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    ICHR
    Earnings call· Jun 2026(Q2 FY26)

    ICHOR HOLDINGS Q2 FY26 earnings call ICHR

    Aug 3, 2026 Source

    Executive summary

    Ichor Q2 FY26 — Strong Revenue Growth and Margin Expansion

    Ichor delivered strong Q2 FY26 results, driven by 15% sequential revenue growth and significant gross margin expansion, leading to a 3-year high in EPS. The company is executing its strategic footprint realignment and increasing proprietary content, which is translating into measurable financial improvements. Management anticipates continued strong demand and sequential growth exceeding 10% in the next two quarters, positioning Ichor for a robust second half and a structurally stronger future.

    Highlights

    5

    • Revenue increased 15% sequentially to $294.8 million in Q2 FY26.

    • Gross margin expanded by 130 basis points sequentially to 14.1%, exceeding the high end of guidance.

    • EPS more than doubled compared to Q1, reaching $0.34, the highest in 3 years.

    • Completed a $200 million ATM equity offering, generating $195 million in net proceeds and increasing liquidity.

    • Anticipating Q3 revenue of $315 million to $345 million, representing 12% sequential growth at the midpoint.

    Concerns

    2

    • Isolated part outages caused a delay in recognizing some Q2 revenue, pushing it into early Q3.

    • Operating cash flow was a use of $15.9 million in Q2 due to incremental inventory investments for future growth.

    Guidance & targets

    11
    CategoryTargetConfidence
    Q3 Revenue
    $315M to $345M
    high materiality
    High
    Q3 Gross Margin
    14.5% to 15.5%
    medium materiality
    High
    Q3 Operating Expenses
    $25.5 million
    low materiality
    High
    Q3 EPS
    $0.40 to $0.50
    high materiality
    High
    Full-year 2026 Revenue Growth
    at least 30% versus full year 2025
    high materiality
    High
    H2 2026 Revenue Volumes
    at least 25% higher than the first half
    high materiality
    High
    Full-year 2026 Operating Expenses Growth
    up about 6% from 2025
    low materiality
    High
    Capital Expenditures
    trend higher in the second half while remaining within our target range of approximately 3% of revenue
    medium materiality
    High
    Gross Margin Improvement
    100 basis points per quarter
    high materiality
    High
    Internal Content Percentage
    ~30%
    medium materiality
    High
    Internal Content Percentage
    ~35%
    medium materiality
    High

    Operational metrics

    13
    Non-GAAP Gross Margin
    14.1%up 130 bps sequentially
    Q2 FY26

    Exceeded the high end of guidance and was 60 basis points above the midpoint of guidance.

    Non-GAAP Operating Expenses
    $25.3 million
    Q2 FY26

    Operating margin improved to over 5.5%.

    Adjusted EBITDA
    >$21 millionup >50% sequentially
    Q2 FY26

    Increased significantly in the quarter.

    Cash and investments balance
    $256 millionincrease of $167 million from Q1
    Q2 FY26 end

    Increased due to ATM equity offering.

    Capital expenditures
    $7.8 million
    Q2 FY26

    Expected to trend higher in H2 FY26.

    Total debt
    $120.6 million
    Q2 FY26 end

    Balance at quarter end.

    Net debt coverage ratio
    1.1
    Q2 FY26 end

    Stands at 1.1.

    ATM equity offering net proceeds
    $195 million
    Q2 FY26

    Completed the entirety of the $200 million ATM equity offering.

    Diluted shares outstanding
    36.3 million
    Q2 FY26 average

    Average diluted shares outstanding during the quarter.

    Days Sales Outstanding (DSOs)
    32 dayssimilar to Q1
    Q2 FY26 end

    Remained similar to Q1.

    Inventory turns
    3.7xsimilar to Q1
    Q2 FY26 end

    Remained similar to Q1.

    Internal content percentage
    ~25%
    Q2 FY26 exit

    Exited Q2 at around the 25% run rate from last year, with plans to increase to ~30% by Q3 end and ~35% by Q4 end.

    Manufacturing capacity
    $500 million
    quarterly, current

    Current capacity can support $500 million in quarterly revenue; can expand to $3 billion annually with targeted investments.

