Business Wire | Aug 3, 2020 04:05PM EDT

Ichor Holdings, Ltd. Announces Second Quarter 2020 Financial Results

Aug. 03, 2020

FREMONT, Calif.--(BUSINESS WIRE)--Aug. 03, 2020--Ichor Holdings, Ltd. (NASDAQ: ICHR), a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment, today announced second quarter 2020 financial results.

Highlights for the second quarter of 2020:

* Revenues of $222 million, up 59% year-over-year and our fifth consecutive quarter of revenue growth; * Net earnings of $0.30 per diluted share on a GAAP basis and $0.54 on a non-GAAP basis; and * For the first half of 2020, revenues increased 59% and earnings per share, on a GAAP and non-GAAP basis, increased by over 120% compared to the first half of 2019.

"In light of the constraints placed on our global operations and supply chain as a result of COVID?19, we are very pleased to report sequential increases in our quarterly revenues, gross margin, operating margin, and earnings per share for the second quarter," commented Jeff Andreson, chief executive officer of Ichor. "Our foremost priority is to ensure the health and safety of our employees and their families, and our performance in the second quarter is testament to the dedication, commitment, and ingenuity of our workforce in delivering exceptional service to our customers during this unprecedented and challenging time. Our operational capabilities have largely recovered from the significant constraints experienced earlier this year, but we remain vigilant in continuing to take all appropriate actions to protect our people and safely maintain business operations globally." Mr. Andreson concluded, "Our continued market share gains are evident in our year-to-date revenue growth, which is significantly greater than the rate of growth for the overall industry. At the same time, our year-over-year growth in earnings per share for the first half of 2020 is more than double the rate of our revenue growth, demonstrating strong operational performance and continued execution toward our stated objective to grow earnings faster than revenues."

Q2 2020 Q1 2020 Q2 2019

(dollars in thousands, except per share amounts)

U.S. GAAP Financial Results:

Net sales $ 221,564 $ 220,028 $ 139,195

Gross profit percent 13.2 % 13.1 % 14.0 %

Operating income percent 4.2 % 2.5 % 2.2 %

Net income $ 6,811 $ 3,399 $ 336

Diluted EPS $ 0.30 $ 0.15 $ 0.01

Q2 2020 Q1 2020 Q2 2019

(dollars in thousands, except per share amounts)

Non-GAAP Financial Results:

Net sales $ 221,564 $ 220,028 $ 139,195

Gross profit percent 14.0 % 13.8 % 14.2 %

Operating income percent 7.5 % 7.2 % 5.9 %

Adjusted net income $ 12,569 $ 12,058 $ 5,118

Diluted EPS $ 0.54 $ 0.52 $ 0.23

U.S. GAAP Financial Results Overview

For the second quarter of 2020, revenue was $221.6 million, net income was $6.8 million, and net income per diluted share ("diluted EPS") was $0.30. This compares to revenue of $220.0 million and $139.2 million, net income of $3.4 million and $0.3 million, and diluted EPS of $0.15 and $0.01, for the first quarter of 2020 and second quarter of 2019, respectively.

Non-GAAP Financial Results Overview

For the second quarter of 2020, non-GAAP net income was $12.6 million and non-GAAP diluted EPS was $0.54. This compares to non-GAAP net income of $12.1 million and $5.1 million, and non-GAAP diluted EPS of $0.52 and $0.23, for the first quarter of 2020 and second quarter of 2019, respectively.

Third Quarter 2020 Financial Outlook

For the third quarter of 2020, we expect revenue to be in the range of $210 million to $240 million. We expect GAAP diluted EPS to be in the range of $0.27 to $0.48 and non-GAAP diluted EPS to be in the range of $0.50 to $0.70.

