Ichor Holdings Posts Third Straight Quarter of Margin Gains
Ichor Holdings swung to a GAAP profit and guided Q3 revenue as high as $345 million after a semiconductor-equipment demand ramp lifted second-quarter sales 24% from a year earlier.
Ichor Holdings (ICHR) reported second-quarter revenue of $294.8 million, up 15% sequentially from $256.1 million in the first quarter and up 24% from $240.3 million a year earlier.
The quarter extended a recovery that began after revenue troughed at $223.6 million in the fourth quarter of 2024, capping fiscal 2024 revenue growth of 11.6% that was nonetheless accompanied by GAAP gross-margin compression to 9.3% and a GAAP loss of $1.54 a share for the year. Since that trough, Ichor has posted three consecutive quarters of double-digit sequential revenue growth, with the pace of expansion accelerating rather than fading as the base grew.
Margins moved in step with volume. GAAP gross margin rose from 9.4% in the fourth quarter of 2024 to 12.6% in the first quarter of 2025 and 13.9% in the second, a cumulative gain of roughly 450 basis points, while the non-GAAP measure climbed from 11.7% to 12.8% to 14.1% over the same stretch. GAAP operating margin turned positive at 0.8% in the first quarter and reached 2.4% in the second, a reversal from negative 6.2% in the fourth quarter of 2024 and negative 2.0% a year earlier. Non-GAAP operating margin nearly tripled sequentially to 5.5% from 3.4%.
The bottom line followed. GAAP net income reached $1.0 million, or $0.03 a share, reversing a $2.5 million loss in the first quarter and a $9.4 million loss a year earlier. Non-GAAP diluted earnings more than doubled sequentially to $0.34 a share from $0.15, a level Chief Executive Jeff Barros called a three-year record, up from a $0.01 non-GAAP loss in the year-earlier quarter. Both figures beat the guidance Ichor had issued for the quarter, which called for GAAP and non-GAAP midpoints of $0.15 and $0.30.
R&D spending rose 41% sequentially to $7.8 million from $5.5 million, outpacing revenue growth and pointing to increased investment tied to the demand ramp. A new line item, the Consolidation Restructuring Plan, appeared for the first time in the first quarter at $0.5 million and grew to $2.7 million in the second, even as costs from the separate Scotland and Korea facility exits fell to $0.04 million from $2.7 million a year earlier, indicating that the older restructuring effort is nearly complete. Ichor also changed its non-GAAP definition starting this quarter to stop excluding inventory impairment charges, recasting prior periods to conform.
For the third quarter, Ichor guided revenue to $315 million to $345 million, a midpoint of $330 million that implies another quarter of double-digit sequential growth, and non-GAAP earnings to a $0.45 midpoint, up from the $0.30 midpoint it had set for the second quarter. Barros said the additional growth the company had forecast for the second quarter had already materialized in the third quarter to date.
The growth ramp has a cash cost. Free cash flow fell to negative $23.6 million from negative $10.0 million in the first quarter and negative $14.8 million a year earlier, driven by a $38.4 million inventory build and an $11.6 million rise in accounts receivable as Ichor stocks up to meet higher forecast demand. The company offset that drain with a new $200 million at-the-market equity offering completed during the quarter, netting $195.4 million and lifting cash and equivalents to $256.5 million from $89.1 million at the end of the first quarter.