Ichor Holdings’ Earnings Call: Mixed Sentiment and Strategic Moves

Ichor Holdings ((ICHR)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Ichor Holdings presented a mixed sentiment, highlighting both positive and challenging aspects of the company’s current financial standing. While the company reported strong revenue performance and announced strategic leadership changes, it also faces challenges in non-semi end markets, gross margin pressures, and restructuring costs. Despite these hurdles, Ichor’s focus on strategic product development suggests potential for future growth.

Strong Revenue Performance

Ichor Holdings reported third-quarter revenues of $239 million, surpassing the midpoint of expectations and marking a 13% increase year-over-year. This strong performance is notable against the backdrop of overall wafer fab equipment (WFE) growth, indicating the company’s robust market position.

CEO Appointment

The appointment of Phil Barros as CEO marks a significant leadership change for Ichor Holdings. With over 20 years of experience at the company, Barros brings a wealth of expertise in engineering, product management, sales, and corporate strategy, positioning him well to steer the company through its current challenges and opportunities.

Strategic Product Development

Ichor is making strides in strategic product development, with progress on two additional proprietary component products. The company aims to have the first beta unit ready for customer evaluation by early 2026, which could expand its addressable markets and drive future growth.

Refinancing of Credit Facility

In a move to reduce borrowing costs, Ichor has completed the refinancing of its credit facility. The company reduced the fixed amount of the revolver facility from $400 million to $225 million, which is expected to improve financial flexibility.

Gross Margin Challenges

The company faced a 1 percentage point impact on its Q3 gross margin due to lower IMG revenue volumes. Looking ahead, Q4 gross margins are expected to be between 10% and 12%, reflecting ongoing challenges in maintaining profitability.

Decline in Non-Semi End Markets

Ichor reported a significant decline in non-semi end markets, particularly affecting its IMG business in the commercial space and aerospace and defense sectors. This decline has had a notable impact on the company’s financial performance.

Restructuring Costs

The third quarter included $18.3 million in restructuring costs related to the strategic consolidation of global operations. Ichor anticipates additional charges in Q4 and fiscal 2026 as it continues to streamline operations.

Lower Revenue Guidance for Q4

Ichor’s revenue guidance for Q4 is projected to be between $210 million and $230 million, reflecting reductions from its third and fourth largest customers due to continued slowing in system build rates.

Forward-Looking Guidance

Looking ahead, Ichor Holdings provided guidance for the fourth quarter of 2025, with projected revenues between $210 million and $230 million and gross margins expected to range from 10% to 12%. Operating expenses are forecast to remain at $23.7 million, with EPS guidance ranging from a loss of $0.14 to a profit of $0.02. The company plans to focus on operational improvements and strategic investments to enhance profitability, projecting year-over-year growth in 2026 with mid-teens gross margins in the second half of the year.

In summary, Ichor Holdings’ earnings call reflected a mixed outlook, with strong revenue performance and strategic leadership changes offering promise, while challenges in non-semi end markets and gross margin pressures present immediate hurdles. The company’s commitment to strategic product development and operational improvements indicates potential for future growth, making it a company to watch for investors and market analysts alike.