This outlook for non?GAAP diluted EPS excludes known charges related to amortization of intangible assets, share?based compensation expense, tax adjustments related to these non-GAAP adjustments, and non-recurring charges known at the time of providing this outlook. This outlook for non-GAAP diluted EPS excludes any items that are unknown at this time, such as non-recurring tax-related items or other unusual items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

COVID-19 Pandemic and Market Conditions Update

The COVID?19 pandemic and related economic repercussions have created, and are expected to continue to create, significant volatility, uncertainty, and turmoil in our industry. While we are currently not subject to any site-wide government shutdowns, "social distancing" guidelines are resulting, and will continue to result in, reduced factory capacity. In addition, an increase in direct costs within our factories associated with employee personal protective equipment ("PPE"), facility cleaning and layout changes, together with increases in logistics costs and employee labor costs, as well as other operating inefficiencies have resulted in, and may continue to result in, lower revenues and operating margins. The extent and duration of these impacts cannot be specifically quantified given the dynamic nature and breadth of the pandemic's impact on our operations and that of our customers and suppliers.

Balance Sheet and Cash Flow Results

We ended the second quarter of 2020 with cash of $57.0 million, an increase of $15.4 million from the end of the prior quarter, and a decrease of $3.6 million from December 27, 2019. The increase from the end of the prior quarter was primarily due to net proceeds from our credit facilities of $22.8 million, partially offset by capital expenditures of $3.2 million and cash used in operating activities of $4.1 million. The decrease from December 27, 2019 was primarily due to cash used in operating activities of $25.2 million and capital expenditures of $5.7 million, partially offset by net proceeds from our credit facilities of $25.6 million and net proceeds from the issuance of shares under our share-based compensation plans of $1.6 million.

Our cash used in operating activities of $25.2 million for the six months ended June 26, 2020 consisted of net income of $10.2 million and net non-cash charges of $17.5 million, offset by an increase in our net operating assets and liabilities of $52.9 million. Net non-cash charges primarily consisted of depreciation and amortization of $11.7 million and share-based compensation of $5.0 million. The increase in our net operating assets and liabilities was primarily due to an increase in inventories of $22.2 million, an increase in accounts receivable of $20.0 million, and a decrease of accounts payable of $13.7 million. The increase in inventories was primarily due to an increase in purchases to support increased volume, and the increase in accounts receivable was primarily due to increased sales volume during the quarter compared to the fourth quarter of 2019, as well as the timing of second quarter sales being heavily back-end weighted.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release also contains non-GAAP financial results, including non-GAAP gross profit, non?GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, and free cash flow. Management uses these non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing investors' ability to view our results from management's perspective. Non-GAAP gross profit, operating income, and net income are defined as: gross profit, operating income, or net income excluding (1) amortization of intangible assets, share-based compensation expense, and non-recurring expenses, including contract settlement losses and facility shutdown costs, to the extent they are present in gross profit, operating income, and net income; and (2) the tax impacts associated with our non-GAAP adjustments, as well as non-recurring discrete tax items. Non-GAAP diluted EPS is defined as non-GAAP net income divided by weighted average diluted ordinary shares outstanding during the period. Free cash flow is defined as cash provided by operating activities, less capital expenditures. Tables showing these metrics on a GAAP and non-GAAP basis, with reconciliation footnotes thereto, are included at the end of this press release.

Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP. Other companies may calculate non-GAAP results differently or may use other measures to evaluate their performance, both of which could reduce the usefulness of our non-GAAP results as a tool for comparison.

Because of these limitations, you should consider non-GAAP results alongside other financial performance measures and results presented in accordance with GAAP. In addition, in evaluating non-GAAP results, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving non-GAAP results and you should not infer from our presentation of non-GAAP results that our future results will not be affected by these expenses or any unusual or non-recurring items.

Conference Call

We will conduct a conference call to discuss our second quarter 2020 results and business outlook on August 3, 2020, at 1:30 p.m. PDT.

To listen to a live webcast of the call, please visit our investor relations website at ir.ichorsystems.com, or go to the live link at webcasts.eqs.com/ichorholdings20200803. To listen via telephone, please call (877) 407?0989 (domestic) or +1 (201) 389?0921 (international), conference ID: 13706824.

After the call, an on-demand replay will be available at the same webcast link.

