| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
29, 2023
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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ITEM 1B. |
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| Fiscal Period | Period Ending | Weeks in Period | ||||||||||||
Fiscal Year 2023: | December 29, 2023 | 52 | ||||||||||||
| First Quarter | March 31, 2023 | 13 | ||||||||||||
| Second Quarter | June 30, 2023 | 13 | ||||||||||||
| Third Quarter | September 29, 2023 | 13 | ||||||||||||
| Fourth Quarter | December 29, 2023 | 13 | ||||||||||||
| Fiscal Year 2022: | December 30, 2022 | 52 | ||||||||||||
First Quarter | April 1, 2022 | 13 | ||||||||||||
Second Quarter | July 1, 2022 | 13 | ||||||||||||
Third Quarter | September 30, 2022 | 13 | ||||||||||||
Fourth Quarter | December 30, 2022 | 13 | ||||||||||||
Fiscal Year 2021: | December 31, 2021 | 53 | ||||||||||||
First Quarter | March 26, 2021 | 13 | ||||||||||||
Second Quarter | June 25, 2021 | 13 | ||||||||||||
Third Quarter | September 24, 2021 | 13 | ||||||||||||
Fourth Quarter | December 31, 2021 | 14 | ||||||||||||
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Company Overview
| Company Overview | ||
The broad technical expertise of our engineering team, coupled with our early customer engagement approach, enables us to offer innovative and reliable solutions to complex fluid delivery challenges. With over two decades of experience developing complex fluid delivery subsystems and meeting the constantly changing production requirements of leading semiconductor OEMs, we have developed expertise in fluid delivery that we offer to our OEM customers. In addition, our capital efficient model provides us the flexibility to fulfill increased demand and meet changing customer requirements with relatively low levels of capital expenditures. With an aim to provide superior customer service, we have a global footprint with many facilities strategically located in close proximity to our customers. We have long standing relationships with top tier OEM customers, including Applied Materials, Lam Research, Applied Materials, and ASML, which were our three largest customers by sales in 2022.
2023.
Our Competitive Strengths
| Our Competitive Strengths | ||
Capital Efficient and Scalable Business Model
Our Growth Strategy
| Our Growth Strategy | ||
Continue to Improve Our Manufacturing Process Efficiency
Our Products and Services
| Our Products and Services | ||
History
| History | ||
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•In April 2012, we acquired Semi Scenic UK Limited to provide refurbishment services for legacy tools. |
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•In April 2016, we purchased Ajax-United Patterns & Molds, Inc. for $17.6 million to add chemical delivery subsystem capabilities with existing customers. |
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•In December 2017 we acquired Talon Innovations Corporation for $137.8 million to add to our gas delivery subsystem, precision machining, and component manufacturing capabilities. |
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•In April 2018, we acquired IAN Engineering Co., Ltd. for $6.5 million to provide us exposure to and growth opportunities in the Korean semiconductor capital equipment market. |
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•In December 2020, we acquired certain operating assets and assumed the operations of a business in Nogales, Mexico for $5.0 million to increase our precision machined component manufacturing capacity. |
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Customers, Sales, and Marketing
| Customers, Sales, and Marketing | ||
Operations, Manufacturing, and Supply Chain Management
| Operations, Manufacturing, and Supply Chain Management | ||
Manufacturing
Technology Development and Engineering
| Technology Development and Engineering | ||
Competition
| Competition | ||
The fluid delivery subsystem market is concentrated, and we face competition, for example, from Ultra Clean Technology, with additional competition from other regional suppliers. The chemical delivery subsystem, weldments, and precision machining industries are fragmented, and we face competition from numerous smaller suppliers. In addition, the market for tool refurbishment is fragmented, and we compete with many regional competitors. The primary competitive factors we emphasize include:
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•customer relationships; |
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•early engagement with customers; |
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•large and experienced engineering staff; |
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•design-to-delivery cycle times; and |
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Intellectual Property
| Intellectual Property | ||
Human Capital Resources
| Human Capital Resources | ||
Total Rewards
| Environmental, Health, and Safety Regulations | ||
| Available Information | ||
Our internet address is ichorsystems.com. We make a variety of information available, free of charge, at our Investor Relations website, ir.ichorsystems.com. This information includes our Annual Reports on Form 10‑K, our Quarterly Reports on Form 10‑Q, our Current Reports on Form 8‑K, and any amendments to those reports as soon as reasonably practicable after we electronically file those reports with or furnish them to the Securities and Exchange Commission (“SEC”),SEC, as well as our Code of Business Ethics and Conduct and other governance documents.
Risk Factor Summary
| Risk Factor Summary | ||
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•Our business depends significantly on expenditures by manufacturers in the semiconductor capital equipment industry. |
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•We rely on a very small number of OEM customers for a significant portion of our sales. |
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•Our customers exert a significant amount of negotiating leverage over us. |
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•The industries in which we participate are highly competitive and rapidly evolving. |
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•We are exposed to risks associated with weakness in the global economy and geopolitical instability. |
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•If we do not keep pace with developments in the industries we serve and with technological innovation generally, our products and services may not be competitive. |
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•We must design, develop, and introduce new products that are accepted by OEMs in order to retain our existing customers and obtain new customers. |
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•Acquisitions may present integration challenges, and the goodwill, indefinite-lived intangible assets, and other long-term assets recorded in connection with such acquisitions may become impaired. |
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•We are subject to fluctuations in foreign currency exchange rates. |
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•The manufacturing of our products is highly complex. |
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•Defects in our products could damage our reputation, decrease market acceptance of our products, and result in potentially costly litigation. |
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•We may incur unexpected warranty and performance guarantee claims. |
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•Our dependence on a limited number of suppliers may harm our production output and increase our costs. |
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•We may face supply chain disruptions, manufacturing interruptions or delays. |
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•We are subject to order and shipment uncertainties. |
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•Our customers generally require that they qualify our engineering, documentation, manufacturing and quality control procedures. |
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•We may be subject to interruptions or failures in our information technology systems. |
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•Our business is largely dependent on the know-how of our employees, and we generally do not have an intellectual property position that is protected by patents. |
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•Our business is subject to a variety of U.S. and international laws, rules, policies, and other obligations regarding privacy, data protection, and other matters. |
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•Third parties have claimed and may in the future claim we are infringing their intellectual property. |
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•From time to time, we may become involved in other litigation and regulatory proceedings. |
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•As a global company, we are subject to the risks of doing business internationally. |
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•Changes in U.S. or international trade policy, tariffs, and import/export regulations may have a material adverse effect on our business. |
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•We are subject to numerous environmental laws and regulations. |
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•Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business. |
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•We previously identified material weaknesses in our internal control over financial reporting, and the failure to maintain an effective system of internal controls and procedures may cause investors to lose confidence in our financial reporting. |
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•We have a substantial amount of indebtedness and are subject to restrictive covenants. |
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| Economic and | ||
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Economic and Strategic Risks
Our business depends significantly on expenditures by manufacturers in the semiconductor capital equipment industry, which, in turn, is dependent upon the semiconductor device industry. When that industry experiences cyclical downturns, demand for our products and services is likely to decrease, which would likely resultgenerally decreases, resulting in decreased sales. We may also be forced to reduce our prices during cyclical downturns without being able to proportionally reduce costs.
Certain of our competitors may have or may develop greater financial, technical, manufacturing and marketing resources than we do. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements, devote greater resources to the development, promotion, sale and support of their products and services, and reduce prices to increase market share. In addition to organic growth by our competitors, there may be merger and acquisition activity among our competitors and potential competitors that may provide our competitors and potential competitors with an advantage over us by enabling them to expand their product offerings and service capabilities to meet a broader range of customer needs. The introduction of new technologies and new market entrants may also increase competitive pressures.
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•design innovative and performance-enhancing features that differentiate our products from those of our competitors; |
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•identify emerging technological trends in the industries we serve, including new standards for our products; |
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•accurately identify and design new products to meet market needs; |
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•collaborate with OEMs to design and develop products on a timely and cost-effective basis; |
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•ramp-up production of new products, especially new subsystems, in a timely manner and with acceptable yields; |
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•manage our costs of product development and the costs of producing the products that we sell; |
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•successfully manage development production cycles; and |
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We must design, develop, and introduce new products that are accepted by OEMs in order to retain our existing customers and obtain new customers.
| Business and Operational Risks | ||
Our business has been adversely affected by the COVID‑19 pandemic, which may continue to negatively affect our business, financial condition, and operating results.
Our business could be adversely affected by the effects of the ongoing COVID-19 global pandemic, the evolution of which continues to be uncertain. Recurring COVID-19 outbreaks around the world, such as those most recently occurring in China following the suspension of China’s zero-COVID policy, have heightened concerns relating to new and potentially more dangerous virus variants, which, if transmitted around the globe, could lead to the re-introduction of restrictions that were in place in 2020, 2021, and to a lesser extent in 2022, or even the adoption of other more strict measures to combat outbreaks. In 2020 and 2021, we experienced adverse impacts to our revenues and operating margins which resulted from reduced factory output stemming from social distancing measures, increased direct costs within our factories associated with employee personal protective equipment, facility cleaning and layout changes, increased logistics costs and employee labor costs, as well as other operating inefficiencies. In particular, the ongoing COVID‑19 pandemic and general macroeconomic factors have caused a sustained shortage of skilled labor, increased turnover, and labor cost inflation, which may continue to result in increased labor costs and negatively affect our ability to operate our manufacturing facilities and overall business efficiently. We may face similar effects to our results of operations in the event of a resurgence of COVID-19 into 2023, such as the resurgence of COVID-19 in China in late 2022, which has exacerbated and may continue to exacerbate supply chain disruptions, particularly as China’s national policies relating to COVID-19 are susceptible to unpredictable changes.
The COVID-19 pandemic contributed to the current macroeconomic environment and caused significant disruptions and volatility in the global capital markets, which may increase the cost of capital and adversely impact our ability to access capital. A resurgence of COVID-19 or another pandemic with effects similar to those of COVID-19 may adversely affect our liquidity position as well as our customers’ ability to make timely payments to us or our ability to make timely payments to our suppliers. As the COVID-19 pandemic continues to evolve, its ultimate impact on our business is subject to change. A severe outbreak of COVID-19 or another pandemic can disrupt our business and adversely materially impact our financial results.
Business and Operational Risks
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•cause delays in product introductions and shipments; |
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•result in increased costs and diversion of development resources; |
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•cause us to incur increased charges due to unusable inventory; |
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•require design modifications; |
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•result in liability for the unintended release of hazardous materials; |
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•result in product warranty liability; |
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•create claims for rework, replacement or damages under our contracts with customers, as well as indemnification claims from customers; |
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•decrease market acceptance of, or customer satisfaction with, our products, which could result in decreased sales and increased product returns; |
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•result in the loss of existing customers or impair our ability to attract new customers; or |
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•entering into any new line of business; |
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•amending or modifying our organizational documents; |
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•selling all or substantially all of our assets, or merging or amalgamating with a third party; |
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•incurring borrowings in excess of a specific amount; |
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•making senior management changes; and |
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Our business is subject to the risks of severe weather, earthquakes, fire, power outages, floods, and other catastrophic events, including weather events resulting from climate change, and to interruption by man-made disruptions, such as terrorism.
Legal and Regulatory Risks
| Legal and Regulatory Risks | ||
Third parties have claimed and may in the future claim we are infringing their intellectual property, which could subject us to litigation or licensing expenses, and we may be prevented from selling our products if any such claims prove successful.
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•the imposition of governmental controls or changes in government regulations, including tax regulations; |
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•difficulties in enforcing our intellectual property rights; |
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•difficulties in developing relationships with local suppliers; |
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•difficulties in attracting new international customers; |
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•difficulties in complying with foreign and international laws and treaties; |
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•restrictions on the export of technology, including those based on positions taken by governmental agencies regarding possible national, commercial or security issues posed by the development, sale or export of certain products and technologies; |
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•compliance with U.S. and international laws involving international operations, including the Foreign Corrupt Practices Act, export control laws and export license requirements; |
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•difficulties in achieving headcount reductions due to unionized labor and works councils; |
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•restrictions on transfers of funds and assets between jurisdictions; |
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•geo-political instability; |
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Changes in U.S. or international trade policy, tariffs, and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.
changes, and we may face competition from companies that exist in a more favorable legal or regulatory environment than we do who are able to sell products for certain applications to certain customers that we are prohibited from selling to under applicable export controls, for example.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.
