ICHR - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day ladies and gentlemen, and welcome to the Third Quarter 2017 Ichor System’s Earnings Conference Call. At this time, all participants will are in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] I would now like to introduce your host for today’s conference, Mr. Maurice Carson, President and CFO. sir. ahead go Please

Maurice Carson

afternoon. Good you which Thank replay will website Investor conclude on Christy. replay, the this visit find please telephonically for the conference Ichor’s Ichor’s this we after call be webpage shortly listen afternoon, you, to you webcast where everyone. Relations joining and To will Thank available instructions. for complete

the those conference release included meaning call, our press These SEC. XXXX, are filed our annual of fiscal read to SEC and control statements. from you which results our differ in as report the materially for could our you been forward-looking Laws. such and statements Federal and subsequent filings uncertainties described beyond out earnings contain and include on cause press release, actual earnings within recognize spelled Securities forward-looking please subject in to those These year number with As that have and uncertainties to and in meaning both this prospectus those of and XX-K which are our those listen described the statements which Form in with a risks risks

and consider statements light should other in You risks of forward-looking uncertainties. those and all

be should mention and that release. certain Additionally, call I measures we providing our press financial conference will during non-GAAP in earnings our

remarks, will is open the With will today the news the After of Tom the Tom? I go to Our of industry for me comparable Chairman Tom reconciliation will financial prepared release financials. questions. non-GAAP and financial exciting measures lines earnings measures. a over Ichor some the contains press their most and and we discuss GAAP trends Rohrs. Ichor’s CEO,

Thomas Rohrs

joining you QX Thank all for call. us Maurice our you, thank today and conference XXXX for

Systems our of with nine XX% that growing revenues sixth earnings and our stated XXXX third year-over-year was have quarter of increased consecutive quarter the quarter period, sequential of revenues. than over first growth months over faster straight over goal another Year-to-date consistent are and seventh up our quarter revenue XXX% for Ichor of profits was growth The growth. and same

million quarter in our of of the Our nine-and-a-half our QX to customers. approximately contributed guidance, recent core revenues revenue $XXX revenues and expect million weeks X%. our approximately in with last our grow were the of At revenues of we the to levels to $XXX of lower mid-range quarter million acquisition the concert about shipment Cal-Weld million and grow to $XX or Cal-Weld $XX

to and CMP and deposition used on are towards customers’ tools several we believe patterning systems trends tools, ideas and the Our gas performance for industry and systems dynamics set optimistic is focus our benefitting semiconductors what expertise this tools, by consistent today processes the delivery and and These revenue gas We to our delivery we be lithography continue liquid do XD are multiple also overall have encourage But well. that growth there our a outperform skill liquid tools. are FinFETS. the us drivers and earnings leading differentiated result in These that our specific will are of fluid we expressed differentially future. etch breakthrough from in NAND, industry. in

towards that acquisition First, our which XX% private that At strategy ago target discussed buy profit. we to companies our roadshow. had financials we executing of to gross model against time, add in capabilities delivery our systems well very our we and net during months IPO margin long-term financial would are out our XX% that XX move opportunities and fluid we pointed

as to in is supplying are and well the to Talon acquisition Ichor as supplier Cal-Weld company. our customers. excited we market a our is manufactured and capabilities up announced of business. our our key of years incremental by Innovations, opportunities delivery and expands working. of Cal-Weld will core earnings Talon of a for of to and are to we drive Ichor. key agreement Our the margin Talon an and the increases fittings, our footprint gas purchase for has that our announce opens Talon been strategy recent precision leader evident is definitive delivery today, already one accretive fluid Talon components. acquisitions acquisitions acquisition valves margins business. also Like which and supported integration Both revenue in Talon and these help bring increase new Cal-Weld, that gas vertical to

our in key proprietary expanding liquid agreement calls, the this delivery to on revenue and with added several support capacity several growth regarding to recent and offerings Consistent markets we in product earnings – to are agreement progress in customer. and our announcement outperformance we four our driver a evident is earlier pleased Another the business markets in commentary systems my provide October. announce to contractual

with business we in the This revised have targets reflects served products, running of we revenue Marc contributions our model. The to new in and for put our new with been added together busy of QX is meaningful Because Operating target accretive expected after have customer this initial has contributions revised fiscal Haugen progress customers we led Kevin the financial XXXX. Maurice amount Chief which pursuing our by will addition exceeding Officer quarter, model revenue Last our to Canty ground progress Talon, as have our hit all the markets. We and target Marc IP year and results and own are made we future which added our we made consistent Both plans. strategy adding also Kevin with our to new future our This significant margin Cal-Weld Along the and later. organization. a module, to our gross delivery Member. we and a us to our discuss the a will and proprietary Board strategy expand prior and small go can in base recognize applications has our capacity, liquid model with a as and achieving profitability. module, adding in and capabilities accretive our to to

