million.
(2)Represents costs associated with the exit from our Scotland and Korea operations. Included in this amount for the twelve months ended December 26, 2025 are: (i) inventory write-off charges of $1.7 million; and (ii) severance costs associated with affected employees of $1.1 million.
(3)Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland and Korea operations, as described above).
The following table presents our unaudited non-GAAP operating income and non-GAAP operating margin and a reconciliation from operating loss, the most comparable GAAP measure, for the periods indicated:
| Year Ended | |||||||||||
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December 26, 2025 |
December 27, 2024 |
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(dollars in thousands)
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| U.S. GAAP operating loss | $ | (39,272) | $ | (7,640) | |||||||
| Non-GAAP adjustments: | |||||||||||
| Restructuring plan costs (1) | 26,644 | - | |||||||||
| Share-based compensation | 16,728 | 15,576 | |||||||||
| Amortization of intangible assets | 8,311 | 8,572 | |||||||||
| Facility shutdown costs (2) | 6,726 | - | |||||||||
| Other (3) | 1,408 | 1,600 | |||||||||
| Transaction-related costs (4) | - | 785 | |||||||||
| Non-GAAP operating income | $ | 20,545 | $ | 18,893 | |||||||
| U.S. GAAP operating margin | (4.1) | % | (0.9) | % | |||||||
| Non-GAAP operating margin | 2.2 | % | 2.2 | % | |||||||
(1)Represents the costs associated with our Consolidation Restructuring Plan. Included in this amount for the twelve months ended December 26, 2025 are: (i) inventory impairment costs of $19.8 million; (ii) fixed asset charges of $3.1 million; (iii) severance costs associated with affected employees of $1.7 million; (iv) other direct and incremental restructuring related costs of $1.2 million; and (v) operating lease ROU asset impairment charges of $0.9 million.
(2)Represents costs associated with the exit from our Scotland and Korea operations. Included in this amount for the twelve months ended December 26, 2025 are: (i) severance costs associated with affected employees of $1.8 million; (ii) inventory write-off charges of $1.7 million; (iii) operating lease ROU asset impairment charges of $1.3 million; (iv) other direct and incremental facility exit-related costs of $1.3 million; and (v) accelerated depreciation charges of $0.6 million.
(3)Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland and Korea operations, as described above).
(4)Represents transaction-related costs incurred in connection with our acquisitions pipeline.
The following table presents our unaudited non-GAAP net income and non-GAAP diluted EPS and a reconciliation from net income (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."
| Year Ended | |||||||||||
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December 26, 2025 |
December 27, 2024 |
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(dollars in thousands, except per share amounts)
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| U.S. GAAP net loss | $ | (52,781) | $ | (20,820) | |||||||
| Non-GAAP adjustments: | |||||||||||
| Restructuring plan costs (1) | 26,644 | - | |||||||||
| Share-based compensation | 16,728 | 15,576 | |||||||||
| Amortization of intangible assets | 8,311 | 8,572 | |||||||||
| Facility shutdown costs (2) | 6,726 | - | |||||||||
| Other (3) | 1,408 | 1,600 | |||||||||
| Transaction-related costs (4) | - | 785 | |||||||||
| Loss on extinguishment of debt (5) | 667 | - | |||||||||
| Tax adjustments related to non-GAAP adjustments (6) | 129 | 175 | |||||||||
| Tax expense (benefit) from valuation allowance (7) | 83 | - | |||||||||
| Non-GAAP net income | $ | 7,915 | $ | 5,888 | |||||||
| U.S. GAAP diluted EPS | $ | (1.54) | $ | (0.64) | |||||||
| Non-GAAP diluted EPS | $ | 0.23 | $ | 0.18 | |||||||
| Shares used to compute non-GAAP diluted EPS | 34,358,211 | 33,135,552 | |||||||||
(1)Represents the costs associated with our Consolidation Restructuring Plan. Included in this amount for 2025 are: (i) inventory impairment costs of $19.8 million; (ii) fixed asset charges of $3.1 million; (iii) severance costs associated with affected employees of $1.7 million; (iv) other direct and incremental restructuring related costs of $1.2 million; and (v) operating lease ROU asset impairment charges of $0.9 million.
(2)Represents costs associated with the exit from our Scotland and Korea operations. Included in this amount for the twelve months ended December 26, 2025 are: (i) severance costs associated with affected employees of $1.8 million; (ii) inventory write-off charges of $1.7 million; (iii) operating lease ROU asset impairment charges of $1.3 million; (iv) other direct and incremental facility exit-related costs of $1.3 million; and (v) accelerated depreciation charges of $0.6 million.
