Ichor NASDAQ: ICHR reported first-quarter 2026 results that landed at the upper end of management’s expectations, driven by a sharp sequential increase in demand and what executives described as improving operating leverage early in a multi-year growth cycle.
First-quarter results show sequential acceleration
CEO Phil Barros said the company is “just a few months into a multi-year growth cycle” and is already “delivering upside to our outlook and demonstrating strong earnings leverage.” Revenue in Q1 totaled $256 million, up 15% from the prior quarter. Barros said gross margin reached 12.8%, “approach[ing] the high end of our guidance,” and helped Ichor “deliver our highest earnings per share in three years.”
CFO Greg Swyt added that the figures discussed on the call were non-GAAP. He reported Q1 revenue of $256.1 million, gross margin of 12.8% (up 110 basis points sequentially), and operating expenses of $24.1 million. Operating income rose to $8.7 million, or 3.4% of revenue, which Swyt said “more than tripled compared to Q4.”
Earnings were $0.15 per diluted share on 35.3 million diluted shares outstanding. Swyt also noted EBITDA of “nearly $14 million.”
Inventory and capacity preparations amid ramping demand
Management emphasized earlier investments to support growth. Barros said Ichor’s “early investments…in ramping labor headcount and prepositioning inventory are paying off,” helping the company execute for customers and pursue growth “towards the high end of our demand forecast.” He added that demand across Ichor’s “core markets has further strengthened” since the previous earnings call and that visibility now extends “deeper into 2026.”
Swyt said Ichor is making “incremental investments in inventory” as the ramp begins. As a result, cash from operations was a use of $2.9 million in Q1. Capital expenditures were $7.1 million, and Swyt said the company is managing CapEx toward “approximately 3% of revenue,” expecting spending to “trend up modestly” in the second half of the year.
On the balance sheet, Swyt said cash and equivalents ended the quarter at $89.1 million, down $9.2 million from Q4, reflecting inventory and CapEx investments. Days sales outstanding increased modestly to 33 days, inventory turns improved to 3.7, total debt was $122 million, and the net debt coverage ratio was 1.6.
Global footprint realignment and margin strategy
Barros outlined continued execution on the company’s “Global Footprint Realignment,” which he said is intended to (1) structurally address prior margin challenges, (2) enable more scalable manufacturing of Ichor-branded products to reach cost targets, and (3) increase Ichor content within systems to improve gross margin flow-through as revenue ramps.
He said the company has installed and qualified “half of the planned equipment moves…ahead of schedule,” and is now performing “all manufacturing steps” for its substrate product line “within the same four walls within Mexico.” Barros also said the valve product line achieved “full customer qualification to manufacture in Mexico” in Q1, expanding capacity and enabling more internal sourcing. The company expects to be at “full production as we exit” Q2.
As Mexico ramps, Barros said Ichor is temporarily increasing external supply to support “strong, consistent delivery” in its integration business. He also said Malaysia will ramp through the remainder of the year, contributing to a “richer mix of machining revenues,” and that higher machining volumes and cost-reduction initiatives are “the final 2 steps” to achieving near-term gross margin targets of at least 15%.
In response to an analyst question about the drivers of gross margin expansion, Barros said improvements are “as much event-driven as it is volume-driven,” with volume leverage and cost reductions “pretty closely equally weighted,” estimating “volume leverage is about 50% of it and our cost reductions are about 50% of it.”
Second-quarter outlook calls for revenue near $300M
For Q2 2026, management guided to revenue of approximately $300 million plus or minus $10 million. Swyt provided a range of $290 million to $310 million, which at the midpoint implies 17% sequential growth and 25% year-over-year growth. Gross margin is expected to be 13% to 14%.
Barros said the Q2 forecast reflects “unconstrained demand exceeding $300 million” and characterized the ramp as “one of the steepest” in the company’s history, representing growth “well over 30% in just two quarters.” He added that with stronger visibility, Ichor continues to expect “every quarter in 2026 will be a growth quarter.”
Swyt said operating expense guidance for the year is largely unchanged, with a relatively consistent run rate of about $25 million beginning in Q2. The company is targeting only 5% to 6% OpEx growth for the full year, with Q2’s increase versus Q1 tied to “higher variable compensation forecasts on the improved outlook for the year.”
For Q2, the company guided to EPS of $0.25 to $0.35 on an expected diluted share count of 35.5 million. Swyt reiterated expectations for interest and tax, including approximately $2 million per quarter in total interest and other income/expense and an effective tax rate of 20% to 25%.
Content roadmap, lithography timing, and non-semiconductor growth
Barros reaffirmed a target to exit 2026 with systems containing 35% Ichor-branded content, noting the company exited 2025 at 25% (up from 15% in 2024). He said the next step-function increase is expected in flow control, with 2026 described as “a qualification year” and the “first meaningful flow control revenues in 2027.” Longer term, he said capacity additions in Mexico and Malaysia plus flow control qualifications should enable Ichor to be “capable of providing up to 75% of Ichor-branded content” within systems by year-end.
On demand visibility, Barros said Ichor typically has “good visibility for about 6 months,” with “hard PO coverage for about a full quarter.”
Asked about lithography, Barros said etch and deposition are “growing faster” than lithography. He referenced earlier commentary that a customer has inventory to work through, adding that Ichor expects that inventory to be burned through in Q3 with a pickup in Q4. He described that as “a little bit of a headwind in Q3” and “a tailwind in Q4.”
Barros also reiterated Ichor’s intent to expand machining capabilities into markets outside semiconductor, which he said are currently less than 10% of revenue. He cited commercial space and defense as growth drivers. In response to a question on silicon carbide, Barros said demand there remains “pretty light” and has been “pretty steadily down since it was last year.”
On capacity, Barros said the company’s output pacing factors are primarily supply chain and labor headcount, while it is “well-positioned” on longer-lead infrastructure such as facilities and cleanroom space. He also said the company believes it has enough brick-and-mortar capacity “to go well above $2 billion,” with additional equipment investments needed to support higher levels of Ichor-branded content. Swyt reiterated that for 2026 the company is driving toward a CapEx rate of about 3% of revenue.
About Ichor NASDAQ: ICHR
Ichor Holdings Ltd. is a global supplier of critical subsystems used in the fabrication of semiconductor devices. The company specializes in the design, engineering and manufacturing of gas delivery systems, vacuum pumps and abatement solutions that manage process gases and by-products in wafer-processing tools. Its modular subsystems are designed to integrate with lithography, etch, deposition and cleaning equipment, helping to ensure precise control of gas flow, pressure and purity throughout the chip-manufacturing cycle.
Founded in the mid-1980s and headquartered in Fremont, California, Ichor has expanded its footprint across Asia, Europe and North America.
Recommended Stories
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Ichor, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Ichor wasn't on the list.
While Ichor currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Click the link to see MarketBeat's guide to investing in 5G and which 5G stocks show the most promise.
Get This Free Report