About Ichor

We are a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Our product offerings include gas and chemical delivery subsystems, collectively known as fluid delivery subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices. Our gas delivery subsystems deliver, monitor and control precise quantities of the specialized gases used in semiconductor manufacturing processes such as etch and deposition. Our chemical delivery subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning. We also manufacture precision-machined components, weldments, and proprietary products for use in fluid delivery systems for direct sales to our customers, as well as certain components for internal use in fluid delivery systems and for direct sales to our customers. This vertically-integrated portion of our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively. We are headquartered in Fremont, CA. ichorsystems.com.

We use a 52- or 53-week fiscal year ending on the last Friday in December. The three months ended June 26, 2020, March 27, 2020, and June 28, 2019 were all 13 weeks. References to the first and second quarter of 2020 and the second quarter of 2019 relate to the three-month periods then ended.

Safe Harbor Statement

Certain statements in this release are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "guidance," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," "look forward," and similar expressions are used to identify these forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements regarding financial results for our third fiscal quarter of 2020, statements regarding the impacts of the COVID-19 pandemic, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements, including: (1) dependence on expenditures by manufacturers and cyclical downturns in the semiconductor capital equipment industry, (2) reliance on a very small number of original equipment manufacturers for a significant portion of sales, (3) negotiating leverage held by our customers, (4) competitiveness and rapid evolution of the industries in which we participate, (5) risks associated with weakness in the global economy and geopolitical instability, (6) keeping pace with developments in the industries we serve and with technological innovation generally, (7) designing, developing and introducing new products that are accepted by original equipment manufacturers in order to retain our existing customers and obtain new customers, (8) managing our manufacturing and procurement process effectively, (9) defects in our products that could damage our reputation, decrease market acceptance and result in potentially costly litigation, (10) dependence on a limited number of suppliers, and (11) the impact of the COVID?19 pandemic, any related or unrelated public health threat or fear of such event on economic activity, us and our customers, suppliers, employees, and other business relations, including, but not limited to, demand for our products, workforce availability, and costs to manufacture our products. Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission (the "SEC"), including other risks, relevant factors and uncertainties identified in the "Risk Factors" section of our Annual Report on Form 10?K filed with the SEC on March 6, 2020, and subsequent filings with the SEC.

All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. We undertake no obligation to update or revise any forward-looking statements contained herein, whether as a result of actual results, changes in our expectations, future events or developments, or otherwise, except as required by law.

ICHOR HOLDINGS, LTD.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

June 26, December 2020 27, 2019

Assets

Current assets:

Cash $ 56,969 $ 60,612

Accounts receivable, net 104,859 84,849

Inventories, net 149,190 127,037

Prepaid expenses and other current assets 6,371 4,449

Total current assets 317,389 276,947

Property and equipment, net 45,631 44,541

Operating lease right-of-use assets 12,019 14,198

Other noncurrent assets 1,116 1,094

Deferred tax assets, net 4,354 4,738

Intangible assets, net 45,357 52,027

Goodwill 173,010 173,010

Total assets $ 598,876 $ 566,555

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable $ 118,278 $ 131,578

Accrued liabilities 15,974 12,814

Other current liabilities 6,996 5,233

Current portion of long-term debt 8,750 8,750

Current portion of lease liabilities 5,359 5,492

Total current liabilities 155,357 163,867

Long-term debt, less current portion, net 195,413 169,304

Lease liabilities, less current portion 7,038 9,081

Deferred tax liabilities 210 210

Other non-current liabilities 2,668 2,677

Total liabilities 360,686 345,139

Shareholders' equity:

Preferred shares ($0.0001 par value; 20,000,000shares authorized; zero shares issued and - - outstanding)

Ordinary shares ($0.0001 par value; 200,000,000shares authorized; 22,868,999 and 22,618,708 shares 2 2 outstanding, respectively; 27,306,438 and27,056,147 shares issued, respectively)

Additional paid in capital 248,882 242,318

Treasury shares at cost (4,437,439 shares) (91,578 ) (91,578 )

Retained earnings 80,884 70,674

Total shareholders' equity 238,190 221,416

Total liabilities and shareholders' equity $ 598,876 $ 566,555

ICHOR HOLDINGS, LTD.

