In This Article:
Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Ichor Holdings Ltd (NASDAQ:ICHR) reported Q4 2024 revenue of $233 million, exceeding expectations and marking a 10% sequential increase.
-
The company experienced a 5% revenue growth for the full year 2024 compared to 2023, indicating a positive trend.
-
Ichor Holdings Ltd (NASDAQ:ICHR) is seeing strong demand in its primary applications of edge and CBD, with expectations for continued growth in 2025.
-
The company is making significant progress in qualifying its proprietary products, which is expected to drive margin expansion in 2025.
-
Ichor Holdings Ltd (NASDAQ:ICHR) has reduced its total debt significantly from $250 million to $129 million over the past year, improving its net debt coverage ratio.
Negative Points
-
Gross margin declined to 12% in Q4 2024, which was lower than expected due to higher direct labor costs and inventory charges.
-
The company faced gross margin headwinds in Q4 due to a longer-than-expected training process for new labor resources.
-
Higher inventory charges and unfavorable product mix impacted the financial results negatively.
-
Despite revenue growth, the company experienced a decrease in cash and equivalents by $8 million from Q3.
-
Ichor Holdings Ltd (NASDAQ:ICHR) anticipates continued impact from higher labor costs into Q1 2025, affecting short-term profitability.
Q & A Highlights
Q: Can you explain the factors contributing to the expected gross margin increase in 2025? A: Greg White, CFO: The gross margin increase is primarily driven by the introduction of new products, particularly in gas panels, and the absence of previous headwinds like inventory charges. We anticipate a 25-30% improvement in flow-through from incremental sales, with new products being the largest driver of margin expansion.
Q: How do you rank the demand drivers for 2025, particularly in NAND, DRAM, and Foundry? A: Jeff Andreson, CEO: Foundry logic is expected to remain strong, with gate-all-around technology potentially seeing increased demand. DRAM is projected to stay steady, while NAND is experiencing an uptick, contributing to the overall demand increase.
Q: Are you being conservative with your revenue outlook, given the additional labor costs? A: Jeff Andreson, CEO: We added resources due to strengthened demand, which we expect to sustain in the first half of the year. We anticipate a modest increase in the second half, and the additional resources are also to support internal supply and inventory builds.