    Industry KPIs

    3
    MetricValueDetails
    Fab capacity utilization$500 millionUSD
    Wfe industry spend outlookat least 30% increase%
    Inventory channel inventory32 days DSOs; 3.7x inventory turns

    Product announcements

    2
    ProductTypeDetails
    Malaysia high-volume manufacturing sitemilestone
    Commercial space part familymilestone

    Capital programs

    1
    Capacity Expansion Programunderwayupwards of $3 billion annual revenue capacity
    Period spend: CapEx level to trend higher in the second half
    Funding: ATM equity offering providing significant flexibility
    Start: H2 FY26

    Benefit: expand capacity within our existing footprint upwards of $3 billion annually

    Accelerating investments in factory clean rooms and machining capacity in the second half of 2026. The company has the brick-and-mortar for $3 billion capacity, requiring additional clean room space and machining capacity investments.

    Risks & headwinds

    3
    Supply chain disruptions (isolated part outages)Q2 FY26

    Delayed recognition of Q2 revenue into early Q3

    Mitigation: Resolved the isolated part outages; customers are mandating increased in-sourcing to de-risk supply chains, which Ichor is addressing.

    Flow control supplier issuesOngoing

    Qualitative concern, not quantified

    Mitigation: Management is actively working to de-risk the supply chain; a path to 20% gross margin is visible even without relying on flow control improvements.

    Negative operating cash flow due to inventory build-upQ2 FY26, near-term

    Use of $15.9 million in Q2 FY26

    Mitigation: Making incremental investments in inventory to meet customer demands; expected to revert to positive in H1 FY27 as inventory turns improve.

    What to watch in Q3 FY26

    5

    Q3 Revenue Growth

    Q3 FY26
    CurrentQ2 revenue grew 15% sequentially to $294.8M
    Target$315M-$345M (12% sequential growth at midpoint)

    Why it matters

    Verifies the anticipated steepening ramp in customer demand and sequential growth exceeding 10%.

    We anticipate Q3 revenues in the range of $315 million to $345 million, which at the midpoint represents sequential growth of 12% and year-over-year increase in revenue volumes of 38%.

    Q&A highlights

    8

    How does Ichor's 30%+ FY26 revenue growth expectation align with customer WFE forecasts, and what bridges the gap?

    Ichor's growth is a blend of all customers, trending towards the higher end of WFE expectations, which is coalescing around 30%+ increase for the year. The company continues to grow with its customers.

    “what we're trending to today is kind of a mix of all of our customers. If you look at how -- every one of our customers are guiding, I would say that we're a good blend of what they're saying based on what our percentage of shipments are to each of those customers.”

    asked by Kinney Chin · answered by Philip Barros

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Execution and Margin Expansion

    Ichor's Q2 results demonstrate successful execution of its strategy to strengthen operations and expand margins. Gross margin reached 14.1%, a 130 basis point sequential increase, driven by improved product mix, growth in component revenues, and strategic footprint realignment. This translated to $0.34 EPS, the highest in three years, and management expects another 100 basis points of gross margin improvement in each of the remaining two quarters of the year.

    02

    Strengthening Demand Environment

    The underlying demand environment for semiconductors continues to strengthen, with Ichor now expecting full-year 2026 revenue growth to align with the high end of WFE expectations, at least 30% versus 2025. The company anticipates sequential revenue growth exceeding 10% in both Q3 and Q4, with second-half revenue volumes expected to be at least 25% higher than the first half. This growth is fueled by technology transitions in AI infrastructure, advanced etch/deposition, gate-all-around architectures, and advanced memory.

    03

    Manufacturing Capacity and Internal Content

    Ichor has invested aggressively in capacity, now able to support $500 million in quarterly revenue. With targeted investments, primarily in machining capacity and clean room space, the company believes it can expand its existing footprint to support up to $3 billion in annual revenue. The Malaysia manufacturing ramp is progressing well, with key qualifications secured, and the company is on track to increase proprietary internal content from ~25% in Q2 to ~30% by Q3 end and ~35% by Q4 end, contributing significantly to gross margin expansion.

    04

    Financial Performance and Liquidity

    Q2 revenue was $294.8 million, up 15% sequentially. Non-GAAP EPS was $0.34. EBITDA increased over 50% sequentially to more than $21 million. The completion of a $200 million ATM equity offering generated $195 million in net proceeds, significantly increasing available liquidity to $256 million cash and equivalents, providing flexibility for growth initiatives and strategic opportunities.

    05

    Operational Efficiencies and Cost Management

    The company is making meaningful operational improvements within its machining and components businesses, leading to expanding product margins from operational efficiencies and successful product transitions. Despite a steeper demand ramp, total operating expenses for 2026 are expected to be up only about 6% from 2025, reflecting disciplined cost management and significant operating leverage as volumes increase.

    AI-generated summary of the company’s earnings call. Not investment advice.