Consolidated Statement of Operations

(dollars in thousands, except per share amounts)

(unaudited)

Three Months Ended Six Months Ended

June 26, March 27, June 28, June 26, June 28, 2020 2020 2019 2020 2019

Net sales $ 221,564 $ 220,028 $ 139,195 $ 441,592 $ 277,026

Cost of sales 192,302 191,254 119,662 383,556 237,270

Gross profit 29,262 28,774 19,533 58,036 39,756

Operating expenses:

Research and 3,509 3,322 2,634 6,831 5,025 development

Selling,general, and 13,113 16,618 10,685 29,731 22,443 administrative

Amortizationof intangible 3,336 3,334 3,202 6,670 6,339 assets

Totaloperating 19,958 23,274 16,521 43,232 33,807 expenses

Operating 9,304 5,500 3,012 14,804 5,949 income

Interest 2,302 2,374 2,762 4,676 5,530 expense

Other expense 2 (31 ) 7 (29 ) 31 (income), net

Income before 7,000 3,157 243 10,157 388 income taxes

Income taxexpense 189 (242 ) (93 ) (53 ) (1,466 )(benefit)

Net income $ 6,811 $ 3,399 $ 336 $ 10,210 $ 1,854

Net income per share:

Basic $ 0.30 $ 0.15 $ 0.02 $ 0.45 $ 0.08

Diluted $ 0.30 $ 0.15 $ 0.01 $ 0.44 $ 0.08

Shares used tocompute net income pershare:

Basic 22,836,400 22,737,163 22,395,308 22,786,782 22,332,568

Diluted 23,066,976 23,181,127 22,663,053 23,099,946 22,596,412

ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended Six Months Ended

June 26, March 27, June 28, June 26, June 28, 2020 2020 2019 2020 2019

Cash flowsfrom operatingactivities:

Net income $ 6,811 $ 3,399 $ 336 $ 10,210 $ 1,854

Adjustmentsto reconcilenet income tonet cash provided by(used in)operatingactivities:

Depreciationand 5,925 5,737 5,250 11,662 10,460 amortization

Share-based 2,141 2,865 1,475 5,006 2,805 compensation

Deferred (338 ) 722 (175 ) 384 (172 )income taxes

Amortizationof debt 241 243 242 484 454 issuancecosts

Changes inoperatingassets and liabilities,net ofacquisitions:

Accountsreceivable, (17,286 ) (2,724 ) 12,326 (20,010 ) (1,284 )net

Inventories, (5,469 ) (16,684 ) 5,698 (22,153 ) 12,633 net

Prepaidexpenses and 1,431 (868 ) 1,701 563 3,058 other assets

Accounts (1,337 ) (12,380 ) (5,071 ) (13,717 ) (4,176 )payable

Accrued 3,706 (568 ) 1,288 3,138 (706 )liabilities

Other 28 (778 ) (1,987 ) (750 ) (4,266 )liabilities

Net cashprovided by(used in) (4,147 ) (21,036 ) 21,083 (25,183 ) 20,660 operatingactivities

Cash flowsfrom investingactivities:

Capital (3,195 ) (2,470 ) (1,335 ) (5,665 ) (6,117 )expenditures

Cash paid forintangible - - (8,147 ) - (8,147 )assets

Net cash usedin investing (3,195 ) (2,470 ) (9,482 ) (5,665 ) (14,264 )activities

Cash flowsfrom financingactivities:

Issuance ofordinaryshares under 308 2,658 495 2,966 2,562 share-basedcompensationplans

Employees'taxes paidupon vesting (393 ) (993 ) (63 ) (1,386 ) (174 )of restrictedshare units