(3)Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland and Korea operations, as described above).
(4)Represents transaction-related costs incurred in connection with our acquisitions pipeline.
(5)In September 2025, we entered into an amended and restated credit agreement, which includes a group of financial institutions as direct lenders underlying the agreement. Under the debt modification literature codified in ASC 470, a portion of the refinance was treated as an extinguishment. Accordingly, $0.2 million of existing capitalized deferred issuance costs were written off as a loss on extinguishment of debt and $0.5 million of third-party and lender fees were expensed as incurred.
(6)Adjusts GAAP income tax expense for the impact of our non-GAAP adjustments, which are presented on a gross basis.
(7)During the first quarter of 2025, we recorded a valuation allowance against the deferred tax assets of our Korea operations.
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Liquidity and Capital Resources
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The following section discusses our liquidity and capital resources, including our primary sources of liquidity and our material cash requirements. Our cash and cash equivalents are maintained in highly liquid and accessible accounts with no significant restrictions.
Material Cash Requirements
Our primary liquidity requirements arise from: (i) working capital requirements, including procurement of raw materials inventory for use in our factories and employee-related costs, (ii) business acquisitions, (iii) interest and principal payments under our credit facilities, (iv) research and development investments and capital expenditures, (v) payment of income taxes, and (vi) payments associated with our noncancellable leases and related occupancy costs. We have no significant long-term purchase commitments related to procuring raw materials inventory. Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and are therefore subject to prevailing global macroeconomic conditions, such as interest rates, increased tariffs and retaliatory trade policies, geopolitical events, and financial, business, and other factors, some of which are beyond our control.
We believe that our cash and cash equivalents, the amounts available under our credit facilities, and our operating cash flow will be sufficient to fund our business and our current obligations for at least the next 12 months and beyond.
Sources and Conditions of Liquidity
Our ongoing sources of liquidity to fund our material cash requirements are primarily derived from: (i) sales to our customers and the related changes in our net operating assets and liabilities and (ii) proceeds from our credit facilities and equity offerings, when applicable.
Summary of Cash Flows
We ended 2025 with cash and cash equivalents of $98.3 million, a decrease of $10.4 million from 2024, which was primarily due to capital expenditures of $36.2 million and net payments on our credit facilities of $4.4 million, partially offset by cash provided by operating activities of $29.9 million.
The following table sets forth a summary of operating, investing, and financing activities for the periods presented:
| Year Ended | |||||||||||||||||
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December 26, 2025 |
December 27, 2024 |
December 29, 2023 |
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| (in thousands) | |||||||||||||||||
| Cash provided by operating activities | $ | 29,886 | $ | 27,880 | $ | 57,632 | |||||||||||
| Cash used in investing activities | (36,169) | (17,636) | (15,496) | ||||||||||||||
| Cash provided by (used in) financing activities | (4,096) | 18,470 | (48,651) | ||||||||||||||
| Net increase (decrease) in cash | $ | (10,379) | $ | 28,714 | $ | (6,515) | |||||||||||
Our cash provided by operating activities of $29.9 million during 2025 consisted of net non-cash charges of $73.7 million, which consisted primarily of depreciation and amortization of $33.5 million, inventory impairment of $19.8 million, and share-based compensation expense of $16.7 million, and a decrease in our net operating assets and liabilities of $9.0 million, partially offset by a net loss of $52.8 million.
The decrease in our net operating assets and liabilities of $9.0 million during 2025 was primarily due to a decrease in accounts receivable of $16.1 million and a decrease in prepaid assets of $7.9 million, partially offset by a decrease in accrued and other liabilities of $7.1 million and a decrease in accounts payable of $6.4 million.
Cash used in investing activities during 2025 and 2024 consisted of capital expenditures.
Cash used in financing activities during 2025 consisted of net payments on our credit facilities of $4.4 million. The decrease in cash provided by financing activities from 2024 to 2025 was primarily due to net proceeds from our issuance of shares in the prior year.
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Recent Accounting Pronouncements
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From time to time, the Financial Accounting Standards Board ("FASB") or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update ("ASU").
To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 1 - Organization and Summary of Significant Accounting Policiesof our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K.
Ichor Holdings Ltd. published this content on February 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 20, 2026 at 13:40 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]