•incur additional indebtedness or contingent obligations; •create or incur liens, negative pledges or guarantees; •make investments; •make loans; •merge, consolidate or sell substantially all of our assets; •make certain payments on indebtedness; •pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; •enter into certain agreements that restrict distributions from restricted subsidiaries; •enter into transactions with affiliates; •change the nature of our business; and •demand for and market acceptance of our products as a result of the cyclical nature of the industries we serve or otherwise, often resulting in reduced sales during industry downturns and increased sales during periods of industry recovery or growth; •overall economic conditions; •changes in the timing and size of orders by our customers; •strategic decisions by our customers to terminate their outsourcing relationship with us or give market share to our competitors; •consolidation by our customers; •cancellations and postponements of previously placed orders; •pricing pressure from either our competitors or our customers, resulting in the reduction of our product prices or loss of market share; •disruptions or delays in the manufacturing of our products or in the supply of components or raw materials that are incorporated into or used to manufacture our products, thereby causing us to delay the shipment of products; •decreased margins for several or more quarters following the introduction of new products, especially as we introduce new subsystems or other products or services; •changes in design-to-delivery cycle times; •inability to reduce our costs quickly in step with reductions in our prices or in response to decreased demand for our products; •changes in our mix of products sold; •write-offs of excess or obsolete inventory; •one-time expenses or charges; and •provisions that authorize our Board of Directors, without action by our shareholders, to issue additional ordinary shares and preferred shares with preferential rights determined by our Board of Directors; •provisions that permit only a majority of our Board of Directors or the chairman of our Board of Directors to call shareholder meetings and therefore do not permit shareholders to call shareholder meetings; and The issuance of preferred shares could adversely affect holders of ordinary shares. Approximate California 271,300 Oregon 172,100 Mexico 62,900 Texas 47,800 Scotland 37,700 Malaysia 31,900 Korea 18,500 Nevada 12,500 24, 2023. Year Ended December 30, 2022 December 31, 2021 (dollars in thousands, except per share amounts) Net sales $ 1,280,069 $ 1,096,917 Gross margin 16.6 % 16.2 % Gross margin, non-GAAP 17.0 % 16.7 % Operating margin 6.7 % 7.4 % Operating margin, non-GAAP 9.8 % 10.7 % Net income $ 72,804 $ 70,899 Net income, non-GAAP $ 104,863 $ 97,698 Diluted EPS $ 2.51 $ 2.45 Diluted EPS, non-GAAP $ 3.62 $ 3.37 shipment, as that is when control of the promised good has transferred. assets. Net Income Tax Expense Year Ended December 30, 2022 December 31, 2021 (in thousands) Net sales $ 1,280,069 $ 1,096,917 Cost of sales 1,068,205 919,437 Gross profit 211,864 177,480 Operating expenses: Research and development 19,564 15,691 Selling, general, and administrative 88,572 65,857 Amortization of intangible assets 17,905 14,918 Total operating expenses 126,041 96,466 Operating income 85,823 81,014 Interest expense, net 11,056 6,451 Other expense (income), net (563 ) 807 Income before income taxes 75,330 73,756 Income tax expense 2,526 2,857 Net income $ 72,804 $ 70,899 Year Ended December 30, 2022 December 31, 2021 Net sales 100.0 100.0 Cost of sales 83.4 83.8 Gross profit 16.6 16.2 �� Operating expenses: Research and development 1.5 1.4 Selling, general, and administrative 6.9 6.0 Amortization of intangible assets 1.4 1.4 Total operating expenses 9.8 8.8 Operating income 6.7 7.4 Interest expense, net 0.9 0.6 Other expense (income), net 0.0 0.1 Income before income taxes 5.9 6.7 Income tax expense 0.2 0.3 Net income 5.7 6.5 Year Ended Change December 30, 2022 December 31, 2021 Amount % (dollars in thousands) Net sales $ 1,280,069 $ 1,096,917 $ 183,152 16.7 % industry. Further detail is provided above under the section entitled 2022 to 34.7% in 2023. 2022 to 65.3% in 2023. Year Ended Change December 30, 2022 December 31, 2021 Amount % (dollars in thousands) Cost of sales $ 1,068,205 $ 919,437 $ 148,768 16.2 % Gross profit $ 211,864 $ 177,480 $ 34,384 19.4 % Gross margin 16.6 % 16.2 % + 40 bps LiquidityIn addition, in October 2021, the Organization for Economic Co-operation and Capital Resources RisksDevelopment (“OECD”) issued model rules for a new global minimum tax framework, commonly referred to as “Pillar Two,” which includes the introduction of a 15% global minimum to become effective beginning after January 1, 2024. To date, approximately 140 countries have tentatively signed a framework agreeing in principle to this initiative several countries are in various stages of implementing Pillar Two proposals in local tax legislation. The OECD continues to refine the technical guidance. Our effective tax rate and cash tax payments could increase in future years as a result of these changes.27Liquidity and Capital Resources Risks We have a substantial amount of indebtedness, which could adversely affect us, including by decreasing our business flexibility. The agreement that governs our indebtedness contains covenants that could impact our ability to perform certain transactions without obtaining pre-approval from our lenders.As of December 30, 2022,29, 2023, we had total principal outstanding of $142.5$135.0 million under our term loan facility and $160.0$115.0 million under our revolving credit facility (collectively “credit facilities”). We may incur additional indebtedness in the future. Our credit facilities contain certain restrictive covenants and conditions, including limitations on our ability to, among other things:•incur additional indebtedness or contingent obligations;•create or incur liens, negative pledges or guarantees;•make investments;•make loans;•sell or otherwise dispose of assets;•merge, consolidate or sell substantially all•sell or otherwise dispose of our assets;•make certain payments on indebtedness;•pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments;•enter into certain agreements that restrict distributions from restricted subsidiaries;•enter into transactions with affiliates;•change the nature of our business; and•amend the terms of our organizational documents.•amend the terms of our organizational documents.As a result of these covenants, we may be restricted in our ability to pursue new business opportunities or strategies or to respond quickly to changes in the industries that we serve. A violation of any of these covenants would be deemed an event of default under our credit facilities. In such event, upon the election of the lenders, the loan commitments under our credit facilities would terminate and the principal amount of the loans and accrued interest then outstanding would be due and payable immediately. A default may also result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event our lenders accelerate the repayment of our borrowings, we cannot ensure that we and our subsidiaries would have sufficient funds to repay such indebtedness or be able to obtain replacement financing on a timely basis or at all. These events could force us into bankruptcy or liquidation, which could have a material adverse effect on our business, financial condition and results of operations.We also may need to negotiate changes to the covenants in the agreements governing our credit facilities in the future if there are material changes in our business, financial condition or results of operations, but we cannot ensure that we will be able to do so on terms favorable to us or at all.Furthermore, our ability to make scheduled payments on or to refinance our indebtedness, including under our credit facilities, depends on our financial condition and results of operations, which are subject to prevailing economic and competitive conditions and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to fund our day-to-day operations or to pay the principal, premium, if any, and interest on our indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to sell assets or operations, seek additional capital or restructure or refinance our indebtedness. If we cannot make scheduled payments on our debt, we will be in default and, as a result, the lenders under our credit facilities could terminate their commitments to loan money, or foreclose against the assets securing such borrowings, and we could be forced into bankruptcy or liquidation, in each case, which would have a material adverse effect on our business, financial condition and results of operations.28The interest expense associated with our indebtedness is subject to variable rates, and increased debt service costs as a result of higher interest rates could adversely affect our business, financial condition and results of operations.Borrowings under our credit facilities are generally subject to variable interest rates, which fluctuate depending on macroeconomic factors, and expose us to interest rate risk. If interest rates increase, our debt service costs on these borrowings would also increase, even if the amount borrowed remains the same, and would require us to use more of our available cash to service our indebtedness, resulting in decreased net income and cash flows, including cash available for servicing our indebtedness. There can also be no assurance that we will be able to enter into swap agreements or other hedging arrangements in the future if we desire to do so, or that any future hedging arrangements will offset increases in interest rates.Ordinary Share Ownership Risks Ordinary Share Ownership RisksOur quarterly sales and operating results fluctuate significantly from period to period, and this may cause volatility in our share price.Our quarterly sales and operating results have fluctuated significantly in the past, and we expect them to continue to fluctuate in the future for a variety of reasons, including the following:•demand for and market acceptance of our products as a result of the cyclical nature of the industries we serve or otherwise, often resulting in reduced sales during industry downturns and increased sales during periods of industry recovery or growth;•overall economic conditions;•changes in the timing and size of orders by our customers;•strategic decisions by our customers to terminate their outsourcing relationship with us or give market share to our competitors;•consolidation by our customers;•cancellations and postponements of previously placed orders;•pricing pressure from either our competitors or our customers, resulting in the reduction of our product prices or loss of market share;•disruptions or delays in the manufacturing of our products or in the supply of components or raw materials that are incorporated into or used to manufacture our products, thereby causing us to delay the shipment of products;•decreased margins for several or more quarters following the introduction of new products, especially as we introduce new subsystems or other products or services;•changes in design-to-delivery cycle times;•inability to reduce our costs quickly in step with reductions in our prices or in response to decreased demand for our products;•changes in our mix of products sold;•write-offs of excess or obsolete inventory;•one-time expenses or charges; and•announcements by our competitors of new products, services or technological innovations, which may, among other things, render our products less competitive.•announcements by our competitors of new products, services or technological innovations, which may, among other things, render our products less competitive.As a result of the foregoing, we believe that quarter-to-quarter comparisons of our sales and results of operations may not be meaningful and that these comparisons may not be an accurate indicator of our future performance. Changes in the timing or terms of a small number of transactions could disproportionately affect our results of operations in any particular quarter. Moreover, our results of operations in one or more future quarters may fail to meet our guidance or the expectations of securities analysts or investors. If this occurs, we would expect to experience an immediate and significant decline in the trading price of our ordinary shares.Further, if the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our ordinary shares could decline for reasons unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause our share price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.29Our articles of association contain anti-takeover provisions that could adversely affect the rights of our shareholders.Our articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of controlchange-of-control transactions, including, among other things:•provisions that authorize our Board of Directors, without action by our shareholders, to issue additional ordinary shares and preferred shares with preferential rights determined by our Board of Directors;•provisions that permit only a majority of our Board of Directors or the chairman of our Board of Directors to call shareholder meetings and therefore do not permit shareholders to call shareholder meetings; and•provisions that impose advance notice requirements, minimum shareholding periods and ownership thresholds, and other requirements and limitations on the ability of shareholders to propose matters for consideration at shareholder meetings.•provisions that impose advance notice requirements, minimum shareholding periods and ownership thresholds, and other requirements and limitations on the ability of shareholders to propose matters for consideration at shareholder meetings.These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction.Our Board of Directors is authorized to issue preferred shares without any action on the part of holders of our ordinary shares. Our Board of Directors also has the power, without shareholder approval, to set the terms of any such preferred shares that may be issued, including voting rights, dividend rights, and preferences over our ordinary shares with respect to dividends or if we liquidate, dissolve or wind up our business and other terms. If we issue preferred shares in the future that have preference over our ordinary shares with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred shares with voting rights that dilute the voting power of our ordinary shares, the rights of holders of our ordinary shares or the price of our ordinary shares could be adversely affected.Our shareholders may face difficulties in protecting their interests as a shareholder, as Cayman Islands law provides substantially less protection when compared to the laws of the United States.Our corporate affairs are governed by our amended and restated memorandum and articles of association and by the Companies Law (2013 Revision) and common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands have a less exhaustive body of securities laws as compared to the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the United States federal courts.Furthermore, since we are a Cayman Islands company with a portion our assets located outside of the United States, it may be difficult or impossible for shareholders to bring an action against us in the United States in the event that shareholders believe that their rights have been infringed under U.S. federal securities laws or otherwise. Even if shareholders are successful in bringing an action of this kind, the laws of the Cayman Islands may render shareholders unable to enforce a judgment against our assets. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States.As a result of all of the above, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.30If a U.S. person is treated as owning at least 10% of our shares, such person may be subject to adverse U.S. federal income tax consequences.If a U.S. person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). Because our group includes one or more U.S. subsidiaries, in certain circumstances we could be treated as a controlled foreign corporation or certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether we are or are not treated as a controlled foreign corporation).A United StatesU.S. shareholder of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in United StatesU.S. property by controlled foreign corporations, whether or not we make any distributions. An individual that is a United StatesU.S. shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United StatesU.S. shareholder that is a U.S. corporation. A failure to comply with these reporting obligations may subject a United StatesU.S. shareholder to significant monetary penalties and may prevent starting of the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due. We do not intend to monitor whether we are or any of our current or future non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United StatesU.S. shareholder with respect to us or any of our controlled foreign corporation subsidiaries. In addition, we cannot provide assurances that we will furnish to any United StatesU.S. shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations.A U.S. investor should consult its tax advisors regarding the potential application of these rules to an investment in our shares in its particular circumstances.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 1C. CYBERSECURITYRisk Management and StrategyOur cybersecurity program is designed from a risk- and compliance-based approach to achieve systemwide resilience and protection across our operations. We regularly assess risks from cybersecurity threats and monitor our information systems for potential vulnerabilities. We utilize the National Institute of Standards and Technology Cybersecurity Framework to deliver clear and proactive processes, multi-layered defenses, and relevant technologies that are designed to control, audit, monitor, and protect access to sensitive information. Our cybersecurity program includes physical, administrative, and technical safeguards, and we maintain plans and procedures the objective of which is to help us prevent, detect and timely and effectively respond to, and as necessary, recover from, cybersecurity incidents. Through our cybersecurity risk management program, we have established operational processes to address issues including monitoring and patching of vulnerabilities, regularly updating our information systems, and evaluating new countermeasures made to defend against an evolving landscape of threats. This process is overseen by the Audit Committee of our Board.In addition, we periodically engage third-party consultants and providers to assist us in assessing, testing, enhancing and monitoring our cybersecurity risk management programs and responding to any incidents. These third parties work in conjunction with our information security team in an effort to continuously improve our cyber risk posture. Examples of third-party actions include the engagement of a security operations center for real-time monitoring and response to incidents, independent audits, risk assessments and security certifications.We believe cybersecurity awareness is important in helping prevent cyber threats. To that end, we provide annual cybersecurity awareness training and regular phishing awareness exercises to our tech-enabled employees. We monitor and assess the success rate of employees reporting phishing scams, and the results inform the development of our security trainings, systems and programs. Additionally, role-based security training is provided to employees in certain higher-risk positions (including those who handle sensitive information, technology or funds), which is tailored to the heightened cybersecurity risks they face.31We have experienced, and may in the future experience, whether directly or through our service providers or other channels, cybersecurity incidents. While prior incidents have not had a material impact on us, future incidents could have a material impact on our business, operations and reputation. Although our processes are designed to help prevent, detect, respond to and mitigate the impact of such incidents, there is no guarantee that they will be sufficient to prevent or mitigate the risk of a cyberattack or the potentially serious reputational, operational, legal or financial impacts that may result. Refer to “Item 1A. – Risk Factors” in this annual report on Form 10-K, including, “We may be subject to interruptions or failures in our information technology systems,” for additional discussion on our cybersecurity related risks.Cybersecurity GovernanceCybersecurity is an important part of our risk management and strategy activities and an area of focus for our Board and management. Our Audit Committee is responsible for reviewing and monitoring our cybersecurity and information security policies and our internal controls regarding cybersecurity and information security. Our Audit Committee receives regular reports from members of our senior management and other personnel that include assessments and potential mitigation of the risks and exposures to cybersecurity incidents.Our cybersecurity risk management and strategy activities are overseen by executive management, made up of the IT Steering Committee and Chief Information Officer. Our Chief Information Officer has over 25 years of experience in information technology and security as well as extensive experience working in and leading our information systems and technology function. The IT Steering Committee and Chief Information Officer receive regular updates on cybersecurity matters, results of mitigation efforts and cybersecurity incident response and remediation through the management of, and participation in, the cybersecurity risk management and strategy activities described above, and report to the Audit Committee on any appropriate items.ITEM 2. PROPERTIESOur principal executive offices are located at 3185 Laurelview Ct., Fremont, California 94538. As of December 30, 2022,29, 2023, our principal manufacturing and administrative facilities, including our executive offices, are comprised of approximately 833,400865,700 square feet. All of our facilities are leased, which allows for flexibility as business conditions and geographic demand change. The table below sets forth the approximate square footage of each of our facilities.Location
Square
FootageSingapore97,700113,300 Minnesota80,90097,700 We do not anticipate difficulty in either retaining occupancy of any of our facilities through lease renewals prior to expiration or through month-to-month occupancy or replacing them with equivalent facilities. We believe that our existing facilities and equipment are well maintained, in good operating condition, and are adequate to meet our currently anticipated requirements.32ITEM 3. LEGAL PROCEEDINGSWe may be subject to various legal claims and proceedings which arise in the ordinary course of our business involving claims incidental to our business, including employment-related claims. We are presently not a party to any material litigation or regulatory proceeding and are not aware of any pending or threatened litigation or regulatory proceeding against us which, individually or in the aggregate, could have a material adverse effect on our business, financial condition, or results of operations.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESHolders of RecordHolders of Record As of February 17, 2023,21, 2024, all of our issued ordinary shares were held in “nominee” or “street” name or in our treasury account.DividendsDividends We do not anticipate that we will pay any cash dividends on our ordinary shares for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, contractual restrictions (including those under our credit facilities and any potential indebtedness we may incur in the future), restrictions imposed by applicable law, tax considerations, and other factors our Board of Directors deems relevant.33Stock Performance GraphTable of ContentsStock Performance Graph The information included under the heading Item 55. – Stock Performance Graph is “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be “soliciting material” subject to Regulation 14A or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act.Our ordinary shares are listed for trading on the NASDAQ under the symbol “ICHR.” The Stock Price Performance Graph set forth below plots the cumulative total shareholder return on a quarterly basis of our ordinary shares from December 29, 201728, 2018 through December 30, 2022,29, 2023, with the cumulative total return of the Nasdaq Composite Index and the PHLX Semiconductor Sector Index over the same period. The comparison assumes $100 was invested on December 29, 201728, 2018 in the ordinary shares of Ichor Holdings, Ltd., in the Nasdaq Composite Index, and in the PHLX Semiconductor Sector Index and assumes reinvestment of dividends, if any.
