Analysis: the profit is real, the cash is not there yet

The cleanest way to read this quarter is to put the income statement next to the cash flow statement. Ichor earned $998 thousand and used $15.9 million of cash in operations. The reconciliation the company provides explains the difference: net operating assets and liabilities rose $32.0 million, driven by a $38.4 million increase in inventory and an $11.6 million increase in accounts receivable, against a $15.7 million increase in accounts payable. Over the six months the pattern is larger, with inventory up $58.9 million and receivables up $34.1 million. A subsystems builder ramping into a stronger order environment buys material before it ships tools, so this is the expected shape. It is also the reason the reported return to profit does not yet show up as cash.

That places the equity raise alongside the working capital build. Ichor took $195.4 million net at an average of $80.70 a share at a point when it held $89,089 thousand of cash and was about to absorb a working capital build of that order. The credit facility remained in place, and the company made $1.6 million of payments against it in the quarter. The cost is dilution: basic weighted average shares were 35,397,839 in the quarter against 34,179,382 a year earlier, and the full effect of 2.5 million new shares has not yet passed through a whole reporting period, which matters when guidance is expressed in earnings per share.

The margin figures are the third thread. Gross margin improved by 260 basis points year over year on a GAAP basis, from 11.3 percent to 13.9 percent. Operating margin of 2.4 percent on $294,784 thousand of sales means small changes in mix or in the cost of a single subsystem move the reported result between profit and loss, which is exactly what happened between the first and second quarters. Guidance of $0.25 to $0.35 GAAP against an actual $0.03 therefore rests on both the revenue step to a $330 million midpoint and on the margin trend continuing, and the filing offers no customer-level backlog to test the first of those.

Two further items sit under the numbers. The Singapore tax holiday ended at the end of the first quarter of 2026, and the company names that, alongside a valuation allowance against United States deferred tax assets and the mix of earnings between jurisdictions, as a reason its effective rate differs from the statutory rate. Singapore is also where $130,923 thousand of the quarter’s $294,784 thousand of shipments went. The second item is the definitional change to non-GAAP measures. Removing the inventory impairment exclusion makes the non-GAAP series stricter, and the company recast prior periods, so the improvement from a non-GAAP loss of $469 thousand to income of $12,172 thousand is measured on a consistent basis. Readers comparing against figures published before this quarter are not.

What the documents say

Ichor Holdings, Ltd. (NASDAQ: ICHR) reported net sales of $294,784 thousand for the 13 weeks ended June 26, 2026, up 15 percent on the first quarter and up 24 percent on the second quarter of 2025. The Fremont, California manufacturer of gas and chemical delivery subsystems for semiconductor process tools released the figures on August 3, 2026 as an exhibit to a Form 8-K and filed its quarterly report the following day. The quarter returned the company to a reported profit, with net income of $998 thousand and diluted earnings per share of $0.03, against a net loss of $2,469 thousand in the first quarter and $9,408 thousand a year earlier.

Margins moved before volume did

Gross margin was 13.9 percent on a GAAP basis and 14.1 percent on a non-GAAP basis, against 12.6 percent and 12.8 percent in the first quarter and 11.3 percent and 11.8 percent in the second quarter of 2025. Operating margin was 2.4 percent, up from 0.8 percent and from negative 2.0 percent. Non-GAAP net income was $12,172 thousand, or $0.34 a diluted share, against $5,287 thousand and $0.15 in the first quarter and a non-GAAP loss of $469 thousand a year earlier.

The adjustments between the two sets of numbers are itemized by the company. For the third quarter the company says its non-GAAP guidance excludes amortization of intangible assets of approximately $1.9 million and share-based compensation of approximately $4.8 million plus related tax effects. Ichor also changed a definition this quarter: from the second quarter of 2026 its non-GAAP measures no longer exclude inventory impairment charges, and prior periods have been recast on the new basis.

Chief executive Phil Barros said the additional growth the company had forecast for the second quarter had already been achieved to date in the third quarter, and that customer demand visibility now extends well into 2027. He described the result as a three-year record for earnings.

A balance sheet rebuilt inside one quarter

Cash and cash equivalents ended the quarter at $256,456 thousand, against $89,089 thousand at March 27, 2026 and $98,290 thousand at the December 26, 2025 year end. The increase of $167.4 million came almost entirely from an at-the-market public offering completed during the quarter, in which Ichor issued approximately 2.5 million ordinary shares at an average price of $80.70 for net proceeds of $195.4 million. The sales agreement supporting the program is dated May 18, 2026 and names TD Securities (USA) LLC, Stifel, Nicolaus & Company, Needham & Company and Craig-Hallum Capital Group.

Offsetting the raise were $15.9 million of cash used in operating activities, $7.8 million of capital expenditure, $2.8 million relating to shares issued under compensation plans net of employee taxes on vesting, and $1.6 million of credit facility payments. Long-term debt less the current portion stood at $114,308 thousand and total assets at $1,188,291 thousand, of which goodwill was $335,402 thousand.

Geography is concentrated. Sales shipped to Singapore were $130,923 thousand in the quarter against $106,870 thousand a year earlier, sales to the United States were $80,334 thousand against $76,684 thousand, Europe was $23,990 thousand against $25,279 thousand, and other destinations $59,537 thousand against $31,452 thousand. Ichor manufactures in California, Minnesota, Oregon, Texas, Singapore, Malaysia and Mexico.

Guidance for the third quarter

The company expects revenue of $315 million to $345 million, a midpoint of $330 million, with GAAP diluted earnings per share of $0.25 to $0.35 and non-GAAP diluted earnings per share of $0.40 to $0.50. That midpoint would extend the sequential pattern of the first half, in which six-month net sales reached $550,852 thousand against $484,750 thousand in the same period of 2025 even though the six months still carried a net loss of $1,471 thousand.