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Ichor (ICHR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 3, 2026

Source: earnings call transcript

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

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

Product announcements

ProductTypeDetails
Malaysia high-volume manufacturing sitemilestone
Commercial space part familymilestone

Capital programs

Capacity Expansion Program underway upwards 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

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 issues Ongoing

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-up Q2 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

Q3 Revenue Growth

Q3 FY26
Current Q2 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%.

Find out whether ICHR delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.