The stock price performance shown on the graph above is not necessarily indicative of future price performance. Information used in the graph was obtained from the Nasdaq Stock Market, a source believed to be reliable, but we are not responsible for any errors or omissions in such information.ITEM 6. [RESERVED]ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSYou 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 report. 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 report, particularly in the section entitled Item 1A1A. – Risk Factors. For a comparison of our financial condition, results of operations, and cash flows for 20212022 to 2020,2021, refer to Part II, Item 77. in our 20212022 Annual Report on Form 10‑K, which was filed with the Securities and Exchange CommissionSEC on February 28, 2022.Overview34Overview We are a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Our primary product offerings include gas and chemical delivery systems and subsystems, collectively known as fluid delivery systems and 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 systems and 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. This vertically integrated portion of our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively.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 has allowed OEMs to leverage the suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes. We believe that this outsourcing trend has enabled 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, the United Kingdom, Korea, 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 77. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Results within this Annual Report.Year Ended December 29,
2023December 30,
2022(dollars in thousands, except per share amounts) Net sales $ 811,120 $ 1,280,069 Gross margin 12.7 % 16.6 % Gross margin, non-GAAP 13.4 % 17.0 % Operating margin (1.3) % 6.7 % Operating margin, non-GAAP 2.9 % 9.8 % Net income (loss) $ (42,985) $ 72,804 Net income, non-GAAP $ 12,257 $ 104,863 Diluted EPS $ (1.47) $ 2.51 Diluted EPS, non-GAAP $ 0.42 $ 3.62 Key Factors Affecting Our Business35Key Factors Affecting Our Business Investment in Semiconductor Manufacturing EquipmentThe 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 OEMsFaced 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 IndustryOur 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 2022,2023, 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, 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 ConcentrationThe 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. In 2022,2023, our top twothree customers were Applied Materials, Lam Research, and Applied Material,ASML, accounting for a combined 79%82% of sales. Our customers often require reduced prices or other pricing, quality, or delivery commitments as a condition to their purchasing from us in any given period 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 orders with us, Applied Materials, Lam Research, and Applied MaterialsASML have been our customers for over a decade.AcquisitionsIn November 2021, we acquired IMG, a California-based leader in precision machining and specialty joining and plating, for approximately $270.0 million. Between 2017 and 2020, we engaged in four separate business combinations for a combined investment of approximately $200.0 million. These acquisitions continue to have a significant impact on our financial position and results of operations. We intend to continue to evaluate opportunistic acquisitions to supplement our organic growth, and any such acquisitions could have a material impact on our business and results of operations.36Macroeconomic ConditionsWe participatedThe semiconductor industry is cyclical in nature, and matching customer demand can be challenging based on a variety of factors, including market trends, supply chain shortages and related lead times, customer buying patterns, availability of skilled labor, and macroeconomic and other factors. During much of 2022, many of these factors impacted our ability to fulfill high customer demand; however, the industry entered a cyclical downturn in the continuationfourth quarter of unprecedented demand for2022, leading to reductions in spending on semiconductor capital equipment, the primary industry in 2022, driven by increased secularwhich we operate, resulting in weakened customer demand for semiconductors, as well as the ever-increasing levelsin 2023. In particular, industry overcapacity and a number of complexity in the manufacturing thereof. Macroeconomicmacroeconomic factors may have however, created, and may continuecontributed to create, volatility and uncertainty in our industry,this reduced spending environment, including persistent levels of high inflation, higher interest rates, foreign currency rate fluctuations, and supply chain challenges.disruptions, and other macroeconomic uncertainties. Additionally, increased export controls around exportingfor semiconductor-related goods and services shipped to China may impactand delayed business investment in electronic memory capacity had varying levels of unfavorable consequences to our business. To help mitigate these impacts and to better align our resources and cost structure with current and expected future levels of business, we initiated labor and other cost reduction initiatives starting in the overall sizefourth quarter of the semiconductor capital equipment industry going forward,2022 and the conflictcontinuing through 2023. As a result of these programs, we incurred severance charges of $1.1 million and $2.3 million in Ukraine has given rise to potential global security issues that may adversely affect international business2022 and economic conditions as well as economic sanctions imposed by the international community that have impacted the global economy. Regarding the COVID‑19 pandemic, although our factories and operations are currently not directly affected by any restrictions, measures, or shutdowns, increases in positive case rates may change the extent to which our business becomes adversely impacted by such restrictions, measures, or shutdowns on a go-forward basis. 2023, respectively.While these challenging macroeconomic conditions mayhave impacted and will continue to impact our business and customers in the near-term,near term, we believe secular demand for semiconductors, both in quantity and performance, and constant technological innovation will drive long-term, sustainable growth in the semiconductor capital equipment, industry.and our products will return to growth, fueled by the long-term growing need for more semiconductor productive capacity and enhanced process technologies.Components of Our Results of OperationsComponents of Our Results of Operations The following discussion sets forth certain components of our statements of operations as well as significant factors that impactimpacting those items.SalesWe generate sales primarily from the design, manufacture, and sale of subsystems and components primarily 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. Our shipping terms are generally “shipping point.” Accordingly, control transfers, and salesSales are recognized at a point-in-time, upon "delivery," as such term is defined within the point-in-timecontract, which is generally at the time of shipment.Cost of Sales and Gross ProfitCost 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 highly variable cost structure, with low fixed overhead ascosts comprising a smaller percentage of cost of sales. In addition, oursales 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, this approach resultsduring a cyclical downturn, fixed costs become a larger percentage of cost of sales, which could result in a smaller increase indecrease to gross margin as a percentage of sales in times of increased demand.Sincemargin. Additionally, since the gross margin on each of our products differs,can differ, our overall gross margin as a percentage of our sales changescan change based on the mix of products we sell in any period.37Operating ExpensesOur 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 and certain non-recurring costs, including facility shutdown costs and executive transition-related costs.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, professional fees, and depreciation and other allocated facility related costs.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 accountingaccounting-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,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 (Income), NetThe 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 (income), 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 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 was extendedis expected to continue through 2026. In 2022,2023, the tax benefit resulting from our Singapore tax holiday, compared to the Singapore statutory tax rate, was approximately $11.7$5.0 million. During 2023, we recorded a valuation allowance against our U.S. state and federal deferred tax assets; therefore, we are unable to record income tax benefits related to our losses under GAAP losses. Income tax is also impacted by certain withholding taxes, stock option and restricted share unit (“RSU”) activity, and credit generation.Critical Accounting Estimates38Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles.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 ValuationInventories 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 2023, 2022, 2021, and 2020,2021, we wrote down inventory determined to be excessive or obsolete by $9.8 million, $5.0 million, $1.9 million, and $4.6$1.9 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.Results of OperationsResults of Operations 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 Year Ended December 29,
2023December 29,
2023December 30,
2022(in thousands) (in thousands) Research and development Research and development Operating income (loss) Income (loss) before income taxes Net income (loss) 39The following table sets forth our results of operations as a percentage of our total sales for the periods presented.Year Ended Year Ended December 29, 2023 December 29, 2023 December 30, 2022 Net sales Net sales Research and development Research and development Operating income (loss) Income (loss) before income taxes Net income (loss) Comparison of 2022 and 2021Comparison of 2023 and 2022 Net SalesYear Ended Change December 29,
2023December 30,
2022Amount % (dollars in thousands) Net sales $ 811,120 $ 1,280,069 $ (468,949) (36.6) % The increasedecrease in net sales from 20212022 to 20222023 was primarily due to strongreduced customer demand stemming from our customers as a result of continued growth inreduced spending within the global wafer fabricationsemiconductor capital equipment market throughout much of 2022, as well as incremental sales from our acquisition of IMG in November 2021.Net sales to U.S. customers increaseddecreased by $38.0$290.8 million in 20222023 to $572.1$281.3 million. On a relative basis, net sales to U.S. customers as a percent of total net sales decreased from 49.6% in 2021 to 44.7% in 2022.Net sales to international customers increaseddecreased by $155.1$178.1 million in 20222023 to $707.9$529.8 million. On a relative basis, net sales to international customers as a percent of total net sales increased from 50.4% in 2021 to 55.3% in 2022.40Cost of Sales and Gross ProfitYear Ended Year Ended Change December 29,
2023December 29,
2023December 30,
2022Amount % (dollars in thousands) (dollars in thousands) Cost of sales $ 707,724 $ $ 1,068,205 $ $ (360,481) (33.7 (33.7 %) Gross profit $ 103,396 $ $ 211,864 $ $ (108,468) (51.2 (51.2 %) Gross margin 12.7 % 16.6 % -390 bps
The 40390 basis point increasedecrease in gross margin from 20212022 to 20222023 was primarily due to increasedreduced factory utilization and operating leverage,as a result of lower volume due to reduced customer demand, as well as accretive marginsa lower revenue mix from our acquisitionsales of IMG in November 2021, partially offset by increased materials, logistics, and labor costs observed throughout 2022. These cost increases were primarilycomponents, due to investments inexcess inventory levels at our capacity to service customer demand, inflationary macroeconomic conditions that put pressure on the cost of labor, materialscustomers. Additionally, increased excess and factory costs, and the impacts of certain supply chain challenges on logistics costs and factory efficiency.
obsolete inventory expense unfavorably impacted gross margin by approximately 60 basis points.
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Research and development |
| $ | 19,564 |
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| $ | 15,691 |
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| $ | 3,873 |
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| 24.7 | % |
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| Research and development | $ | 20,223 | $ | 19,564 | $ | 659 | 3.4 | % | |||||||||||||||
partially offset by lower employee related expenses, inclusive of share-based compensation expense, of $0.5 million.
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Selling, general, and administrative |
| $ | 88,572 |
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| $ | 65,857 |
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| $ | 22,715 |
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| 34.5 | % |
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| Selling, general, and administrative | $ | 79,334 | $ | 88,572 | $ | (9,238) | (10.4) | % | |||||||||||||||
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Amortization of intangibles assets |
| $ | 17,905 |
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| $ | 14,918 |
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| $ | 2,987 |
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| Amortization of intangibles assets | $ | 14,734 | $ | 17,905 | $ | (3,171) | (17.7) | % | |||||||||||||||
Interest Expense, Net
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Interest expense, net |
| $ | 11,056 |
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| $ | 6,451 |
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| $ | 4,605 |
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| 71.4 | % | Interest expense, net | $ | 19,379 | $ | $ | 11,056 | $ | $ | 8,323 | 75.3 | 75.3 | % | ||||||||||||||||||||||||||||||||||
Weighted average borrowings outstanding |
| $ | 303,036 |
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| $ | 187,028 |
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| $ | 116,008 |
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| 62.0 | % | Weighted average borrowings outstanding | $ | 292,661 | $ | $ | 303,036 | $ | $ | (10,375) | (3.4 | (3.4 | %) | ||||||||||||||||||||||||||||||||||
Weighted average borrowing rate |
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| 3.37 | % |
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| 2.74 | % |
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| + 63 bps |
| Weighted average borrowing rate | 6.80 | % | 3.37 | % | + 343 | bps | ||||||||||||||||||||||||||||||||||||||||
Ourrate, partially offset by decreases in our average amount borrowed was primarily the result of drawing $130.0 million on our revolving credit facility in November 2021 to partially fund our acquisition of IMG.borrowed. The year-over-year increase in our weighted average borrowing rate was primarily due to higher overall prevailingan increase in risk-free, short-term borrowing rates as a result of tightening monetary policy, which impacts the Bloomberg Short Term Bank Yield ("BSBY"), the variable component of our borrowing rate under our credit facilities. The decreases in our average amount borrowed was primarily due to quarterly term loan payments and payments on our revolving credit facilities in the second, halfthird, and fourth quarters of 2022 compared to 2021, partially offset by a lower overall applicable margin following the amendment and restatement of our credit agreement in October 2021.
