Ichor Holdings

Good afternoon and thank you for joining today's third quarter 2025 conference call. As you read our earnings press release and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in our earnings press release, those described in our annual report on Form 10-K for fiscal year 2024, and those described in subsequent filings with the SEC. You should consider all forward-looking statements in light of those and other risks and uncertainties. Additionally, we will be providing certain non-GAAP financial measures during this conference call. Our earnings press release and the financial supplement posted to our IR website each provide a reconciliation of these non-GAAP financial measures to their most comparable GAAP financial measures. On the call with me today, as usual, are Jeff Andreessen and Greg Swite. We also have our newly named CEO, Phil Barrows, joining us for today's call. Jeff will begin with an update on our business, and then Greg will provide additional details about our results and guidance. Phil will then make his remarks before opening the line for questions. I'll now turn over the call to Jeff Andreessen. Jeff?

Thank you, Claire, and welcome everyone to our Q3 earnings call. Thanks for joining us today. This afternoon, along with our third quarter earnings release, we announced that Phil Barros, our longtime CTO, has been named I-Corps CEO effective today. We are very pleased to have Phil joining us for today's call. Phil has been with I-Corps for over 20 years and held executive roles spanning engineering, product management, sales, account management, and corporate development and strategy. He has been instrumental in the development of the company's product strategy, and I look forward to watching the company's success develop under Phil's leadership. Third quarter revenues of $239 million exceeded the midpoint of our expectations entering the quarter. Similar to the upside witnessed in Q2, we once again experienced customer accelerations of certain gas panel deliveries for dry etch and deposition applications into the quarter. There's no question that the demand environment for etch and deposition is strong and has strengthened year to date, particularly in support of leading edge investments and gate all around and high bandwidth memory. We believe the Q3 upside, however, reflected a pull-in of deliveries from the fourth quarter, rather than an increase in overall second half demand among our primary customers. At the same time, the demand profile for other served markets continued to weaken as we progressed through the third quarter. While we've been discussing demand erosion affecting multiple applications for several quarters now, most significantly in the areas of EUV lithography, and silicon carbide, what surprised us most during Q3 was the decline in our non-semi end markets. As we entered the third quarter, we began to see order rates coming down from within our IMG business. As a reminder, the primary non-semi markets served by IMG include commercial space and aerospace and defense. IMG's business also brings strong contribution margin to our overall financial performance. So when we did not see IMG order rates recover to their planned levels inside of the quarter as we had expected in early August, this resulted in a one percentage point impact to our Q3 gross margin. As a result, our continued progress made during Q3 in ramping capacity of our internally sourced components and meeting our hiring objectives was overshadowed by the gross margin impact of lower IMG revenue volumes. With our current visibility, we are expecting IMG to continue to run at a lower rate for the remainder of the year, which is reflected in both our revenue and gross margin guidance for the fourth quarter. Our Q4 forecast now reflects meaningful forecast revisions from our third and fourth largest customers, reflecting the continued slowing in system build rates for certain applications and end markets. Our operational focus continues to be on improving the cost of our internal component manufacturing capacity to align with our targeted product margins and increasing our output to fulfill our customer demand. In parallel, we are making steady technical and operational progress on our two additional proprietary component products, which are designed to expand our addressable markets for both flow control and valves. we are targeting our first beta unit for customer evaluation in early 2026. These next-generation offerings will allow us to serve a broader range of applications and customer needs, further increasing our value across the semiconductor supply chain. As we reflect on the customer demand environment, there's no question that our 18% year-over-year revenue growth recorded for the first three quarters of 2025 demonstrates strong performance relative to overall wafer fab equipment or WFE growth. Our strong growth this year reflects increased demand from our two largest customers and a strengthening environment for etch and deposition, partially offset by declines in our EUV lithography business, our silicon carbide business, and the closure of some of our smaller underperforming business units during the year. With the currently strong demand environment for action deposition expected to continue, the beginning of a recovery in these underperforming served markets for I-Corps could very well result in Q4 2025, proving to be the trough quarter for this next phase of I-Corps' growth ahead with Phil Barros as CEO. With that, I'll turn it over to Greg to recap our Q3 results and provide further details around our financial outlook. Greg?

Thanks, Jeff. To begin, I would like to emphasize that the P&L metrics discussed today are non-GAAP measures. These measures exclude the impact of share-based compensation, amortization of acquired intangible assets, non-recurring charges, and discrete tax items and adjustments. There is a useful financial supplement available in the investor section of our website that summarizes our GAAP and non-GAAP financial results. as well as a summary of the balance sheet and cash flow information for the last several quarters. Third quarter revenues were $239.3 million above the midpoint of guidance, up 13% year over year, and roughly flat to Q2. The gross margin for the quarter was 12.1%. As Jeff discussed, while we made good progress in ramping output of our internally sourced products, The slowdown in our non-Semi business impacted Q3 gross margin by 100 basis points. With operating expenses aligned with forecast at $23.8 million, our operating income for Q3 was $5.1 million. Our net interest expense and net income tax expenses were likewise aligned with our expectations at $1.7 million and $0.7 million, respectively. The resulting EPS for the quarter was $0.07 per share. Our Q3 GAAP results reflect $18.3 million in restructuring costs related to the strategic consolidation of our global operations and consisted of inventory impairment and fixed asset charges as well as personal transition and facility shutdown costs. We anticipate there may be additional charges in the fourth quarter and fiscal 2026 as we continue to execute on the strategy. Turning to the balance sheet, our cash and equivalents totaled $92.5 million at the end of the quarter, flat to Q2. We generated $9 million in cash from operations, and our capital investments for the quarter were $7.1 million. Working capital changes reflect a consistent level of day sales outstanding and an $18 million decrease in inventory. Our planned CapEx investments for 2025 are still expected to total approximately 4% of revenue as we finish the build-out of our new Malaysia factory that aligns with our strategy to consolidate our global operations and capacity in close alignment with our customers. In Q3, we completed the refinancing of the company's credit facility in order to reduce our overall borrowing costs. This refinance impacted our gap provision for other expenses during the quarter. We reduced the fixed amount of the revolver facility from $400 million to $225 million in favor of an accordion feature. We also extended the term of the facility another five years. Our outstanding term loan balance remained unchanged and at the end of the quarter was $125 million and our net debt coverage ratio was 1.5 times, well below any potential threshold for covenants. Now I will discuss our guidance for the fourth quarter of 2025. With anticipated revenues in the range of $210 to $230 million, we expect our Q4 gross margins to be between 10% and 12%. In comparison to our earlier expectations for gross margin, About half of the reduction is due to the lower level of IMG revenues and the other half is due to the lower revenue from our third and fourth largest semi-customers. We expect Q4 operating expenses to remain relatively consistent with Q3 levels at approximately $23.7 million. Net interest expense for Q4 is expected to be approximately $1.7 million. We expect to record a tax expense in Q4 of approximately $900,000, reflecting a full year non-GAAP tax expense of $5.6 million, which is unchanged from our prior expectations. As you update your models for 2026, our assumed effective tax rate is currently expected to be in the range of 15 to 17%. Finally, Our EPS guidance range for Q4 of a loss of $0.14 to a profit of $0.02 reflects a share count of 34.5 million shares. I will now turn over the call to Phil Barros. Phil?