add It’s me have well expected. our words we than more had a had Let CFO candidates going extraordinarily and ever in fact, I search. few about

offer. just We an have extended

excellent is So conclusion. to coming the process an

One quarter. of the CFO that, of our with lengthy the benefits search had for working is full of luxury have the I Maurice

contribution, simply sincerely Ichor loyalty So, I rather last than Systems. and his and to of dedication call, to reiterate Maurice quarter’s my words thank tremendous for will

business extremely the the brief the new XXXX summary, beginning that a third of and new to QX We passed pause a excited very positioned is about are XXXX will has on quarter really through are ramp for of us. note opportunities us. In well our we finish and growth high the bring

our over this will is reacceleration that pleased the to continue We And with XXXX. turn shows and expectation are that Maurice. will our into call that, guidance this I

Maurice Carson

sure Ichor we’ve I to like everybody and much last make extraordinary have over also all Tom. the how you, would u managed few both to Thank do things and working the that enjoyed knows you with for years.

is outperformed through this the with in in consistent end the quarter. the guidance significant the X%. through but non-GAAP be from this, the was a Cal-Weld Let down final margin initial prior quarter general, at in up with accelerating very base of some in referencing QX. the keep significantly our will Tom slowly the XX.X% labor Revenue with Cal-Weld QX and in QX improvement Ichor Unless be slightly details but increased difficult quarter. quarter-on-quarter force otherwise, QX. completely in this manufacturing there in number. let in short-lived. shifting noted some gave of I by drove financials. go me a within it that weeks. the decline of me addition to the down financials say made would you the were details two of shift line but Base the anticipation the for but compared that grew expectations, as This our revenue in was compared was Gross portion decision The on quarter from XX.X% our the quarter. was mix We mix tact Ichor guidance, starting to last In was significant of margins

Operating was were expenses, a the just added tax flat decision. rate what our essentially to X%. operating of The this had we was can million little without As Cal-Weld $X right guidance, see Cal-Weld you from quarter. book prior the over expenses anticipated.

anticipate Our this case with cash to to last the still rate the guided We of quarter for tax was than had less be rate a future. tax and Cal-Weld addition the in the X%. higher quarter

our capacity However, Year-to-date and was $X.X and in use NOLs projects in to Portland. into Singapore, XX% is in early able be have were and revenue. that related able to we million primarily will to do CapEx use XXXX. Net income we QX of Malaysia expansion QX

Inventory to Ichor. Couple were with of invest things. key higher balance weldments two for driven related plastic has sheet and of items the and balance shipped have quarter from our I growth in by held the higher We DSO two the Most continue of of key accounts in addition revenue finish to capacity, machining, was higher of than turns the weeks growth. a the will as generally higher around we of we some past. DSO compared with we slightly inventory to of quarterly Talon. in in discussion anticipation Ichor last proportion were worst expansion Cal-Weld. and sheet. primarily margin areas QX Cal-Weld the

exciting very for Ichor. a As Tom this acquisition mentioned, is

of Ichor of For signing areas. gas delivered plan. grow It Talon and piece year, revenue, accretive in and agreement creation the Today laying debt XXXX Innovations. of key the We key $X value a is that third this of would operating Talon interest we acquisition. of almost and acquisition our extremely and plan the is plan is incremental margin The business the of margin strategic to new at an value. this industry. the of acquisition the business second This line. while have you announced contributing exactly on the to delivery into out delivered initial LDM, shipments product important purchase gross first inclusive Cal-Weld, we strategic for growth been the for by our vectors continue this step financing expansion to to million a with piece in margin, We we EPS added fits the in where the with already adding the margin an

XX% of Since are now when gross and guidance XX% the We for we to as our to our With between believe time it’s income. XX% and that did Talon Talon, XX% us model as in presented we a net of income we XX% XX%. Talon gross and close. unsure acquisition not will adjusted financial model. model, we update include long-term long-term see IPO, our Cal-Weld and path our and the With net acquisition margins have between margin

and been clearance is will Hart–Scott–Rodino termination for a well. have filed have reasons, to with soon with am well as we happy Ichor, done new and able I you to investors the release, and also personal first, as press we now. is year early important sharing that closed. for and and get that going the the Two But the in so I pleased mentioned that am extremely On both have are vision a leaving. Tom been CFO Talon I Cal-Weld fits to we As before for update search note, acquisitions

the on companies we Second, Christy, With and been great intensely about to the process. passionate delivery. are that, with open team focused are Both questions. service have teams are and take both through that please ready have to to Talon Cal-Weld management fluid line. each work customer