2023.
|
| Year Ended |
|
| Change | |||||||||
|
| December 30, 2022 |
|
| December 31, 2021 |
|
| Amount |
|
| % | |||
|
| (dollars in thousands) | ||||||||||||
Other expense (income), net |
| $ | (563 | ) |
| $ | 807 |
|
| $ | (1,370 | ) |
| n/m |
| Year Ended | Change | ||||||||||||||||||||||
| December 29, 2023 | December 30, 2022 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Other expense (income), net | $ | 804 | $ | (563) | $ | 1,367 | n/m | ||||||||||||||||
operations.
|
| Year Ended |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| December 30, 2022 |
|
| December 31, 2021 |
|
| Amount |
|
| % |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
|
| (dollars in thousands) |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended | Year Ended | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 29, 2023 | December 29, 2023 | December 30, 2022 | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense |
| $ | 2,526 |
|
| $ | 2,857 |
|
| $ | (331 | ) |
|
| -11.6 | % | Income tax expense | $ | 11,907 | $ | $ | 2,526 | $ | $ | 9,381 | 371.4 | 371.4 | % | ||||||||||||||||||||||||||||||||||
Income before income taxes |
| $ | 75,330 |
|
| $ | 73,756 |
|
| $ | 1,574 |
|
|
| 2.1 | % | Income before income taxes | $ | (31,078) | $ | $ | 75,330 | $ | $ | (106,408) | n/m | n/m | |||||||||||||||||||||||||||||||||||
Effective income tax rate |
|
| 3.4 | % |
|
| 3.9 | % |
|
|
|
|
| - 50 bps |
| Effective income tax rate | (38.3) | % | 3.4 | % | -4,170 | bps | ||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Financial Results | ||
Non-GAAP Financial Results
|
| Year Ended |
| |||||
|
| December 30, 2022 |
|
| December 31, 2021 |
| ||
| (dollars in thousands) |
| ||||||
U.S. GAAP gross profit |
| $ | 211,864 |
|
| $ | 177,480 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Share-based compensation |
|
| 2,056 |
|
|
| 1,384 |
|
Facility shutdown costs (1) |
|
| — |
|
|
| 2,611 |
|
Fair value adjustment to inventory from acquisitions (2) |
|
| 2,492 |
|
|
| 1,652 |
|
Other (3) |
|
| 933 |
|
|
| 106 |
|
Non-GAAP gross profit |
| $ | 217,345 |
|
| $ | 183,233 |
|
U.S. GAAP gross margin |
|
| 16.6 | % |
|
| 16.2 | % |
Non-GAAP gross margin |
|
| 17.0 | % |
|
| 16.7 | % |
|
|
|
|
| Year Ended | |||||||||||
| December 29, 2023 | December 30, 2022 | ||||||||||
| (dollars in thousands) | |||||||||||
| U.S. GAAP gross profit | $ | 103,396 | $ | 211,864 | |||||||
| Non-GAAP adjustments: | |||||||||||
| Share-based compensation | 3,130 | 2,056 | |||||||||
| Fair value adjustment to inventory from acquisitions (1) | — | 2,492 | |||||||||
| Other (2) | 2,191 | 933 | |||||||||
| Non-GAAP gross profit | $ | 108,717 | $ | 217,345 | |||||||
| U.S. GAAP gross margin | 12.7 | % | 16.6 | % | |||||||
| Non-GAAP gross margin | 13.4 | % | 17.0 | % | |||||||
|
|
|
| Year Ended |
| |||||
|
| December 30, 2022 |
|
| December 31, 2021 |
| ||
| (dollars in thousands) |
| ||||||
U.S. GAAP operating income |
| $ | 85,823 |
|
| $ | 81,014 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
| 17,905 |
|
|
| 14,918 |
|
Share-based compensation |
|
| 13,924 |
|
|
| 11,473 |
|
Facility shutdown costs (1) |
|
| — |
|
|
| 2,996 |
|
Settlement loss (2) |
|
| 4,146 |
|
|
| — |
|
Fair value adjustment to inventory from acquisitions (3) |
|
| 2,492 |
|
|
| 1,652 |
|
Acquisition costs (4) |
|
| 296 |
|
|
| 4,386 |
|
Other (5) |
|
| 1,144 |
|
|
| 498 |
|
Non-GAAP operating income |
| $ | 125,730 |
|
| $ | 116,937 |
|
U.S. GAAP operating margin |
|
| 6.7 | % |
|
| 7.4 | % |
Non-GAAP operating margin |
|
| 9.8 | % |
|
| 10.7 | % |
|
|
|
|
| Year Ended | |||||||||||
| December 29, 2023 | December 30, 2022 | ||||||||||
| (dollars in thousands) | |||||||||||
| U.S. GAAP operating income (loss) | $ | (10,895) | $ | 85,823 | |||||||
| Non-GAAP adjustments: | |||||||||||
| Amortization of intangible assets | 14,734 | 17,905 | |||||||||
| Share-based compensation | 17,338 | 13,924 | |||||||||
| Settlement loss (1) | — | 4,146 | |||||||||
| Fair value adjustment to inventory from acquisitions (2) | — | 2,492 | |||||||||
| Acquisition costs (3) | — | 296 | |||||||||
| Other (4) | 2,298 | 1,144 | |||||||||
| Non-GAAP operating income | $ | 23,475 | $ | 125,730 | |||||||
| U.S. GAAP operating margin | (1.3) | % | 6.7 | % | |||||||
| Non-GAAP operating margin | 2.9 | % | 9.8 | % | |||||||
|
|
|
|
|
|
|
| Year Ended |
| |||||
|
| December 30, 2022 |
|
| December 31, 2021 |
| ||
| (dollars in thousands, except per share amounts) |
| ||||||
U.S. GAAP net income |
| $ | 72,804 |
|
| $ | 70,899 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
| 17,905 |
|
|
| 14,918 |
|
Share-based compensation |
|
| 13,924 |
|
|
| 11,473 |
|
Facility shutdown costs (1) |
|
| — |
|
|
| 2,996 |
|
Settlement loss (2) |
|
| 4,146 |
|
|
| — |
|
Fair value adjustment to inventory from acquisitions (3) |
|
| 2,492 |
|
|
| 1,652 |
|
Acquisition costs (4) |
|
| 296 |
|
|
| 4,386 |
|
Other (5) |
|
| 1,144 |
|
|
| 498 |
|
Loss on extinguishment of debt (6) |
|
| — |
|
|
| 737 |
|
Tax adjustments related to non-GAAP adjustments (7) |
|
| (7,848 | ) |
|
| (9,861 | ) |
Non-GAAP net income |
| $ | 104,863 |
|
| $ | 97,698 |
|
U.S. GAAP diluted EPS |
| $ | 2.51 |
|
| $ | 2.45 |
|
Non-GAAP diluted EPS |
| $ | 3.62 |
|
| $ | 3.37 |
|
Shares used to compute diluted EPS |
|
| 28,963,031 |
|
|
| 28,979,352 |
|
| Year Ended | |||||||||||
| December 29, 2023 | December 30, 2022 | ||||||||||
| (dollars in thousands, except per share amounts) | |||||||||||
| U.S. GAAP net income (loss) | $ | (42,985) | $ | 72,804 | |||||||
| Non-GAAP adjustments: | |||||||||||
| Amortization of intangible assets | 14,734 | 17,905 | |||||||||
| Share-based compensation | 17,338 | 13,924 | |||||||||
| Settlement loss (1) | — | 4,146 | |||||||||
| Fair value adjustment to inventory from acquisitions (2) | — | 2,492 | |||||||||
| Acquisition costs (3) | — | 296 | |||||||||
| Other (4) | 2,298 | 1,144 | |||||||||
| Tax adjustments related to non-GAAP adjustments (5) | 9,778 | (7,848) | |||||||||
| Tax expense from valuation allowance (6) | 11,094 | — | |||||||||
| Non-GAAP net income | $ | 12,257 | $ | 104,863 | |||||||
| U.S. GAAP diluted EPS | $ | (1.47) | $ | 2.51 | |||||||
| Non-GAAP diluted EPS | $ | 0.42 | $ | 3.62 | |||||||
| Shares used to compute diluted non-GAAP EPS | 29,514,553 | 28,963,031 | |||||||||
| Liquidity and | ||
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity and Capital Resources
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 restrictionsrestrictions.
Summary of Cash Flows
|
| Year Ended |
| |||||||||||||||||||||||||||||||||||||||||||
|
| December 30, 2022 |
|
| December 31, 2021 |
|
| December 25, 2020 |
| |||||||||||||||||||||||||||||||||||||
|
| (in thousands) |
| |||||||||||||||||||||||||||||||||||||||||||
| Year Ended | Year Ended | |||||||||||||||||||||||||||||||||||||||||||||
| December 29, 2023 | December 29, 2023 | December 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||
Cash provided by operating activities |
| $ | 31,453 |
|
| $ | 15,272 |
|
| $ | 38,259 |
| ||||||||||||||||||||||||||||||||||
Cash used in investing activities |
|
| (28,933 | ) |
|
| (289,585 | ) |
|
| (14,597 | ) | ||||||||||||||||||||||||||||||||||
Cash provided by financing activities |
|
| 8,455 |
|
|
| 96,909 |
|
|
| 168,625 |
| ||||||||||||||||||||||||||||||||||
| Cash provided by (used in) financing activities | ||||||||||||||||||||||||||||||||||||||||||||||
Net increase (decrease) in cash |
| $ | 10,975 |
|
| $ | (177,404 | ) |
| $ | 192,287 |
| ||||||||||||||||||||||||||||||||||
accrued and other liabilities during 2023 compared to 2022.
Cash provided by financing activities during 2022 consisted of net proceeds from our credit facilities of $7.5 million and net proceeds from share-based compensation activity of $1.0 million.
Recent Accounting Pronouncements
million.The change in net payments on, and net proceeds from, our facilities relates to fluctuations in cash required for working capital purposes relative to the geographic distribution of available cash during the periods then ended. The increase in net proceeds from share-based compensation activity from 2022 to 2023 was due to increased stock option exercises.
| Recent Accounting Pronouncements | ||
Foreign Currency Exchange Risk
| Foreign Currency Exchange Risk | ||
us.
| Interest Rate Risk | ||
Interest Rate Risk
Evaluation of Disclosure Controls and Procedures
| Evaluation of Disclosure Controls and Procedures | ||
Management’s Report on Internal Control Over Financial Reporting
29, 2023.
| Management’s Report on Internal Control Over Financial Reporting | ||
Our internal control over financial reporting is designed to provide reasonable assurance with U.S. GAAP and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of the financial statements in accordance with GAAP and that our receipts and expenditures are being made in accordance with appropriate authorizations; and (3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
| Remediation of Prior Years' Material Weaknesses | ||
The identified material weakness related to ineffective information technology general controls (“ITGCs”)ITGCs in the areas of user access and program change management over an information technology system (“IT System”) that supports our financial reporting process. We did not have resources within the organization with sufficient levels of information technology knowledge and did not perform risk assessment surrounding the IT System to adequately understand how areas of user access and program change management function within the IT System in order to design and operate ITGCs sufficient to mitigate the identified risks. Our
Theconcluded the material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results.
has been remediated as of December 29, 2023. Our independent registered public accounting firm, KPMG, LLP, who audited the consolidated financial statements included in this Annual Report on Form 10‑K,has issued an adverse opinionattestation report on the effectiveness of our internal control over financial reporting. KPMG LLP’s report appears on page F-3reporting, which is included in Item 8. - Financial Statements and Supplementary Data of this Annual Report on Form 10‑K.
| Changes in Internal Control Over Financial Reporting | ||
Remediation
Management is taking steps to remediate
Remediation Efforts Towards Prior Year Material Weaknesses
Asplan discussed in our Annual Report on Form 10‑K filed for the year ended December 31, 2021, management had identified material weaknesses related to ineffective ITGCs in the areas of user access and program change management over certain IT Systems that support our financial reporting processes.
During 2022, we made progress towards remediation of the material weaknesses identified in the prior year. Specifically, management designed and documented ITGC processes and procedures over user access and change management controls and maintained evidence over the operation of these controls. While we have made progress on remediation plans, we require additional time to complete the design and implementation of our remediation plans and to demonstrate the effectiveness of our remediation efforts regarding user access and program change management.
The weakness will not be considered remediated until the applicable controls operate for a sufficient period-of-time and management has concluded, through testing, that the control objective is achieved and are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of fiscal 2023.
Changes in Internal Control Over Financial Reporting
Other than the material weakness identified during the quarter,above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) or 15d‑15(f) of the Exchange Act) that occurred during the fourth quarter of December 30, 202229, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls and Procedures
| Inherent Limitations on Effectiveness of Controls and Procedures | ||
None.
29, 2023.
29, 2023.
|
|
(a)The following documents are filed as a part of this report: (1)Financial Statements. |
|
The following Consolidated Financial Statements are filed as part of this report under Item 88. – Financial Statements and Supplementary Data.
Reports of Independent Registered Public Accounting Firm (KPMG LLP, Portland, Oregon, PCAOB ID: 185) |
F-1 | ||||
F‑4 | |||||
F-5 | |||||
F‑ | |||||
F‑ | |||||
F‑ | |||||
(2)Financial Statement Schedules. All financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. |
|
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Ichor Holdings, Ltd. and subsidiaries (the Company) as of December 30, 2022 and December 31, 2021, the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 30, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2022 and December 31, 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 30, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2023 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of excess and obsolete inventory
As discussed in Notes 1 and 3 to the consolidated financial statements, the Company reported inventories of $283.7 million as of December 30, 2022, including an adjustment for excess and obsolete inventory of $17.5 million. The Company states its inventories at the lower of cost or net realizable value. The Company records an adjustment to the cost basis of inventory when evidence exists that the net realizable value of inventory is lower than its cost, which occurs when the Company has excess and/or obsolete inventory. The Company’s model to estimate excess and/or obsolete inventory is based on an analysis of existing inventory quantities on-hand compared to estimated future consumption. Future consumption is estimated based upon assumptions about how historical consumption, recent purchases, backlog and other factors indicate future consumption.
We identified the evaluation of excess and obsolete inventory as a critical audit matter. There was subjective auditor judgement in evaluating whether historical consumption and recent purchases reasonably indicate future consumption used by the Company in their determination that inventory is recorded at the lower of its cost or net realizable value.
The following are the primary procedures we performed to address the critical audit matter. We evaluated whether historical consumption and recent purchases reasonably indicate future consumption by (1) examining historical write-down trends; (2) inspecting publicly available industry and market information to assess relevant changes to the overall business environment; and (3) selected a sample of inventory items and for each selection we evaluated whether the historical data accurately supported the Company’s estimate of future consumption.
/s/ KPMG LLP
We have served as the Company’s auditor since 2011.
