ICHOR HOLDINGS, LTD. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated unaudited financial statements and related notes included elsewhere in this report. The following discussion contains forwardlooking statements based upon our current plans, expectations, and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forwardlooking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in "Risk Factors."
Overview
We are a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Our product offerings include gas and chemical delivery systems and subsystems, collectively known as fluid delivery systems and subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices. Our gas delivery subsystems deliver, monitor, and control precise quantities of the specialized gases used in semiconductor manufacturing processes such as etch and deposition. Our chemical delivery systems and subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning. We also manufacture precision machined components, weldments, and proprietary products for use in fluid delivery systems for direct sales to our customers. This vertically integrated portion of our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively. Fluid delivery subsystems ensure accurate measurement and uniform delivery of specialty gases and chemicals at critical steps in the semiconductor manufacturing processes. Any malfunction or material degradation in fluid delivery reduces yields and increases the likelihood of manufacturing defects in these processes. Most OEMs outsource all or a portion of the design, engineering, and manufacturing of their gas delivery subsystems to a few specialized suppliers, including us. Additionally, many OEMs are also increasingly outsourcing the design, engineering, and manufacturing of their chemical delivery subsystems due to the increased fluid expertise required to manufacture these subsystems. Outsourcing these subsystems has allowed OEMs to leverage the suppliers' highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes. We believe that this outsourcing trend has enabled OEMs to reduce their costs and development time, as well as provide growth opportunities for specialized subsystems suppliers like us.
We have a global footprint with production facilities in
The following summarizes key financial information for the periods indicated.
Amounts are presented in accordance with GAAP unless explicitly identified as
being a non-GAAP metric. For a description of our non-GAAP metrics and
reconciliations to the most comparable GAAP metrics, please refer to Item 2 -
Non-GAAP Financial Results within this report.
Three Months Ended Nine Months Ended
September 24, September 25, September 24, September 25,
2021 2020 2021 2020
(dollars in thousands)
Net sales $ 262,855 $ 227,678 $ 809,729 $ 669,270
Gross profit $ 43,637 $ 32,506 $ 130,502 $ 90,542
Gross margin 16.6 % 14.3 % 16.1 % 13.5 %
Non-GAAP gross margin 16.7 % 14.6 % 16.6 % 14.1 %
Operating expenses $ 22,440 $ 19,974 $ 65,833 $ 63,206
Operating income $ 21,197 $ 12,532 $ 64,669 $ 27,336
Net income $ 18,537 $ 10,548 $ 56,040 $ 20,758
Non-GAAP net income $ 23,421 $ 14,581 $ 71,453 $ 39,208
Diluted EPS $ 0.64 $ 0.45 $ 1.93 $ 0.89
Non-GAAP diluted EPS $ 0.81 $ 0.62 $ 2.47 $ 1.69
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COVID-19 Pandemic and Market Conditions Update
The COVID19 pandemic and related economic repercussions have created, and are expected to continue to create, significant volatility, uncertainty, and turmoil in our industry. While our facilities are currently not subject to any site-wide government shutdowns, inJune 2021 , the Malaysian government instituted an Enhanced Movement Control Order ("EMCO"), which impacted our weldment facility inMalaysia through both on-site employee restrictions as well as a complete shutdown of all manufacturing in the region during early July. While we were able to reopen our factory in mid-July, once the government confirmed we were an essential business, we remained under headcount limitations until the third week of August. With 50% of our weldment capacity located inMalaysia , our overall output in the country was reduced by 40% in the third quarter due to the EMCO restrictions. In addition to the recent impacts inMalaysia , increases in direct costs within our factories associated with employee personal protective equipment ("PPE"), facility cleaning and layout changes, together with increases in logistics costs and employee labor costs, as well as other operating inefficiencies have resulted in, and may continue to result in, lower revenues and operating margins. The extent and duration of these impacts cannot be specifically quantified given the dynamic nature and breadth of the pandemic's impact on our operations and that of our customers and suppliers.
Results of Operations
The following table sets forth our unaudited results of operations for the periods presented. The periodtoperiod comparison of results is not necessarily indicative of results for future periods.
