Ichor Holdings ((ICHR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Ichor Holdings’ recent Q2 2025 earnings call painted a picture of both triumph and tribulation. The company celebrated significant revenue growth and product achievements, yet faced challenges in gross margin performance and hiring issues. These hurdles, coupled with potential revenue stagnation due to external market factors, underscore the risks to sustaining robust financial performance despite strategic progress.
Strong Revenue Growth
Ichor Holdings reported second quarter revenues of $240 million, reaching the upper end of expectations. This reflects a modest acceleration in customer demand and a notable 20% year-over-year increase in revenue for the first half of the year, highlighting the company’s strong market position.
Major Product Milestones
The company achieved significant product milestones, including the successful qualification of their flow control product at a key end user. This marks the first end-user qualification for this product line. Additionally, Ichor secured a third customer qualification for their valve product line and commenced shipping valves in production volumes, demonstrating their innovation and market penetration.
Revenue Growth Outperformance
Ichor’s year-to-date revenue growth outpaced the overall wafer fab equipment (WFE) growth for 2025, with first half revenues up by 20% year-over-year. This performance underscores the company’s ability to exceed industry growth trends and capitalize on market opportunities.
Gross Margin Challenges
The company faced gross margin challenges, with Q2 margins at 12.5%, the lower end of expectations. These challenges were primarily due to hiring difficulties, which limited the output of machine components and prevented the achievement of higher gross margins.
Hiring and Retention Issues
Ongoing hiring and retention issues have impacted Ichor’s output volumes, limiting their ability to meet customer demand and affecting gross margin performance. This highlights a critical operational hurdle that the company must address to sustain growth.
Potential Revenue Stagnation
Ichor’s potential revenue expansion beyond the current $240 million run rate has been stalled by a slowing EUV build, reduced investments by a major U.S. semiconductor manufacturer, and a lack of demand in nontraditional markets like silicon carbide. These factors pose a risk to future growth.
Operational Adjustments and Costs
The company incurred charges of $5.7 million for exit costs related to personnel, fixed assets, and facility-related costs. These costs are part of strategies to align global operations capacity, reflecting Ichor’s efforts to optimize operational efficiency.
Forward-Looking Guidance
Looking ahead to the third quarter, Ichor anticipates revenues between $225 million and $245 million, with gross margins expected to range from 12.5% to 13.5%. Operating expenses are projected to remain flat at approximately $23.7 million, with a net interest expense of around $1.6 million. The company expects a tax expense of approximately $900,000 per quarter, reflecting a full-year tax estimate of $5.6 million. Earnings per share (EPS) guidance for Q3 is projected to be between $0.06 and $0.18, based on a share count of 34.4 million shares.
In conclusion, Ichor Holdings’ Q2 2025 earnings call reveals a company navigating both growth and challenges. While revenue growth and product milestones are commendable, gross margin and hiring issues, along with potential revenue stagnation, present significant hurdles. The forward-looking guidance suggests cautious optimism, with expectations for steady revenues and margins in the coming quarter.