Ichor (ICHR) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue reached $233 million, up 10% sequentially and 15% year-over-year, exceeding expectations and at the upper end of guidance; FY 2024 revenue was $849 million, a 5% increase from 2023.

• Q4 GAAP gross margin was 11.6% (non-GAAP 12.0%); full-year GAAP gross margin was 12.2% (non-GAAP 12.7%).

• Q4 GAAP net loss was $3.9 million (EPS $(0.12)); non-GAAP net income was $2.8 million (EPS $0.08); full-year GAAP net loss was $20.8 million (EPS $(0.64)), with non-GAAP net income of $5.9 million (EPS $0.18).

• Demand from advanced logic, DRAM, and a recovering NAND market contributed to growth, with additional machining resources added to support higher build rates.

• Proprietary product qualifications advanced, with high-purity valves and fittings qualified at major customers, and over 50 next-generation gas panels delivered in 2024.

Financial highlights

• Q4 gross margin declined to 12%, about 300 basis points below expectations, due to higher direct labor costs, inventory charges, and less favorable product/customer mix.

• Q4 operating expenses were $22.3 million, net interest expense was $1.7 million, and non-GAAP net income per share was $0.08.

• Cash and equivalents ended at $109 million, down $8 million from Q3 but up $28.7 million from prior year; free cash flow for Q4 was negative $6.9 million, with FY2024 free cash flow at $10.2 million.

• Total debt reduced to $129 million at year-end, with net debt coverage ratio improving to 1.6x from 3.4x a year ago; net payments on credit facilities totaled $120.6 million in FY2024.

• Q4 2024 revenue: $233.3M (Q3 2024: $211.1M; Q4 2023: $203.5M); FY2024 revenue: $849.0M (FY2023: $811.1M).

Outlook and guidance

• Q1 2025 revenue guidance raised to $235–$255 million, with gross margin expected at 14–15% and non-GAAP EPS of $0.20–$0.32; GAAP diluted EPS expected between $0.04 and $0.16.

• Gross margin projected to exceed 16% for full year 2025, with further improvement expected as proprietary content increases and cost headwinds subside by Q2.

• Operating expenses for 2025 anticipated to rise 5–7% year-over-year; net interest expense for 2025 expected at $6 million.

• Management targets gross margins of 19–20% in 2026 if revenue run rates exceed $300 million per quarter.

• Robust demand anticipated for leading edge foundry and logic investments, with memory market recovery beginning.