Portland, Oregon
February 24, 2023
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Ichor Holdings, Ltd.:
Opinion on Internal Control Overover Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness related to ineffective information technology general controls (ITGCs) in the areas of user access and program change-management over a certain information technology (IT) system that supports the Company’s financial reporting processes has been identified and included in management’s assessment. The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.
|
| December 30, 2022 |
|
| December 31, 2021 |
| |||||||||||||||||||||
| December 29, 2023 | December 29, 2023 | December 30, 2022 | |||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
| |||||||||||||||||||
Current assets: |
|
|
|
|
|
|
|
| |||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||
Cash and cash equivalents |
| $ | 86,470 |
|
| $ | 75,495 |
| |||||||||||||||||||
Accounts receivable, net |
|
| 136,321 |
|
|
| 142,990 |
| |||||||||||||||||||
Inventories |
|
| 283,660 |
|
|
| 236,133 |
| |||||||||||||||||||
Prepaid expenses and other current assets |
|
| 7,007 |
|
|
| 8,153 |
| |||||||||||||||||||
Total current assets |
|
| 513,458 |
|
|
| 462,771 |
| |||||||||||||||||||
Property and equipment, net |
|
| 98,055 |
|
|
| 85,204 |
| |||||||||||||||||||
Operating lease right-of-use assets |
|
| 40,557 |
|
|
| 29,790 |
| |||||||||||||||||||
Other noncurrent assets |
|
| 12,926 |
|
|
| 9,166 |
| |||||||||||||||||||
Deferred tax assets, net |
|
| 11,322 |
|
|
| 8,116 |
| |||||||||||||||||||
Intangible assets, net |
|
| 72,022 |
|
|
| 89,927 |
| |||||||||||||||||||
Goodwill |
|
| 335,402 |
|
|
| 335,902 |
| |||||||||||||||||||
Total assets |
| $ | 1,083,742 |
|
| $ | 1,020,876 |
| |||||||||||||||||||
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
| |||||||||||||||||||
Current liabilities: |
|
|
|
|
|
|
|
| |||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||
| Accounts payable | |||||||||||||||||||||||||||
| Accounts payable | |||||||||||||||||||||||||||
Accounts payable |
| $ | 110,165 |
|
| $ | 159,727 |
| |||||||||||||||||||
Accrued liabilities |
|
| 23,616 |
|
|
| 19,066 |
| |||||||||||||||||||
Other current liabilities |
|
| 15,815 |
|
|
| 14,377 |
| |||||||||||||||||||
Current portion of long-term debt |
|
| 7,500 |
|
|
| 7,500 |
| |||||||||||||||||||
Current portion of lease liabilities |
|
| 9,196 |
|
|
| 7,633 |
| |||||||||||||||||||
Total current liabilities |
|
| 166,292 |
|
|
| 208,303 |
| |||||||||||||||||||
Long-term debt, less current portion, net |
|
| 293,218 |
|
|
| 285,253 |
| |||||||||||||||||||
Lease liabilities, less current portion |
|
| 31,828 |
|
|
| 22,354 |
| |||||||||||||||||||
Deferred tax liabilities, net |
|
| 29 |
|
|
| 38 |
| |||||||||||||||||||
Other non-current liabilities |
|
| 4,879 |
|
|
| 4,213 |
| |||||||||||||||||||
Total liabilities |
|
| 496,246 |
|
|
| 520,161 |
| |||||||||||||||||||
Shareholders’ equity: |
|
|
|
|
|
|
|
| |||||||||||||||||||
Preferred shares ($0.0001 par value; 20,000,000 shares authorized; zero shares issued and outstanding) |
|
| — |
|
|
| — |
| |||||||||||||||||||
Ordinary shares ($0.0001 par value; 200,000,000 shares authorized; 28,861,949 and 28,551,160 shares outstanding, respectively; 33,299,388 32,988,599 shares issued, respectively) |
|
| 3 |
|
|
| 3 |
| |||||||||||||||||||
| Preferred shares ($0.0001 par value; 20,000,000 shares authorized; zero shares issued and outstanding) | |||||||||||||||||||||||||||
| Preferred shares ($0.0001 par value; 20,000,000 shares authorized; zero shares issued and outstanding) | |||||||||||||||||||||||||||
| Ordinary shares ($0.0001 par value; 200,000,000 shares authorized; 29,435,398 and 28,861,949 shares outstanding, respectively; 33,872,837 and 33,299,388 shares issued, respectively) | |||||||||||||||||||||||||||
Additional paid in capital |
|
| 431,415 |
|
|
| 417,438 |
| |||||||||||||||||||
Treasury shares at cost (4,437,439 shares) |
|
| (91,578 | ) |
|
| (91,578 | ) | |||||||||||||||||||
Retained earnings |
|
| 247,656 |
|
|
| 174,852 |
| |||||||||||||||||||
Total shareholders’ equity |
|
| 587,496 |
|
|
| 500,715 |
| |||||||||||||||||||
Total liabilities and shareholders’ equity |
| $ | 1,083,742 |
|
| $ | 1,020,876 |
| |||||||||||||||||||
|
| Year Ended |
| |||||||||||||||||||||||||||||||||||||||||||
|
| December 30, 2022 |
|
| December 31, 2021 |
|
| December 25, 2020 |
| |||||||||||||||||||||||||||||||||||||
| Year Ended | Year Ended | |||||||||||||||||||||||||||||||||||||||||||||
| December 29, 2023 | December 29, 2023 | December 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
Net sales |
| $ | 1,280,069 |
|
| $ | 1,096,917 |
|
| $ | 914,236 |
| ||||||||||||||||||||||||||||||||||
Cost of sales |
|
| 1,068,205 |
|
|
| 919,437 |
|
|
| 789,344 |
| ||||||||||||||||||||||||||||||||||
Gross profit |
|
| 211,864 |
|
|
| 177,480 |
|
|
| 124,892 |
| ||||||||||||||||||||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Research and development |
|
| 19,564 |
|
|
| 15,691 |
|
|
| 13,361 |
| ||||||||||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||||||||||||||||||||||
Selling, general, and administrative |
|
| 88,572 |
|
|
| 65,857 |
|
|
| 56,614 |
| ||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
|
| 17,905 |
|
|
| 14,918 |
|
|
| 13,365 |
| ||||||||||||||||||||||||||||||||||
Total operating expenses |
|
| 126,041 |
|
|
| 96,466 |
|
|
| 83,340 |
| ||||||||||||||||||||||||||||||||||
Operating income |
|
| 85,823 |
|
|
| 81,014 |
|
|
| 41,552 |
| ||||||||||||||||||||||||||||||||||
| Operating income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
Interest expense, net |
|
| 11,056 |
|
|
| 6,451 |
|
|
| 8,727 |
| ||||||||||||||||||||||||||||||||||
Other expense (income), net |
|
| (563 | ) |
|
| 807 |
|
|
| 534 |
| ||||||||||||||||||||||||||||||||||
Income before income taxes |
|
| 75,330 |
|
|
| 73,756 |
|
|
| 32,291 |
| ||||||||||||||||||||||||||||||||||
Income tax expense (benefit) |
|
| 2,526 |
|
|
| 2,857 |
|
|
| (988 | ) | ||||||||||||||||||||||||||||||||||
Net income |
| $ | 72,804 |
|
| $ | 70,899 |
|
| $ | 33,279 |
| ||||||||||||||||||||||||||||||||||
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | ||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) per share | ||||||||||||||||||||||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||||||||||||||||||||||
Basic |
| $ | 2.54 |
|
| $ | 2.51 |
|
| $ | 1.44 |
| ||||||||||||||||||||||||||||||||||
Diluted |
| $ | 2.51 |
|
| $ | 2.45 |
|
| $ | 1.42 |
| ||||||||||||||||||||||||||||||||||
Shares used to compute net income per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
| Shares used to compute Net income (loss) per share: | ||||||||||||||||||||||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||||||||||||||||||||||
Basic |
|
| 28,714,550 |
|
|
| 28,259,607 |
|
|
| 23,172,961 |
| 29,200,796 | 28,714,550 | 28,259,607 | |||||||||||||||||||||||||||||||
Diluted |
|
| 28,963,031 |
|
|
| 28,979,352 |
|
|
| 23,460,105 |
| Diluted | 29,200,796 | 28,963,031 | 28,979,352 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Ordinary Shares |
|
| Paid-In |
|
| Treasury Shares |
|
| Retained |
|
| Shareholders' |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Shares |
|
| Amount |
|
| Earnings |
|
| Equity |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 27, 2019 |
|
| 22,618,708 |
|
| $ | 2 |
|
| $ | 242,318 |
|
|
| 4,437,439 |
|
| $ | (91,578 | ) |
| $ | 70,674 |
|
| $ | 221,416 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued, net of transaction costs |
|
| 4,600,000 |
|
|
| 1 |
|
|
| 139,371 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 139,372 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from exercise of stock options |
|
| 514,481 |
|
|
| — |
|
|
| 8,849 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,849 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from vesting of restricted share units |
|
| 140,700 |
|
|
| — |
|
|
| (1,829 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,829 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from employee share purchase plan |
|
| 33,188 |
|
|
| — |
|
|
| 727 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 727 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 9,875 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 9,875 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 33,279 |
|
|
| 33,279 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary Shares | Ordinary Shares | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 25, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 25, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 25, 2020 |
|
| 27,907,077 |
|
|
| 3 |
|
|
| 399,311 |
|
|
| 4,437,439 |
|
|
| (91,578 | ) |
|
| 103,953 |
|
|
| 411,689 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from exercise of stock options |
|
| 410,558 |
|
|
| — |
|
|
| 8,288 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,288 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from vesting of restricted share units |
|
| 164,613 |
|
|
| — |
|
|
| (3,616 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,616 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from employee share purchase plan |
|
| 68,912 |
|
|
| — |
|
|
| 1,982 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,982 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 11,473 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11,473 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 70,899 |
|
|
| 70,899 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 |
|
| 28,551,160 |
|
|
| 3 |
|
|
| 417,438 |
|
|
| 4,437,439 |
|
|
| (91,578 | ) |
|
| 174,852 |
|
|
| 500,715 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from exercise of stock options |
|
| 89,045 |
|
|
| — |
|
|
| 1,937 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,937 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from vesting of restricted share units |
|
| 179,679 |
|
|
| — |
|
|
| (2,813 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,813 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares issued from employee share purchase plan |
|
| 42,065 |
|
|
| — |
|
|
| 929 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 929 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 13,924 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13,924 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 72,804 |
|
|
| 72,804 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 30, 2022 |
|
| 28,861,949 |
|
| $ | 3 |
|
| $ | 431,415 |
|
|
| 4,437,439 |
|
| $ | (91,578 | ) |
| $ | 247,656 |
|
| $ | 587,496 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued from exercise of stock options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued from vesting of restricted share units | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued from employee share purchase plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 29, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Year Ended |
| |||||||||||||||||||||||||||||||||||||||||||
|
| December 30, 2022 |
|
| December 31, 2021 |
|
| December 25, 2020 |
| |||||||||||||||||||||||||||||||||||||
| Year Ended | Year Ended | |||||||||||||||||||||||||||||||||||||||||||||
| December 29, 2023 | December 29, 2023 | December 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Net income |
| $ | 72,804 |
|
| $ | 70,899 |
|
| $ | 33,279 |
| ||||||||||||||||||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
| Net income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization |
|
| 35,100 |
|
|
| 25,992 |
|
|
| 24,246 |
| ||||||||||||||||||||||||||||||||||
Share-based compensation |
|
| 13,924 |
|
|
| 11,473 |
|
|
| 9,875 |
| ||||||||||||||||||||||||||||||||||
Deferred income taxes |
|
| (3,215 | ) |
|
| (1,863 | ) |
|
| (1,687 | ) | ||||||||||||||||||||||||||||||||||
Amortization of debt issuance costs |
|
| 465 |
|
|
| 883 |
|
|
| 968 |
| ||||||||||||||||||||||||||||||||||
(Gain) loss on sale of asset disposal group |
|
| — |
|
|
| (504 | ) |
|
| 3,575 |
| ||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt |
|
| — |
|
|
| 737 |
|
|
| — |
| ||||||||||||||||||||||||||||||||||
| Gain on sale of asset disposal group | ||||||||||||||||||||||||||||||||||||||||||||||
Other |
|
| — |
|
|
| 484 |
|
|
| — |
| ||||||||||||||||||||||||||||||||||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
| Accounts receivable, net | ||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable, net | ||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable, net |
|
| 6,669 |
|
|
| (33,454 | ) |
|
| (16,128 | ) | ||||||||||||||||||||||||||||||||||
Inventories |
|
| (47,527 | ) |
|
| (89,249 | ) |
|
| (8,527 | ) | ||||||||||||||||||||||||||||||||||
Prepaid expenses and other assets |
|
| 4,508 |
|
|
| 786 |
|
|
| (2,076 | ) | ||||||||||||||||||||||||||||||||||
Accounts payable |
|
| (50,175 | ) |
|
| 38,649 |
|
|
| (14,509 | ) | ||||||||||||||||||||||||||||||||||
Accrued liabilities |
|
| 3,648 |
|
|
| (6,740 | ) |
|
| 7,722 |
| ||||||||||||||||||||||||||||||||||
Other liabilities |
|
| (4,748 | ) |
|
| (2,821 | ) |
|
| 1,521 |
| ||||||||||||||||||||||||||||||||||
Net cash provided by operating activities |
|
| 31,453 |
|
|
| 15,272 |
|
|
| 38,259 |
| ||||||||||||||||||||||||||||||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Capital expenditures |
|
| (29,433 | ) |
|
| (20,839 | ) |
|
| (10,301 | ) | ||||||||||||||||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||||||||||||||||||||||||||||
Cash paid for acquisitions, net of cash acquired |
|
| 500 |
|
|
| (268,766 | ) |
|
| (5,035 | ) | ||||||||||||||||||||||||||||||||||
Purchase of marketable securities |
|
| — |
|
|
| (115,197 | ) |
|
| — |
| ||||||||||||||||||||||||||||||||||
Proceeds from maturities and sales of marketable securities |
|
| — |
|
|
| 114,713 |
|
|
| — |
| ||||||||||||||||||||||||||||||||||
Proceeds from sale of property and equipment |
|
| — |
|
|
| 504 |
|
|
| 739 |
| ||||||||||||||||||||||||||||||||||
Net cash used in investing activities |
|
| (28,933 | ) |
|
| (289,585 | ) |
|
| (14,597 | ) | ||||||||||||||||||||||||||||||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Issuance of ordinary shares, net of fees |
|
| — |
|
|
| — |
|
|
| 139,372 |
| ||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares under share-based compensation plans | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares under share-based compensation plans | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of ordinary shares under share-based compensation plans |
|
| 3,768 |
|
|
| 9,664 |
|
|
| 9,832 |
| ||||||||||||||||||||||||||||||||||
Employees' taxes paid upon vesting of restricted share units |
|
| (2,813 | ) |
|
| (3,616 | ) |
|
| (1,829 | ) | ||||||||||||||||||||||||||||||||||
Debt issuance and modification costs |
|
| — |
|
|
| (1,852 | ) |
|
| — |
| ||||||||||||||||||||||||||||||||||
Borrowings on revolving credit facility |
|
| 25,000 |
|
|
| 137,591 |
|
|
| 30,000 |
| ||||||||||||||||||||||||||||||||||
Repayments on revolving credit facility |
|
| (10,000 | ) |
|
| (41,753 | ) |
|
| — |
| ||||||||||||||||||||||||||||||||||
Proceeds from term loan |
|
| — |
|
|
| 94,175 |
|
|
| — |
| ||||||||||||||||||||||||||||||||||
Repayments on term loan |
|
| (7,500 | ) |
|
| (97,300 | ) |
|
| (8,750 | ) | ||||||||||||||||||||||||||||||||||
Net cash provided by financing activities |
|
| 8,455 |
|
|
| 96,909 |
|
|
| 168,625 |
| ||||||||||||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | ||||||||||||||||||||||||||||||||||||||||||||||
Net increase (decrease) in cash |
|
| 10,975 |
|
|
| (177,404 | ) |
|
| 192,287 |
| ||||||||||||||||||||||||||||||||||
Cash at beginning of period |
|
| 75,495 |
|
|
| 252,899 |
|
|
| 60,612 |
| ||||||||||||||||||||||||||||||||||
Cash at end of period |
| $ | 86,470 |
|
| $ | 75,495 |
|
| $ | 252,899 |
| ||||||||||||||||||||||||||||||||||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Cash paid during the period for interest |
| $ | 10,590 |
|
| $ | 7,123 |
|
| $ | 8,235 |
| ||||||||||||||||||||||||||||||||||
| Cash paid during the period for interest | ||||||||||||||||||||||||||||||||||||||||||||||
| Cash paid during the period for interest | ||||||||||||||||||||||||||||||||||||||||||||||
Cash paid during the period for taxes, net of refunds |
| $ | 3,285 |
|
| $ | 5,642 |
|
| $ | 250 |
| ||||||||||||||||||||||||||||||||||
Supplemental disclosures of non-cash activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Capital expenditures included in accounts payable |
| $ | 1,543 |
|
| $ | 930 |
|
| $ | 369 |
| ||||||||||||||||||||||||||||||||||
| Capital expenditures included in accounts payable | ||||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures included in accounts payable | ||||||||||||||||||||||||||||||||||||||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities, including those acquired through acquisitions |
| $ | 17,889 |
|
| $ | 24,643 |
|
| $ | 642 |
| ||||||||||||||||||||||||||||||||||
Note 1 – Organization and Summary of Significant Accounting Policies
| Note 1 – Organization and Summary of Significant Accounting Policies | ||
goodwill.
