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Ichor (ICHR) - 2021 Q4 - Earnings Call Transcript
ICHRIchor (ICHR)2022-02-09 01:49
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Financial Data and Key Metrics Changes - Q4 revenues were 287million,up9287 million, up 9% from Q3 and 17% higher than Q4 of 2020 [6][23] - Full-year revenues totaled a record 1.1 billion, with net income growing by 65% on a revenue growth of 20% [7][25] - Gross margin improved to 17.1% in Q4, up 40 basis points from Q3, and full-year gross margin increased to 16.7%, up 210 basis points from 2020 [7][23] Business Line Data and Key Metrics Changes - The acquisition of IMG contributed 7millioninincrementalrevenueinQ4[6]−OperatingmarginforQ4was10.77 million in incremental revenue in Q4 [6] - Operating margin for Q4 was 10.7%, up 20 basis points from Q3, and for the full-year, operating margin was also 10.7%, up 240 basis points from 2020 [24] Market Data and Key Metrics Changes - The wafer fab equipment (WFE) industry is expected to grow in the high-teens percentages, with demand projected at 100 billion [8][11] - Supply chain challenges have worsened, affecting component supply and labor availability due to the Omicron variant [9][10] Company Strategy and Development Direction - The company plans to increase CapEx to support capacity expansion, aiming for quarterly revenue run rates in excess of 400million[13]−TheIMGacquisitionisexpectedtoadd100basispointstogrossmarginandatleast40basispointstooperatingmarginforfiscal2022[15]−Thecompanyisfocusingondevelopingnewproductstoexpandmarketshareanddriveprofitability[17]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpectscontinuedrevenuegrowthandgrossmarginimprovements,withaforecastforQ1revenuestobeuparound4400 million [13] - The IMG acquisition is expected to add 100 basis points to gross margin and at least 40 basis points to operating margin for fiscal 2022 [15] - The company is focusing on developing new products to expand market share and drive profitability [17] Management's Comments on Operating Environment and Future Outlook - Management expects continued revenue growth and gross margin improvements, with a forecast for Q1 revenues to be up around 4% to 5% sequentially [11][30] - The company anticipates that supply chain conditions will persist through at least the first half of the year, impacting operations [29] Other Important Information - The company reported earnings per share of 0.90 for Q4, with strong operating leverage resulting in record net earnings of 98million[25][26]−TheacquisitionofIMGwasfundedwith98 million [25][26] - The acquisition of IMG was funded with 140 million in cash and 130millioninincrementalborrowing,increasingtotaldebtto130 million in incremental borrowing, increasing total debt to 295 million [26] Q&A Session Summary Question: Guidance on earnings range - The earnings range of 0.80to0.80 to 1.04 is primarily driven by a full quarter of IMG operations, with some volume leverage expected [36][38] Question: Impact of IMG acquisition on capacity - The IMG acquisition does provide some incremental capacity that can be utilized for core business operations [39] Question: Supply chain pressures - Component shortages are currently the biggest challenge, particularly with electronic components and semiconductors [47][48] Question: CapEx plans - The company is planning for long-term capacity expansion, aligning with customer demand forecasts for the next few years [49][50] Question: IMG integration and customer reaction - The integration of IMG is progressing well, with positive customer reactions noted [70] Question: Supply chain issues quantification - The company has not quantified the impact of supply chain issues but has expanded the guidance range to account for uncertainties [75] Question: Demand exceeding expectations - If demand proves to be higher than anticipated, the company is confident in its ability to meet that demand, contingent on supply chain improvements [78]