Operator

Instructions] Our Karl is of [Operator Ackerman question Cowen. first from

open. Your is line

Karl Ackerman

questions. Hi, I Talon. appreciate model the I have two good of the long-term wonderful. acquisition afternoon and everyone. That’s

and to into revenue you incremental expectation perhaps December your the I’d quarter and in to yourself? love merchant like XXXX, on fourth suppliers importantly please. opportunities customers As the hear and sub-systems, to earlier key who of thoughts have gas outsourcing follow-up at appear be third in your I for a stages your And more look largest chemical

Thomas Rohrs

thank Yes, sure. Karl, you.

will has of are to been largest I you have had they the operational going So, while that reaching because of couple we if about trouble this year. had year, next fourth and And double they growing third year, XXXX, kind anticipate year. so base I last customers this fast from that mentioned will the our XXXX, think, double from business times that,

in six all As close companies, five after of certainly you top wafer know, but equipment say, of – and customers KLA probably both Electronic would Tokyo I or are of fab very buys. these the

very were we moving customers happy are the them. So the way major with with

happy We the with are growth. the and acceleration very continued

terms So, of influence a when new it’s and in and good a said all our very done business. story that us overall very for in positive

Karl Ackerman

I that. question. for maybe you. about thank Great, you guess, Thank more an industry

While XXXX another the which healthy your by be year. is impacted very looks of to business level spending certainly absolute WTE

I memory maybe is how towards toward comment as your in next away some and increases WTE the face have mix FinFET logic foundry adoption that, shifts with eventually think nanometer, of Could ramp and you on misconceptions opportunity and may the one you headwinds. EUV? the logic intensity foundry capital of the on greater transistors year from and business

Thomas Rohrs

of let all, the EUV. Yes, well, first comment me on

you for making EUV. gas think, we are systems may know I As the delivery

So, of a memory we manifested FinFET of and this in approaches that that nail said logic now you the devices. seen that, to in XD the that lot is terms are in the certainly are XD is types that architectures very think same activity and especially on use using the NAND head and being Having the logic close activity the of also devices I hit accelerating.

will I the continue I XD growing we is, business logic year also and same the to think, the all would the not that that DRAM memory believe first I Bottom-line I the wafer equipment is and FinFET is next going and grow And I that. get So that, that certainly a conversation a is the when our But thing. fab affect believe will sure year. even I and will patterning next bottom-line remain to saying done, into of in really devices and be slow of But am positive fact strong. most multiple in down all, about into get try don’t and said say want way devices. aspect see NAND probably customers to of

Karl Ackerman

Thank you gentlemen. Appreciate it.

Maurice Carson

Karl. Thanks,

Thomas Rohrs

welcome. are You

Operator

Thank you.

question Our next Needham. Mok is from Edwin of

open. is line Your

Edwin Mok

on supply understand, bit that my to good to and mentioned just those little provide into you for a Tom I of I in sell inter-company trying you, a assume great guess, to semi outside the are you’ve they kind then, And number And you deal. right? they within dive parts supply terms factor in I Thanks in and to your gas the taking what trying Great. I of to that the - are obviously, Congrats revenue all machine – maybe quarter the question. what in transfer. of wonder, delivery, they beyond what supplier, more, think a understand semi?

Thomas Rohrs

if because delivery fittings point margin of buying those from gross help that of part and they that be including make XX% valves are specific KXS MFCs of Module number which it will you this the some valves we our components are the output we of the used substrates of the system called after are buying that and that course which products as They a are components called to structural They we are will the us on blocks and make to here to specifically, at will So, their attached. similar System. fittings we components total components. had – make proprietary Talon a the vertical also approximately integration and the blocks These buy are ourselves designed as the in of at standpoint, and construction that are These Talon, used gas accretive are Ichor. the gas panel to a Talon.

those �� people it. best if they very probably very, manufactured maybe do are it. so, not parts, do, of highly actually few And Talon who best very, to among able very are do the And precisioned the

to which of integration. fitting critical being involved in add it’s of that the terms in our the to vertical there, our of also valves manufactured get acquisition and So, are terms parts business, very important a both but the also ability in components

Maurice Carson

Edwin, thing, the guidance out the our If I add for reflected that press asked you is of revenue inter-company in one the put revenue we release. could just

So your we question part have taken your second To in of that into account.

Edwin Mok

to describe, assume outside that Okay, right, that’s the I don’t sell helpful. Is sell to there way customers. a you, XX% they of to

Thomas Rohrs

Yes.