Revenue Recognition
Fair Value Measurements ▪Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date ▪Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability 30, 2022. Machinery 5-10 years Leasehold improvements 10 years Computer software, hardware, and equipment 3-5 years Office furniture, fixtures, and equipment 5-7 years Vehicles 5 years Developed technology Income Taxes Cash acquired $ 1,234 Accounts receivable 8,559 Inventories 12,128 Prepaid expenses and other current assets 579 Property and equipment 33,067 Operating lease right-of-use assets 14,509 Intangible assets 65,000 Goodwill 160,515 Accounts payable (3,853 ) Accrued expenses (5,620 ) Other current liabilities (2,109 ) Lease liabilities (14,509 ) Total acquisition consideration $ 269,500 Year Ended December 31, 2021 December 25, 2020 Net sales $ 1,156,619 $ 962,642 Net income $ 74,531 $ 26,048 Net income per share: Basic $ 2.64 $ 1.12 Diluted $ 2.57 $ 1.11 December 30, 2022 December 31, 2021 Raw materials $ 197,726 $ 159,366 Work in process 56,291 62,537 Finished goods 47,186 28,281 Excess and obsolete adjustment (17,543 ) (14,051 ) Total inventories $ 283,660 $ 236,133 Excess and obsolete adjustment Balance at December 27, 2019 $ (7,817 ) Charge to cost of sales (4,649 ) Disposition of inventory (276 ) Balance at December 25, 2020 (12,742 ) Charge to cost of sales (1,942 ) Disposition of inventory 633 Balance at December 31, 2021 (14,051 ) Charge to cost of sales (4,981 ) Disposition of inventory 1,489 Balance at December 30, 2022 $ (17,543 ) December 30, 2022 December 31, 2021 Machinery $ 90,507 $ 80,953 Leasehold improvements 43,129 36,706 Computer software, hardware, and equipment 9,664 8,031 Office furniture, fixtures, and equipment 1,337 1,168 Vehicles 401 284 Construction-in-process 19,869 8,565 164,907 135,707 Less accumulated depreciation (66,852 ) (50,503 ) Total property and equipment, net $ 98,055 $ 85,204 December 30, 2022 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 117,022 $ (51,337 ) $ — $ 65,685 8.4 years Developed technology 11,047 (4,710 ) — 6,337 10.0 years Total intangible assets $ 128,069 $ (56,047 ) $ — $ 72,022 December 31, 2021 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 146,569 $ (65,953 ) $ — $ 80,616 8.7 years Developed technology 11,047 (3,483 ) — 7,564 10.0 years Order backlog 2,600 (853 ) — 1,747 6 months Total intangible assets $ 160,216 $ (70,289 ) $ — $ 89,927 Future amortization expense 2023 $ 15,092 2024 8,555 2025 8,342 2026 7,760 2027 7,055 Thereafter 25,218 $ 72,022 Goodwill Balance at December 27, 2019 $ 173,010 Acquisitions 1,877 Balance at December 25, 2020 174,887 Acquisitions 161,015 Balance at December 31, 2021 335,902 Acquisitions (500 ) Balance at December 30, 2022 $ 335,402 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Operating lease cost $ 8,760 $ 5,763 $ 5,397 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,164 $ 5,477 $ 5,574 December 30, 2022 December 31, 2021 Weighted-average remaining lease term of operating leases 5.3 years 5.8 years Weighted-average discount rate of operating leases 3.0% 2.4% 2023 $ 9,196 2024 8,613 2025 7,940 2026 7,471 2027 6,454 Thereafter 4,542 Total future minimum lease payments 44,216 Less imputed interest (3,192 ) Total lease liabilities $ 41,024 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 United States $ (353 ) $ 13,435 $ (2,558 ) Foreign 75,683 60,321 34,849 Income before tax $ 75,330 $ 73,756 $ 32,291 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Current: Federal $ 1,605 $ 430 $ (1,103 ) State 912 1,524 341 Foreign 3,224 2,766 1,461 Total current tax expense 5,741 4,720 699 Deferred: Federal (2,604 ) (889 ) (1,321 ) State (45 ) (771 ) (196 ) Foreign (566 ) (203 ) (170 ) Total deferred tax benefit (3,215 ) (1,863 ) (1,687 ) Income tax expense (benefit) $ 2,526 $ 2,857 $ (988 ) Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Effective rate reconciliation: U.S. federal tax expense $ 15,819 $ 15,489 $ 6,781 State income taxes, net 752 577 105 Permanent items 248 680 298 Foreign rate differential (2,595 ) (1,897 ) (1,325 ) Tax holiday (11,676 ) (9,653 ) (5,911 ) Credits (1,882 ) (1,647 ) (1,411 ) Tax contingencies 462 482 80 Share-based compensation 166 (2,640 ) (1,002 ) Withholding tax 1,170 1,044 819 Other, net 112 385 330 Valuation allowance (50 ) 37 248 Income tax expense (benefit) $ 2,526 $ 2,857 $ (988 ) December 30, 2022 December 31, 2021 Deferred tax assets: Inventory $ 6,648 $ 4,643 Share-based compensation 3,027 2,551 Accrued payroll 1,942 2,140 Net operating loss carryforwards 528 816 Tax credits 2,525 5,103 Capitalized research expenses 3,746 — Intercompany interest 2,341 1,907 Operating lease liabilities 10,247 7,450 Other assets 1,531 755 Deferred tax assets 32,535 25,365 Valuation allowance (507 ) (556 ) Total deferred tax assets 32,028 24,809 Deferred tax liabilities: Intangible assets (3,245 ) (3,265 ) Property, plant and equipment (7,091 ) (5,928 ) Operating lease right-of-use assets (10,122 ) (7,409 ) Other liabilities (277 ) (129 ) Total deferred tax liabilities (20,735 ) (16,731 ) Net deferred tax asset $ 11,293 $ 8,078 2028. At December 29, 2023, we had foreign tax credits of $1.3 million, which, if not utilized, will begin to expire in 2032. expected. have been capitalized according to these provisions. The following table summarizes the activity related to our unrecognized tax benefits: Unrecognized tax benefits Balance at December 27, 2019 $ 1,860 Increase related to current year tax positions 378 Increase related to prior year tax positions 484 Decrease in tax positions related to lapse of statute of limitations (232 ) Balance at December 25, 2020 2,490 Increase related to current year tax positions 597 Decrease in tax positions related to lapse of statute of limitations (92 ) Balance at December 31, 2021 2,995 Increase related to current year tax positions 689 Decrease in tax positions related to lapse of statute of limitations (89 ) Balance at December 30, 2022 $ 3,595 December 30, 2022 December 31, 2021 Term loan $ 142,500 $ 150,000 Revolving credit facility 160,000 145,000 Total principal amount of long-term debt 302,500 295,000 Less unamortized debt issuance costs (1,782 ) (2,247 ) Total long-term debt, net 300,718 292,753 Less current portion (7,500 ) (7,500 ) Total long-term debt, less current portion, net $ 293,218 $ 285,253 2023 $ 7,500 2024 7,500 2025 7,500 2026 280,000 Total $ 302,500 The following table summarizes option activity: Number of Stock Options Service condition Weighted average exercise price per share Weighted average remaining contractual term Aggregate intrinsic value Outstanding, December 31, 2021 921,469 $ 23.20 Granted — $ — Exercised (89,045 ) $ 21.76 Forfeited or expired (27,309 ) $ 23.53 Outstanding, December 30, 2022 805,115 $ 23.35 2.9 years $ 3,124 Exercisable, December 30, 2022 693,579 $ 23.29 2.7 years $ 2,686 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Weighted average grant-date fair value of options granted -- -- $ 12.10 Total intrinsic value of options exercised $ 1,232 $ 11,859 $ 7,292 Restricted Share Units Number of Restricted Share Units Service condition Performance condition Market condition Weighted average grant-date fair value per share Unvested, December 31, 2021 559,310 9,716 14,572 $ 37.05 Granted 707,839 47,846 71,770 $ 27.24 Vested (266,843 ) — — $ 35.39 Forfeited (139,711 ) — — $ 30.93 Unvested, December 30, 2022 860,595 57,562 86,342 $ 30.26 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Weighted average grant-date fair value per share of RSUs granted $ 27.24 $ 49.59 $ 24.50 Total grant-date fair value of shares vested $ 9,644 $ 5,871 $ 4,731 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Weighted average expected term 0.5 years 0.5 years 0.5 years Risk-free interest rate 1.4% 0.1% 0.7% Dividend yield 0.0% 0.0% 0.0% Volatility 63.8% 63.7% 60.1% Europe. Year Ended December 30, 2022 December 31, 2021 December 25, 2020 United States of America $ 572,129 $ 544,109 $ 490,965 Singapore 460,569 383,278 303,444 Europe 109,547 78,745 70,915 Other 137,824 90,785 48,912 Total net sales $ 1,280,069 $ 1,096,917 $ 914,236 Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Lam Research $ 616,391 $ 579,009 $ 475,933 Applied Materials $ 396,261 $ 352,077 $ 316,082 Foreign long-lived assets, exclusive of deferred tax assets, were Year Ended December 30, 2022 December 31, 2021 December 25, 2020 Numerator: Net income $ 72,804 $ 70,899 $ 33,279 Denominator: Basic weighted average ordinary shares outstanding 28,714,550 28,259,607 23,172,961 Dilutive effect of options 165,855 480,790 221,565 Dilutive effect of RSUs 74,853 237,357 61,761 Dilutive effect of ESPP 7,773 1,598 3,818 Diluted weighted average ordinary shares outstanding 28,963,031 28,979,352 23,460,105 Securities excluded from the calculation of diluted weighted average ordinary shares outstanding (1) 959,000 273,000 1,430,000 Earnings per share: Net income: Basic $ 2.54 $ 2.51 $ 1.44 Diluted $ 2.51 $ 2.45 $ 1.42 (1) Represents potentially dilutive options and RSUs that were excluded from the calculation of net income per share, because including them would have been antidilutive under the treasury stock method. Description of Exhibit 2.1 10.1 23.1* 31.1* 31.2* 32.1** 32.2** Inline XBRL Taxonomy Extension Schema Inline XBRL Taxonomy Extension Calculation Linkbase Inline XBRL Taxonomy Extension Definition Linkbase Inline XBRL Taxonomy Extension Label Linkbase Inline XBRL Taxonomy Extension Presentation Linkbase Cover Page Interactive Data File (embedded within the Inline XBRL *Filed herewith ** Furnished herewith + A management contract or compensatory arrangement required to be filed as an exhibit pursuant to Item 601 of Regulation S‑K ICHOR HOLDINGS, LTD. /s/ Jeffrey S. Andreson Jeffrey S. Andreson Name and Title Date /s/ Jeffrey S. Andreson Chief Executive Officer and Director (Principal Executive Officer) February Chief Financial Officer (Principal Accounting and Financial Officer) February Executive Chairman and Director February Lead Independent Director February Iain MacKenzie /s/ Marc Haugen February February John Kispert /s/ Laura Black February February February Sarah O’Dowd /s/ Jorge Titinger February Jorge Titinger /s/ Yuval Wasserman February Yuval WassermanWe recognize revenue 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. This amount is recorded as net sales in our consolidated statements of operations.Transaction price – In most of our contracts, prices are generally determined by a customer-issued purchase order and generally remain fixed over the duration of the contract. Certain contracts contain variable consideration, including early-payment discounts and rebates. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal will not occur. Variable consideration estimates are updated at each reporting date. Historically, we have not incurred significant costs to obtain a contract. All amounts billed to a customer relating to shipping and handling are classified as net sales, while all costs incurred by us for shipping and handling are classified as cost of sales.Performance obligations – Substantially all of our performance obligations pertain to promised goods (“products”), which are primarily comprised of fluid delivery subsystems, weldments, and other components. Most of our contracts contain a single performance obligation and are generally completed within twelve12 months. Product sales are recognized at a point-in-time, generally upon delivery,"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. Products are covered by a standard assurance warranty, generally extended for a period of one to two years depending on the customer, which promises that delivered products conform to contract specifications. As such, we account for such warranties under ASC 460, Guarantees, and not as a separate performance obligationobligation..Contract balances – Accounts receivable represents our unconditional right to receive consideration from our customers. Accounts receivable are carried at invoice price less an estimate for doubtful accounts and estimated payment discounts. Payment terms vary by customer but are generally due within 15– to 60 days. Historically, we have not incurred significant payment issues with our customers. We had no significant contract assets or liabilities on our consolidated balance sheets in any of the periods presented.Commitments and ContingenciesWe are periodically involved in legal actions and claims that arise as a result of events that occur in the normal course of operations. The ultimate resolution of these actions is not expected to have a material adverse effect on our financial position or results of operations.ConcentrationsFinancial instruments that subject us to creditconcentration risk consist of accounts receivable, accounts payable, and long-term debt. At December 29, 2023 and December 30, 2022, and December 31, 2021, three and two customers represented, in the aggregate, approximately 70%63% and 60%70%, respectively, of the balance of accounts receivable.We establish an allowance for doubtful accounts based upon the credit risk of specific customers, historical trends, and other information. We require collateral, typically cash, in the normal course of business if customers do not meet the criteria established for offering credit. If the financial condition of our customers were to deteriorate and result in an impaired ability to make payments, additions to the allowance may be required. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded to income when received. Activity and balances related to our allowance for doubtful accounts was not significant during any period presented.We use qualified manufacturers to supply many components and subassemblies of our products. We obtain the majority of our components from a limited group of suppliers. A majority of the purchased components used in our products are customer specified. An interruption in the supply of a particular component would have a temporary adverse impact on our operating results.F-9We maintain cash balances at global systematically important banks ("G-SIBs") in both United States-basedStates and foreign-based commercial banks.internationally. Cash balances in the United States exceed amounts that are insured by the Federal Deposit Insurance Corporation (FDIC)("FDIC"). The majority of the cash maintained in foreign-based commercial banks is insured by the government where the foreign banking institutions are based. Cash held in foreign-based commercial banks totaled $48.4$59.7 million and $41.5$48.4 million at December 30, 202229, 2023 and December 31, 2021,30, 2022, respectively, and at times exceeds insured amounts. No losses have been incurred as of December 30, 202229, 2023 or December 31, 202130, 2022 for amounts exceeding the insured limits.We estimate the fair value of financial assets and liabilities based upon comparison of such assets and liabilities to the current market values for instruments of a similar nature and degree of risk. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:▪Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date▪Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability▪Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date▪Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement dateThere were no changes to our valuation techniques during 2022.2023. We estimate the recorded value of our financial assets and liabilities approximates fair value as of December 30, 202229, 2023 and December 31, 2021.We estimate the value of acquired intangible assets, on a nonrecurring basis, based on an income approach utilizing discounted cash flows. Under this approach, we estimate the future cash flows from our asset groups and discount the income stream to its present value to arrive at fair value. Future cash flows are based on recently prepared operating forecasts. Operating forecasts and cash flows include, among other things, revenue growth rates that are calculated based on management’s forecasted sales projections. A discount rate is utilized to convert the forecasted cash flows to their present value equivalent. The discount rate applied to the future cash flows includes a subject-company risk premium, an equity market risk premium, a beta, and a risk-free rate. As this approach contains unobservable inputs, the measurement of fair value for intangible assets is classified as Level 3.InventoriesInventories 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 basisbasis.F-10Property and EquipmentProperty and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives:Estimated useful lives of property & equipment Maintenance and repairs that neither add material value to the asset nor appreciably prolong its useful life are charged to expense as incurred. Gains or losses on the disposal of property and equipment are included in selling, general, and administrative expenses on the consolidated statements of operations.