Repurchase ofordinary - - - - (1,599 )shares

Borrowings onrevolving 25,000 5,000 - 30,000 5,000 creditfacility

Repayments onrevolving - - - - (8,000 )creditfacility

Repayments on (2,187 ) (2,188 ) (2,188 ) (4,375 ) (6,563 )term loan

Net cashprovided by(used in) 22,728 4,477 (1,756 ) 27,205 (8,774 )financingactivities

Net increase(decrease) in 15,386 (19,029 ) 9,845 (3,643 ) (2,378 )cash

Cash atbeginning of 41,583 60,612 31,611 60,612 43,834 period

Cash at end $ 56,969 $ 41,583 $ 41,456 $ 56,969 $ 41,456 of period

Supplementaldisclosures of cash flowinformation:

Cash paidduring the $ 2,104 $ 2,136 $ 2,500 $ 4,240 $ 5,755 period forinterest

Cash paidduring theperiod for $ - $ 34 $ 1,517 $ 34 $ 1,624 taxes, net ofrefunds

Supplementaldisclosures of non-cashactivities:

Capitalexpendituresincluded in $ 1,191 $ 652 $ 1,170 $ 1,191 $ 1,170 accountspayable

Right-of-useassetsobtained inexchange for $ - $ 328 $ 566 $ 328 $ 566 new operatingleaseliabilities

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Gross Profit to Non-GAAP Gross Profit

(dollars in thousands)

(unaudited)

Three Months Ended Six Months Ended

June 26, March June 28, June 26, June 28, 2020 27, 2019 2020 2019 2020

U.S. GAAP $ 29,262 $ 28,774 $ 19,533 $ 58,036 $ 39,756 gross profit

Non-GAAP adjustments:

Share-based 239 196 181 435 323 compensation

Othernon-recurring - - 26 - 129 expense, net(1)

Contractsettlement - 1,386 - 1,386 - loss (2)

Facilityshutdown costs 1,475 - - 1,475 - (3)

Non-GAAP gross $ 30,976 $ 30,356 $ 19,740 $ 61,332 $ 40,208 profit

U.S. GAAP 13.2 % 13.1 % 14.0 % 13.1 % 14.4 %gross margin

Non-GAAP gross 14.0 % 13.8 % 14.2 % 13.9 % 14.5 %margin

(1) Included in this amount for all periods presented are costs associated with restructuring and transitioning key leadership roles.

During the first quarter of 2020, we reached a mutual settlement with the(2) counterparty of a contract dispute and, accordingly, recorded a $1.4 million contract settlement loss to cost of sales.

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we expect to(3) complete by the end of our 2020 fiscal year. Included in this amount are inventory write-off costs of $1.3 million and severance costs of $0.2 million associated with the affected employees.

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Operating Income to Non-GAAP Operating Income

(dollars in thousands)

(unaudited)

Three Months Ended Six Months Ended

June 26, March June June 26, June 28, 2020 27, 28, 2020 2019 2020 2019

U.S. GAAPoperating $ 9,304 $ 5,500 $ 3,012 $ 14,804 $ 5,949 income

Non-GAAP adjustments:

Amortization ofintangible 3,336 3,334 3,202 6,670 6,339 assets

Share-based 2,141 2,865 1,475 5,006 2,805 compensation

Othernon-recurring 195 2,690 496 2,885 1,847 expense, net(1)

Contractsettlement loss - 1,386 - 1,386 - (2)

Facilityshutdown costs 1,536 - - 1,536 - (3)

Non-GAAPoperating $ 16,512 $ 15,775 $ 8,185 $ 32,287 $ 16,940 income

U.S. GAAPoperating 4.2 % 2.5 % 2.2 % 3.4 % 2.1 %margin

Non-GAAPoperating 7.5 % 7.2 % 5.9 % 7.3 % 6.1 %margin

Included in this amount for the first and second quarter of 2020 are (i) a $1.8 million bonus payment to our former CEO in connection with his transition to executive chairman, (ii) acquisition-related expenses,(1) comprised primarily of expense associated with a two-year retention agreement between the Company and key management personnel of IAN (the "IAN retention agreement"), which we acquired in April 2018, and (iii) non-capitalizable costs incurred in connection with our implementation of a new ERP system and a Sarbanes-Oxley ("SOX") compliance program.