Edwin Mok

non-semi that refer semi would and Is is much there of how to a versus non-semi, what in describe to? way it

Thomas Rohrs

around look XX% we and is that more a customers taking they are use actually might to we industrial or strategically of part we perhaps positive somewhere that output. and semi. obviously at for capacity sell is have probably XX% that will their that decide something business we semiconductor They to whether are think They that a a

decided. to So, that’s be

Edwin Mok

the a see, customer are shipments I that beyond, guidance, the kind higher the how Any helpful. look the you in bit that shortage provide extent creep industry. you business can that a that’s your maybe up on on then, and XXXX? heard okay, can that provide is to industry on color of likely provided you To guys quarter you from you improving fourth we’ve we’ve the market – kind demand the guys little anything And heard then, obviously, right in of component before, now disability that on half of fact any first end? how are is seeing nice did is and

Thomas Rohrs

let know, that guidance we do comment Well, Edwin, for that, QX. give not and me you

and you about conversation year this that spending the way the maybe a And optimistic. at reasonable seem of monies our before. that and amount look want to remember last about now, we is we pre-cursor a quarters little Maurice, you of which and feeling again is can talk future I be last talked describe it had to right I a very quarter on can describe we bit. to to additional are we’ve about times capacity However, one our couple very, feeling would when

Maurice Carson

the everybody year. and about that support Edwin, this Singapore capacity to the out we we business yes, you, told before in or built Portland Malaysia, you So, growth fact not just about

the you for to support Portland to growth more well of in talked both and capacity additional in underway growth that’s to business additional delivery all that about out to Malaysia. We gas significant that, and weldments. weldments in also are support parts building We’ve

So, continue our us focus asked as to. to on we have capacity customers

Edwin Mok

no great. situation in great change behind us? component that’s shortage I color. Okay, That’s not on that there is those assume that’s – update real

Thomas Rohrs

No it’s see where expectations do are can right we But conditions exactly what the this, good to bottom-line position right little thing it’s you we that now, a quite would and seeing given have. are under into are we and more at a the than like to – are is, inventory we normal have future. –

Edwin Mok

Okay, great. you. all I That’s have. Thank

Thomas Rohrs

welcome. You are

Maurice Carson

Thank you, Edwin.

Operator

Thank you.

RBC of from Our Daryanani Markets. next question is Amit Capital

open. line Your is

Thomas Rohrs

Amit? okay, you Are

Amit Daryanani

am I good.

Thomas Rohrs

Good, good.

Amit Daryanani

doing I guess, that guys net updated just you just on guide that you much is the is the better start Maybe you the these organic there need margin uptick acquisitions? with, me first that And gross guys couple of and provided, net runrate gross to income income, a margin, of how questions. then, revenue to fundamentals to get help are understand, in targets? versus

Maurice Carson

think, to the make question want I to that through I gets new I and up sure the So, the went just understand gross margin. just XX% model I XX% that us to

much Your driven question acquisitions? of base is by the how business that much is the through and how

Amit Daryanani

we so and it there XXX Right, I points, am sense basis runrate to get think? have gross get the need the trying driving what’s then revenue you to what’s a about of you margins basically, you do

Maurice Carson

weldments, other gas up, move it an products. compared always not acquisitions The organically the as go that, to then to of important also that of and will for talked as have Amit, our with in items. is the proprietary which continues growth LDM delivery part market the business driver but about, margin baseline will our we’ve machining from those So, we we expansion primary be significantly and to

Amit Daryanani

Got it.

Thomas Rohrs

are next we for based volumes part to of into the Amit, that I plan volumes building on say, year. question, the would the are And essentially – your other our

Amit Daryanani

number? million think? Could Is based quarter like you help that that it. Got $XXX a a that you on

Thomas Rohrs

I to prefer do not that.

Amit Daryanani

shot. worth always it’s think, I a

Thomas Rohrs

so, a Yes, idea. it’s good

Amit Daryanani

to had just going I of guess, some the you performance. your September on maybe discussion back quarter

December and sustain the end about that talked the expect up pick sounds start you exactly that you quarter? drove up. you towards and to picked bit a then through the what happened slowness little as business think being in go like, I that it core the at slower it of and you’ve – seen What September, do the