LeasesLeasesWe determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement. If we determine the arrangement is a lease, or contains a lease, at lease inception, we then determine whether the lease is an operating lease or a finance lease. Operating and finance leases result in recording a right-of-use (“ROU”) asset and lease liability on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, we use the non-cancellable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This rate is generally consistent with the interest rate we pay on borrowings under our credit facilities, as this rate approximates our collateralized borrowing capabilities over a similar term of lease payments. We utilize the consolidated group incremental borrowing rate for all leases, as we have centralized treasury operations. We have elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. We have elected not to separate lease and non-lease components for any class of underlying asset.Long-Lived AssetsLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate, in management’s judgment, that the carrying amount of an asset (or asset group) may not be recoverable. In analyzing potential impairments, projections of future cash flows from the asset group are used to estimate fair value. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset group, a loss is recognized for the difference between the estimated fair value and the carrying value of the asset group. The projections are based on assumptions, judgments, and estimates of revenue growth rates for the related business; anticipated future economic, regulatory, and political conditions; the assignment of discount rates relative to risk; and estimates of terminal values. During 2023, 2022, 2021, and 2020,2021, we did not identify any triggering events that would indicate impairment.F-11Intangible AssetsWe account for intangible assets that have a definite life and are amortized on a basis consistent with their expected cash flows over the following estimated useful lives:Estimated useful lives of intangible assets Trademarks106-10 yearsCustomer relationships6-10 years7-1010 yearsGoodwillGoodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. We review goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. We first make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying a quantitative goodwill impairment test. Under the quantitative test, the fair value of the reporting unit is compared to its carrying value and an impairment loss is recognized for any excess of carrying amount over the reporting unit’s fair value. Fair value of the reporting unit is determined using a discounted cash flow analysis. For purposes of testing goodwill for impairment, we have concluded that we operate as one reporting unit.We performed a qualitative goodwill assessment at December 30, 202229, 2023 and December 31, 2021.30, 2022. This assessment indicated that it was more likely than not our reporting unit’s fair value exceeded its carrying value.Research and Development CostsResearch and development costs are expensed as incurred.We recognize deferred income taxes using the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for differences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense for the current year differs from the statutory rate primarily as a result of the impact of foreign operations and discrete tax benefits recorded in connection with our historical acquisitions and stock option exercises.When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in our consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. We recognize interest and penalties as a component of income tax expense.F-12Foreign OperationsThe 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 (income), net on our 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.Accounting Pronouncements Recently IssuedIn October 2021,November 2023, the FASB issued ASU No. 2021‑08,2023-07, Accounting for Contract Assets and Contract Liabilities from Contracts with CustomersSegment Reporting - Improvements to Reportable Segment Disclosures (Topic 805)280). . This ASU updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires an acquirerdisclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in a business combinationinterim periods. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts usingall prior periods presented in the revenue recognition guidance in Topic 606. Atfinancial statements. We are currently evaluating the acquisition date,effect that the acquirer appliesadoption of this ASU may have on our consolidated financial statements.In December 2023, the revenue model as if it had originated the acquired contracts.FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU is intended to enhance the transparency, decision usefulness, and effectiveness of income tax disclosures. The ASU requires a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. The ASU also requires a public entity to provide a qualitative description of the states and local income tax category and the net amount of income taxes paid, disaggregated by federal, state, and foreign taxes as well as by individual jurisdictions. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption2024, and early adoption and retrospective application are permitted. We are currently evaluating the effect that the adoption of thethis ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. This ASU is currently not expected tomay have a material impact on our consolidated financial statements.Note 2 – AcquisitionsNote 2 – Acquisitions IMG Companies, LLCOn November 19, 2021 we completed the acquisition, via merger, of IMG Companies, LLC and its subsidiaries (“IMG”), a California-based precision machining, specialty joining, and plating company for an aggregate purchase price of $269.5 million. IMG provides us increased capacity and capabilities in our precision machining business and expands our served customer base with new component and service offerings.The following table presents the purchase price allocation.Cash acquired $ 1,234 Accounts receivable 8,559 Inventories 12,128 Prepaid expenses and other current assets 579 Property and equipment 33,067 Operating lease right-of-use assets 14,509 Intangible assets 65,000 Goodwill 160,515 Accounts payable (3,853) Accrued expenses (5,620) Other current liabilities (2,109) Lease liabilities (14,509) Total acquisition consideration $ 269,500 F-13We allocated $62.4 million to IMG’s customer relationships and $2.6 million to IMG’s order backlog with weighted average amortization periods of 10 years and 6 months, respectively. Goodwill recognized from the acquisition was primarily attributed to an assembled workforce and expected synergies. In connection with the acquisition, we incurred transaction costs of $0.2 million and $4.4 million in 2022 and 2021, respectively. The fair value adjustment to inventory as part of our purchase price allocation resulted in charges to cost of sales of $2.5 million and $1.4 million during 2022 and 2021, respectively. Total acquisition consideration reflects a $0.5 million reduction for a working capital adjustment that was finalized in 2022, prior to the end of the measurement period.Our consolidated statement of operations for 2021 includes approximately 6 weeks of operating activity of IMG, including sales of $7.3 million.The following table is the unaudited pro forma consolidated results of operations assume the acquisition was completed on December 26, 2020, the beginning of the earliest period presented.operations. Pro forma adjustments are primarily comprised of preliminary estimates of amortization expense related to acquired intangible assets, incremental interest expense from increased borrowings to fund the acquisition and the elimination of IMG’s historical interest expense, elimination of IMG’s non-recurring management expenses, elimination of a gain on forgiveness of debt, acquired inventory fair value charges, the related income tax effects, and other insignificant management adjustments. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved or of results that may occur in the future.Year Ended December 31,
2021Net sales $ 1,156,619 Net income $ 74,531 Net income per share: Basic $ 2.64 Diluted $ 2.57 Nogales, Mexico Precision Machining AcquisitionOn December 1, 2020, we acquired certain operating assets and assumed the operations of a precision machining operation in Nogales, Mexico, which was considered a business combination under ASC 805 – Business Combinations, for an aggregate purchase of $5.0 million. The acquisition adds to our precision machined component manufacturing capacity. In connection with the acquisition, we recorded $2.0 million in tangible operating assets, a $1.2 million customer relationship intangible asset, which will be amortized of a period of 6 years, and $1.9 million in goodwill.Note 3 – InventoriesNote 3 – Inventories Inventories consist of the following:December 29,
2023December 29,
2023December 30,
2022F-14The following table presents changes to our excess and obsolete adjustment:Excess and obsolete adjustment Balance at December 25, 2020 $ (12,742) Charge to cost of sales (1,942) Disposition of inventory 633 Balance at December 31, 2021 (14,051) Charge to cost of sales (4,981) Disposition of inventory 1,489 Balance at December 30, 2022 (17,543) Charge to cost of sales (9,784) Disposition of inventory (1,113) Balance at December 29, 2023 $ (28,440) Note 4 – Property and EquipmentNote 4 – Property and Equipment Property and equipment consist of the following:December 29,
2023December 29,
2023December 30,
2022175,906 Depreciation expense for 2023, 2022, and 2021 and 2020 was $18.8 million, $17.2 million, and $11.1 million, and $10.9 million, respectively.Cloud Computing Implementation CostsWe capitalize implementation costs associated with hosting arrangement that are service contracts. These costs are recorded to prepaid expenses or other noncurrent assets. To-date, these costs are those incurred to implement a new company-wide ERP system. The balance of capitalized cloud computing implementation costs, net of accumulated amortization, was $8.1 million and $11.6$8.1 million as of December 30, 202229, 2023 and December 31, 2021,30, 2022, respectively, and is included in other assets on our consolidated balance sheets. The related amortization expense was $1.1 million, $0.9 million, and $0.3 million during 2023, 2022, and 2021, respectively, and is included in selling, general, and administrative expense on our consolidated statements of operations.F-15Note 5 – Intangible Assets and GoodwillNote 5 – Intangible Assets and Goodwill Definite-lived intangible assets consist of the following:December 29, 2023 December 29, 2023 Gross value Gross value Accumulated
amortizationAccumulated
impairment
chargesCarrying
amountWeighted
average
useful lifeCustomer relationships $ 105,542 $ $ (53,680) $ $ — $ $ 51,862 8.7 years 8.7 years Developed technology 11,047 (5,621) (5,621) — — 5,426 5,426 10.0 years 10.0 years December 30, 2022 December 30, 2022 Gross value Gross value Accumulated
amortizationAccumulated
impairment
chargesCarrying
amountWeighted
average
useful lifeCustomer relationships $ 117,022 $ $ (51,337) $ $ — $ $ 65,685 8.4 years 8.4 years Developed technology 11,047 (4,710) (4,710) — — 6,337 6,337 10.0 years 10.0 years Future projected annual amortization expense consists of the following:Future
amortization
expenseFuture
amortization
expense2028 $ The following tables present the changes to goodwill:Goodwill Balance at December 25, 2020 $ 174,887 Acquisitions 161,015 Balance at December 31, 2021 335,902 Acquisitions (500) Balance at December 30, 2022 335,402 Acquisitions — Balance at December 29, 2023 $ 335,402 Note 6 – LeasesNote 6 – Leases We lease facilities under various non-cancellable operating leases expiring through 2031. In addition to base rental payments, we are generally responsible for our proportionate share of operating expenses, including facility maintenance, insurance, and property taxes. As these amounts are variable, they are not included in lease liabilities. As of December 30, 2022,29, 2023, we had no operating leases executed for which the rental period had not yet commenced.F-16The components of lease expense are as follows:Year Ended December 29,
2023December 30,
2022December 31,
2021Operating lease cost $ 9,656 $ 8,760 $ 5,763 Supplemental cash flow information related to leases is as follows:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021Operating cash flows from operating leases Operating cash flows from operating leases Supplemental balance sheet information related to leases is as follows:December 29,
2023December 29,
2023December 30,
2022Weighted-average remaining lease term of operating leases 4.6 years 5.3 years Weighted-average discount rate of operating leases 3.4% 3.0% Future minimum lease payments under non-cancellable leases as of December 30, 202229, 2023 are as follows:2028 Note 7 – Income Taxes Income TaxesIncome(loss) before tax was as follows:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021Income (loss) before tax F-17Significant components of income tax expense (benefit) consist of the following:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021Federal Federal Federal Federal Total deferred tax expense (benefit) Income tax expense The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense (benefit) consist of the following:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021U.S. federal tax expense U.S. federal tax expense Income tax expense F-18Deferred income tax assets and liabilities consist of the following:December 29,
2023December 29,
2023December 30,
2022Inventory Inventory Interest carryforwards Intangible assets Intangible assets At December 30, 2022,29, 2023, we had federal state, and foreignstate net operating loss carryforwards of zero, $2.1$31.1 million, and $1.7$25.1 million, respectively. The federal net operating losses may be carried forward indefinitely to offset up to 80% of taxable income in any given year. The state and foreign net operating loss carryforwards, if not utilized, will begin to expire in 2032, and 2029, respectively.2032. At December 30, 2022,29, 2023, we had federal research and development credits of $0.2 million. The federal research and development credits,$1.7 million, which, if not utilized, will begin to expire in 2042.Income tax expense for the current year differs from the statutory rate primarily as a result of the valuation allowance, impact of foreign operations and discrete tax benefits recorded in connection with our historical acquisitions and stock option exercises. We have determined the amount of our valuation allowance of $11.1 million based on our estimates of taxable income by jurisdiction in which we operate over the periods in which the related deferred tax assets will be recoverable. As of December 30, 2022,29, 2023, we believedetermined it is not more-likely-than-not that our U.S. entities will generate sufficient taxable income to offset reversing deductible timing differences and to fully utilize carryforward tax attributes. Accordingly, we will realize ourhave recorded a valuation allowance against U.S. federal and state deferred tax assets, with the exceptionnet of certain state and foreign net operating loss carryforwards we believe are not likelydeferred tax liabilities related to indefinite-lived intangible assets for which no future realization can be realized within the carryforward period.In December 2017, the Tax Cuts and Jobs Act (the "2017 Tax Act") was enacted. The 2017 Tax Act included a number of changes including a provision that required capitalization and amortization of research and development costs beginning in 2022. Prior to 2022 research and development costs could be either expensed or capitalized. Accordingly, we began capitalizingBeginning with the 2022 tax year, the research and development costs in 2022.We were granted a tax holiday for our Singapore operations that is effective through 2026. The net impact of the tax holiday in Singapore as compared to the Singapore statutory rate was a benefit of $5.0 million, $11.7 million, and $9.7 million during 2023, 2022, and $5.9 million during 2022, 2021, and 2020, respectively. Our income tax fluctuates based on the geographic mix of earnings and is calculated quarterly based on actual results pursuant to ASC Topic 740‑270.F-19As of December 30, 2022,29, 2023, we have recognized $3.6$3.1 million of unrecognized tax benefits in other non-current liabilities in our consolidated balance sheet. If recognized, $1.8$3.1 million of this amount would impact our effective tax rate. We expect a decrease of $0.1 million to the total amount of unrecognized tax benefits within the next twelve12 months.Our ongoing practice is to recognize potential accrued interest and penalties related to unrecognized tax benefits within our statements of operations in income tax expense (benefit).expense. During 2023, we recognized a net decrease of approximately $0.2 million in potential interest and penalties associated with uncertain tax positions in the statements of operations. At December 30, 2022,29, 2023, other non-current liabilities on our balance sheet included approximately zero and $0.7$0.5 million of interest and penalties, respectively, associated with uncertain tax positions, which are excluded from the unrecognized tax benefits table below.Unrecognized