Included in this amount for the second quarter of 2019 are (i) acquisition-related expenses, comprised primarily of expense associated with a two year retention agreement between the Company and key management personnel of IAN, which we acquired in April 2018 and (ii) costs associated with restructuring and transitioning key leadership roles.

Included in this amount for the six months ended June 28, 2019 are (i) acquisition-related expenses, comprised primarily of a charge to expense from the extinguishment of an indemnification asset related to our acquisition of Cal?Weld in 2017 and expense associated with a two year retention agreement between the Company and key management personnel of IAN, (ii) costs incurred in connection with reorganizing our key personnel and leadership, and (iii) costs incurred with implementing a new ERP system.

During the first quarter of 2020, we reached a mutual settlement with the(2) counterparty of a contract dispute and, accordingly, recorded a $1.4 million contract settlement loss to cost of sales.

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we expect to(3) complete by the end of our 2020 fiscal year. Included in this amount are inventory write-off costs of $1.3 million and severance costs of $0.2 million associated with the affected employees.

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income

(dollars in thousands, except per share amounts)

(unaudited)

Three Months Ended Six Months Ended

June 26, March 27, June 28, June 26, June 28, 2020 2020 2019 2020 2019

U.S. GAAP net $ 6,811 $ 3,399 $ 336 $ 10,210 $ 1,854 income

Non-GAAP adjustments:

Amortizationof intangible 3,336 3,334 3,202 6,670 6,339 assets

Share-based 2,141 2,865 1,475 5,006 2,805 compensation

Othernon-recurring 195 2,690 496 2,885 1,847 expense, net(1)

Contractsettlement - 1,386 - 1,386 - loss (2)

Facilityshutdown 1,536 - - 1,536 - costs (3)

Taxadjustmentsrelated to (1,450 ) (1,616 ) (391 ) (3,066 ) (2,176 )non-GAAPadjustments(4)

Non-GAAP net $ 12,569 $ 12,058 $ 5,118 $ 24,627 $ 10,669 income

U.S. GAAP $ 0.30 $ 0.15 $ 0.01 $ 0.44 $ 0.08 diluted EPS

Non-GAAP $ 0.54 $ 0.52 $ 0.23 $ 1.07 $ 0.47 diluted EPS

Shares usedto compute 23,066,976 23,181,127 22,663,053 23,099,946 22,596,412 diluted EPS

(1) See footnote 1 on preceding table.

During the first quarter of 2020, we reached a mutual settlement with the(2) counterparty of a contract dispute and, accordingly, recorded a $1.4 million contract settlement loss to cost of sales.

During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we expect to(3) complete by the end of our 2020 fiscal year. Included in this amount are inventory write-off costs of $1.3 million and severance costs of $0.2 million associated with the affected employees.

Adjusts U.S. GAAP income tax benefit for impact of our non-GAAP adjustments, as defined, including the impacts of excluding share-based(4) compensation, amortization of intangible assets, and other non-recurring expenses. This adjustment also excludes the impact of non-recurring discrete tax items.

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Net Cash Provided by Operating Activities to FreeCash Flow

(in thousands)

(unaudited)

Three Months Ended Six Months Ended

June 26, March 27, June 28, June 26, June 28, 2020 2020 2019 2020 2019

Net cashprovided by(used in) $ (4,147 ) $ (21,036 ) $ 21,083 $ (25,183 ) $ 20,660 operatingactivities

Capital (3,195 ) (2,470 ) (1,335 ) (5,665 ) (6,117 )expenditures

Free cash $ (7,342 ) $ (23,506 ) $ 19,748 $ (30,848 ) $ 14,543 flow

View source version on businesswire.com: https://www.businesswire.com/news/home/20200803005131/en/

CONTACT: Larry Sparks, CFO 510-897-5200 Claire McAdams, IR & Strategic Initiatives 530-265-9899 IR@ichorsystems.com