Thomas Rohrs

is, already the second and the we’ve part that. yes, Well, of answer seen

to knew So, that this. the that’s easy they customers quarter, of kind announced we In say. third and our

were secondary we was was back understood. It also well shipment call describe we discussed in was was would in dropping you actually during what knew terms saw. think July. is very It this the earnings It it so. the So roadshow as And commonly lower I the ongoing Plan discussed. discussed shipments And quarter. about essentially it percentages levels. less But of specific as during ramp. bottom-line it the applied was in second that pretty our are overall that’s in pause pretty it and their our we

end normally can’t see all you’ve Now, in later particular orders quarter result got quarter doing on late to in we very very, that, very the Maurice of have that, up if fundamentally will. that the look a that, as where they moving as did certainly a said, receive very, continues that would. up the well shipped little Bottom-line ended guided than it And up And the leads you good. damage and fourth to and through positions us very is placing as because pause we’ve any quarter. you they we receivables without

are it. So happy very about we

Amit Daryanani

finally just And up mean, sequentially. inventory, XX% I about is me, for it. Got

Just see December. trending do cycle you talk about cash and what drove how into broadly that uptick

Maurice Carson

their that was Cal-Weld down their quite the in And Cal-Weld, – So, Amit, they due for growth the increased right been that the actually honestly, baseline for the – was inventory drove quarter-on-quarter, to business also they amount, going Ichor increase. inventory experience. the and has forward-looking uptick business are booming but to small inventory have

Thomas Rohrs

stripping out very what’s was working In working terms buy case, Yes, worried you and the normally and capital inventory. when both robust this company, are receivables in you the a capital. about of

our thing, that very a have normalize little to So, it’s and a bit we’ll but good numbers skews it for you actually guys.

Amit Daryanani

nice congrats quarter Perfect. guys. That’s it me a for on and

Thomas Rohrs

very Thank you much.

Operator

Thank you.

is Our Patrick from Ho next of Stifel. question

open. is line Your

Thomas Rohrs

Patrick?

Patrick Ho

you. thank Yes,

plans, only our strong off, basically it for you potential their quarter you I How so. evaluate First Cal-Weld expansion given relates a you that had the or expansion demand the and about for piece that capacity of mentioned for capacity do just business? trends y as and to know additional

Thomas Rohrs

I glad referenced just that, because capacity Cal-Weld. mentioned am that Patrick, is I for the part expansion really you of

with As weldments we integrate our their growth expand worldwide. growth and in presence their

probably a quarter our – Cal-Weld to is overall that plans already key related or for a to strategy. about a third say, part would weldment of our we’ve just announced which talked I So, of are

Patrick Ho

versus opportunity. those do ultimately, of integration, different two into how And evaluate Great. That’s follow-up decide the terms bring vertical deal and more integration, you're look something like the question, acquisition, in more a we expansion of Cal-Weld of getting the as a Ichor Talon at market was I vertical helpful. you company, the you obviously expansion maybe those market synergy larger the part guess, opportunities of you How ahead for variables as from opportunities that if to more Cal-Weld? that opportunities one mentioned do fold? of probably

Thomas Rohrs

and When is, I expansion acquisition are expansion. necessarily mentioned a market this, at a little at has few be are more to looking this this acquisitions, bottom-line of Patrick. The vertical looking integration or Right. a a we times, not we’ve be could think we

full you doing. It’s things. is, behind our what throated customers well be our how derisks imagine. at fit to they have of One does point. the important want looking are our us can it are a customers it We and acquisitions as doing in dramatically when that a very And number what we of with

the critical So element. that’s

to accretive financially we to that, the sure it’s is both second and be make want going margin bottom-line. gross that the to The to

cases, of of Cal-Weld say, growth Talon stretch. both be fit that, like is third to And in that’s we vertical were of a really EBITDA and Talon well, able vertical five range. also elements. a around a sure future at key want play aspect market But, that, element appropriately to it boxes those it’s has also is by purchase not would point not There integration I EBITDA any the The that is integration to company in it, which thing we the and clicks itself multiple times a it. point. key make pure three opportunities. all The both have and we to expansion it all does these again, the to kind

sometimes it’s these we it’s But, cases. Sometimes have less. little successfully little a more, that a done in

we of very with happy are So, both them.

Patrick Ho

much. Great. very Thank you

Thomas Rohrs

are welcome. You

Maurice Carson

Thank you, Patrick.

Operator

our I’d to like for any Thank to call remarks. Maurice Carson Mr. over the turn that you back today. and further concludes Q&A for session

Maurice Carson

much. appreciate very anything at the would have and to here? like We add Tom, you call Thank today. everybody’s time you you do end

Thomas Rohrs

and Yes, New you the again, quarter thank all seeing to looking Year. much. forward to a you in forward and very all you Thank good look

Operator

Ladies and for all gentlemen, may you disconnect. today’s you today's thank a participating day. and in does program conference. conclude have This Everyone great

Ichor (ICHR) 9 Nov 172017 Q3 Earnings call transcript