tax benefitsBalance at December 25, 2020 $ 2,490 Increase related to current year tax positions 597 Decrease in tax positions related to lapse of statute of limitations (92) Balance at December 31, 2021 2,995 Increase related to current year tax positions 689 Decrease in tax positions related to lapse of statute of limitations (89) Balance at December 30, 2022 3,595 Increase related to current year tax positions 488 Decrease in tax positions related to lapse of statute of limitations (10) Decrease in tax positions related to settlements (916) Balance at December 29, 2023 $ 3,157 We assert indefinite reinvestment of our U.S. and Netherlands unremitted earnings. With regard to these unremitted earnings, we have not, nor do we anticipate the need to repatriate funds from the U.S. to the Netherlands or from the Netherlands to the Cayman entity to satisfy liquidity needs. Determination of the amount of unrecognized withholding tax liability related to the indefinitely reinvested earnings is not practicable.Our three major filing jurisdictions are the United States, Singapore, and Malaysia. We are no longer subject to U.S. Federal examination for tax years ending before 2017, to state examinations before 2018,2019, or to foreign examinations before 2018.2019. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating losses or credit carryforward. At December 30, 2022,29, 2023, we were not under examination by a tax authority.Note 8 – Employee Benefit ProgramsNote 8 – Employee Benefit Programs 401(k) PlanWe sponsor a 401(k) plan available to employees of our U.S.‑based subsidiaries. Participants may make salary deferral contributions not to exceed 50% of a participant’s annual compensation or the maximum amount otherwise allowed by law. Eligible employees receive a discretionary matching contribution equal to 50% of a participant’s deferral, up to an annual maximum of 4% of a participant’s annual compensation. For 2023, 2022, 2021, and 2020,2021, matching contributions were $2.7 million, $3.0 million, and $2.2 million, and $1.9 million, respectively.F-20Note 9 – Long-Term DebtNote 9 – Long-Term Debt Long-term debt consists of the following:December 29,
2023December 29,
2023December 30,
2022Maturities of long-term debt consist of the following:The weighted average interest rate across our credit facilities was 3.37%6.80%, 2.74%3.37%, and 3.75%2.74% during 2023, 2022, and 2021, and 2020, respectively.On October 29, 2021, we entered into an amended and restated credit agreement, which includes a group of financial institutions as direct lenders underlying the agreement. The credit agreement includes a $150.0 million term loan facility and a $250.0 million revolving credit facility (together, “credit facilities”). Term loan payments of $1.9 million are due on a quarterly basis. The credit agreement matures on October 29, 2026.Our credit agreement is secured by our tangible and intangible assets and includes customary representations, warranties, and covenants. We are required to maintain a minimum fixed charge coverage ratio of 1.25 : 1 and a maximum leverage ratio of 3.50 : 1.Interest is charged at either the Base Rate or the Bloomberg Short-Term Bank Yield Index (“BSBY”) Rate (as such terms are defined in the credit agreement) at our option, plus an applicable margin.margin. The Base Rate is equal to the higher of i) the Prime Rate, ii) the Federal Funds Rate plus 0.5%, or iii) the BSBY Rate plus 1.00%. The BSBY Rate is equal to BSBY for a particular tenor matching the respective interest period. The applicable margin on Base Rate and BSBY Rate loans is 0.375‑1.375% and 1.375‑2.375% per annum, respectively, depending on our leverage ratio,, which is based on trailing 12‑month EBITDA, as defined in our credit agreement.agreement. We are also charged a commitment fee of 0.175%-0.350%0.175-0.350%, depending on our leverage ratio, on the unused portion of our revolving credit facility. Base Rate interest payments and commitment fees are due quarterly. BSBY rate interest payments are due on the last day of the applicable interest period, or quarterly for applicable interest periods longer than 3 months. At December 30, 2022,29, 2023, our credit facilities bore interest under the BSBY rate option of 5.97%7.58%.Note 10 – Shareholders’ EquityPublic Offering of SharesOn December 14, 2020, we completed an underwritten public offering of 4.6 million ordinary shares with net proceeds of $139.4 million, after deducting the underwriting discount of $1.35 per share and incremental offering expenses of $0.5 million.Note 11 – Share-Based CompensationNote 10 – Share-Based Compensation 2016 PlanIn December 30, 2016, we adopted the 2016 Omnibus Incentive Plan (“the 2016 Plan”). The 2016 Plan provides for grants of share‑based awards to employees, directors, and consultants.consultants. Under the 2016 Plan, 1,888,000 ordinary shares were reserved for issuance. The number of shares reserved for issuance under the 2016 Plan increases annually beginning in fiscal year 2018 by the lesser of (i) 2% of the ordinary shares outstanding on the last day of the immediately preceding fiscal year or (ii) such amount determined by our Board of Directors. Awards may be in the form of share call options (“options”), restricted share units (“RSUs”), and other share‑based awards.awards. Forfeited or expired awards are returned to the incentive plan pool for future grants.F-21Share‑based compensation expense across all plans for options, RSUs, and employee share purchase rights was $17.3 million, $13.9 million, and $11.5 million during 2023, 2022, and $9.9 million during 2022, 2021 and 2020,, respectively.Stock OptionsOptions are valued based on the Black-Scholes-Merton model on the date of grant. The risk-free interest rate is based on the U.S. Treasury rates in effect on the date of grant. Estimated volatility is based on the historical volatility of our ordinary shares. Options generally vest over 4 years, with 25% vesting on the first grant-date anniversary and the remaining vesting on a quarterly basis over the remaining 3 years. Options granted under the 2016 Plan have a contractual term of 7 years.The table below sets forth the weighted average assumptions used to measure the fair value of options granted:Year EndedDecember 30,2022December 31,2021December 25,2020Weighted average expected term----5 yearsRisk-free interest rate----0.5%Dividend yield----0.0%Volatility----61.5%Number of Stock Options Service
conditionService
conditionService
conditionWeighted average exercise price
per shareWeighted average remaining
contractual termAggregate intrinsic value Outstanding, December 30, 2022 Exercised Exercised Forfeited or expired Forfeited or expired Outstanding, December 29, 2023 Outstanding, December 29, 2023 Outstanding, December 29, 2023 Exercisable, December 29, 2023 Fair value information for options granted and the intrinsic value of options exercised are as follows:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021Total intrinsic value of options exercised Total intrinsic value of options exercised At December 30, 2022,29, 2023, total unrecognized share-based compensation expense relating to options was $1.1$0.1 million, with a weighted average remaining service period of 1.00.4 years.RSUs are valued based on the closing market price of our ordinary shares on the date of grant. RSUs that vest pursuant to a service condition generally vest over 4 years, with 25% vesting on the first grant-date anniversary and the remaining vesting on a quarterly basis over the remaining 3 years. RSUs that vest pursuant to a performance condition are generally earned over 3 years, depending on the achievement of certain financial and non-financial targets, and vest on or around the third grant-date anniversary. RSUs that vest pursuant to a market condition are valued based on a Monte Carlo simulation model and generally earned over 3 years based on a relative total shareholder return model and vest on or around the third grant-date anniversary. Upon vesting of RSUs, employees may elect to have shares withheld to cover statutory minimum withholding taxes. Shares withheld are not reflected as an issuance of ordinary shares within our consolidated statements of shareholders’ equity, as the shares were nevernever issued, and the associated tax payments are reflected as financing activities within our consolidated statements of cash flows.F-22The following table summarizes RSU activity:Number of Restricted Share Units Service
conditionService
conditionService
conditionPerformance
conditionMarket
conditionWeighted average grant-date fair
value per shareUnvested, December 30, 2022 Unvested, December 29, 2023 Fair value information for RSUs granted and vested is as follows:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021At December 30, 2022,29, 2023, total unrecognized share-based compensation expense relating to RSUs was $24.7$31.7 million, with a weighted average remaining service period of 2.7 years.2017 ESPPIn May 2017, we adopted the 2017 Employee Stock Purchase Plan (the “2017 ESPP”). The 2017 ESPP grants employees the ability to designate a portion of their base-pay to purchase ordinary shares at a price equal to 85% of the fair market value of our ordinary shares on the first or last day of each 6 month purchase period. Purchase periods begin on January 1 or July 1 and end on June 30 or December 31, or the next business day if such date is not a business day. Shares are purchased on the last day of the purchase period. As of December 30, 2022,29, 2023, 2.2 million ordinary shares remained eligible for issuance under the 2017 ESPP.The table below sets forth the weighted average assumptions used to measure the fair value of 2017 ESPP rights:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021Weighted average expected term 0.5 years 0.5 years Risk-free interest rate 5.1% 1.4% 0.1% Dividend yield 0.0% 0.0% Volatility 63.4% 63.8% 63.7% We recognize share-based compensation expense associated with the 2017 ESPP over the duration of the purchase period. We recognized $0.9 million, $1.0 million, $0.6 million, and $0.4$0.6 million of share-based compensation expense associated with the 2017 ESPP during 2023, 2022, 2021, and 2020,2021, respectively. At December 30, 2022,29, 2023, there was no unrecognized share-based compensation expense.Note 12 – Segment InformationNote 11 – Segment Information Our Chief Operating Decision Maker, the Chief Executive Officer, reviews our results of operations on a consolidated level and executive staff is structured by function rather than by product category. Additionally, key resources, decisions, and assessment of performance are analyzed at a company‑wide level.level. Therefore, we operate in one operating segment.F-23Foreign operations are conducted primarily through our wholly owned subsidiaries in Singapore and Malaysia, and to a lesser degree, Scotland, Korea, and Mexico. Our principal markets include North America, Asia, and to a lesser degree, Europe.The following table sets forth sales by geographic area, which represents sales to unaffiliated customers based upon the location to which the products were shipped:shipped:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021The following table sets forth our two major customers with 10% or more of sales, which comprised 79%82%, 85%79%, and 87%85% of net sales in 2023, 2022, and 2021, respectively:Year Ended December 29,
2023December 30,
2022December 31,
2021Applied Materials $ 295,082 $ 396,261 $ 352,077 Lam Research $ 286,836 $ 616,391 $ 579,009 ASML (1) $ 85,589 -- -- (1)ASML did not represent 10% or more of sales in 2022 and 2020, respectively:2021.$52.8$48.2 million and $38.4$52.8 million at December 29, 2023 and December 30, 2022, and December 31, 2021, respectively.Note 13 – Earnings per ShareF-24Note 12 – Earnings per Share The following table sets forth the computation of our basic and diluted net income (loss) per share and a reconciliation of the numerator and denominator used in the calculation:Year Ended Year Ended December 29,
2023December 29,
2023December 30,
2022December 31,
2021Net income (loss) Net income (loss) Net income (loss) Basic weighted average ordinary shares outstanding Basic weighted average ordinary shares outstanding 29,200,796 28,714,550 28,259,607 Dilutive effect of options 0 165,855 480,790 Dilutive effect of RSUs 0 74,853 237,357 Dilutive effect of ESPP 0 7,773 1,598 Diluted weighted average ordinary shares outstanding 29,200,796 28,963,031 28,979,352 Securities excluded from the calculation of diluted weighted average ordinary shares outstanding (1) 2,632,000 959,000 273,000 Net income (loss) per share: Net income (loss) per share: Net income (loss) per share: Basic Basic F-25EXHIBIT INDEXThe following exhibits are filed with this Form 10‑K or are incorporated herein by reference:Exhibit
Number3.1*4.1*10.2+10.3+10.4+10.5+10.6+10.7+10.810.8++10.9+10.10+10.10+10.11+10.11+10.12+10.12+*10.13+ 21.1*21.1* 101.INS101.INS* Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCHDocument101.CALDocument101.DEFDocument101.LABDocument101.PREDocument104document)Filed herewith**+SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.Dated: February 24, 202323, 2024By: By:Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.Signature Jeffrey S. Andreson24, 2023Jeffrey S. Andreson /s/ Larry J. SparksLarry J. Sparks24, 2023Greg Swyt /s/ Thomas M. Rohrs Thomas M. Rohrs24, 2023Thomas M. Rohrs /s/ Iain MacKenzie 24, 2023Marc HaugenDirector Director24, 2023Marc Haugen /s/ John Kispert Director Director24, 2023Laura BlackDirector Director24, 2023Laura Black /s/ Wendy Arienzo Wendy ArienzoDirector Director24, 2023Wendy Arienzo /s/ Sarah O’Dowd Director Director24, 2023Director Director24, 2023Director Director24, 2023