ICHR

Ichor is a critical-fluid-delivery subsystems supplier to semiconductor capital equipment OEMs — over 90% of 2025 sales came from semicap, with Lam Research and Applied Materials alone accounting for 76% of revenue (per the 10-K). The cyclical recovery is visible in the top line: FY2025 revenue grew 11.6% to $948M, MD&A explicitly attributing this to 'healthy demand in our primary markets of etch and deposition.' That's the bull case in one sentence — Ichor is leveraged to the WFE upcycle and to the structural outsourcing of fluid delivery subsystems by OEMs.

The problem is that the recovery has not yet translated into earnings. FY2025 produced a $52.8M net loss (worse than FY2024's -$20.8M loss), GAAP gross margin compressed to 9.3% from 12.2%, and operating margin deteriorated to -4.1%. Management attributes much of this to a 'geographic footprint rationalization and restructuring plan' that incurred ~$35M in restructuring, severance, and asset-impairment charges tied to closing Scotland and Korea facilities. Non-GAAP operating margin held at 2.2% and non-GAAP diluted EPS was $0.23 — still anemic for a company trading at 3.5x sales and roughly 420x non-GAAP EPS. Operating cash flow of $29.9M is being more than absorbed by $36.2M of capex (up 105% YoY), so free cash flow is negative even before financing.