Three Months Ended Nine Months Ended
September 24, September 25, September 24, September 25,
2021 2020 2021 2020
(in thousands)
Consolidated Statements of Operations Data:
Net sales $ 262,855 $ 227,678 $ 809,729 $ 669,270
Cost of sales 219,218 195,172 679,227 578,728
Gross profit 43,637 32,506 130,502 90,542
Operating expenses:
Research and development 3,905 3,269 11,469 10,100
Selling, general, and administrative 15,147 13,367 44,195 43,098
Amortization of intangible assets 3,388 3,338 10,169 10,008
Total operating expenses 22,440 19,974 65,833 63,206
Operating income 21,197 12,532 64,669 27,336
Interest expense, net 1,487 2,052 4,997 6,728
Other expense (income), net (104 ) 242 103 213
Income before income taxes 19,814 10,238 59,569 20,395
Income tax expense (benefit) 1,277 (310 ) 3,529 (363 )
Net income $ 18,537 $ 10,548 $ 56,040 $ 20,758
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The following table sets forth our unaudited results of operations as a percentage of our total sales for the periods presented.
Three Months Ended Nine Months Ended
September 24, September 25, September 24, September 25,
2021 2020 2021 2020
Consolidated Statements of Operations Data:
Net sales 100.0 100.0 100.0 100.0
Cost of sales 83.4 85.7 83.9 86.5
Gross profit 16.6 14.3 16.1 13.5
Operating expenses:
Research and development 1.5 1.4 1.4 1.5
Selling, general, and administrative 5.8 5.9 5.5 6.4
Amortization of intangible assets 1.3 1.5 1.3 1.5
Total operating expenses 8.5 8.8 8.1 9.4
Operating income 8.1 5.5 8.0 4.1
Interest expense, net 0.6 0.9 0.6 1.0
Other expense (income), net 0.0 0.1 0.0 0.0
Income before income taxes 7.5 4.5 7.4 3.0
Income tax expense (benefit) 0.5 (0.1 ) 0.4 (0.1 )
Net income 7.1 4.6 6.9 3.1
Comparison of the three and nine months ended September 24, 2021 and
September 25, 2020
Net Sales
Three Months Ended Change Nine Months Ended Change
September 24, September 25, September 24, September 25,
2021 2020 Amount % 2021 2020 Amount %
(dollars in thousands)
Net sales $ 262,855 $ 227,678 $ 35,177 15.5 % $ 809,729 $ 669,270 $ 140,459 21.0 %
The increase in net sales from the three and nine months ended
September 25, 2020 to the three and nine months ended September 24, 2021 was
primarily due to strong demand from our customers as a result of continued
growth in the global wafer fabrication equipment market, partially offset by
production constraints as a result of challenges in our supply chain, primarily
due to the EMCO restrictions at our Malaysia factory beginning in June 2021 , as
noted above in the commentary above under the heading, "COVID19 Pandemic and
Market Conditions Update," and delivery timelines with certain key suppliers.
Net sales to U.S. customers increased by $2.1 million and $40.5 million for the
three and nine months ended September 24, 2021 , respectively. On a relative
basis, net sales to U.S. customers as a percent of total net sales decreased
from 55.1% and 54.4% to 48.6% and 50.0% for the three and nine months ended
September 24, 2021 , respectively.
Net sales to international customers increased by $33.0 million and $100.0
million for the three and nine months ended September 24, 2021 , respectively. On
a relative basis, net sales to international customers as a percent of total net
sales increased from 44.8% and 45.6% to 51.5% and 50.0% for the three and nine
months ended September 24, 2021 , respectively.
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Three Months Ended Change Nine Months Ended Change
September 24, September 25, September 24, September 25,
2021 2020 Amount % 2021 2020 Amount %
(dollars in thousands)
Cost of sales $ 219,218 $ 195,172 $ 24,046 12.3 % $ 679,227 $ 578,728 $ 100,499 17.4 %
Gross profit $ 43,637 $ 32,506 $ 11,131 34.2 % $ 130,502 $ 90,542 $ 39,960 44.1 %
Gross margin 16.6 % 14.3 % + 230 bps 16.1 % 13.5 % + 260 bps
The increase in the gross amounts of cost of sales and gross profit for the
three and nine months ended
The increase in our gross margin from the three and nine months endedSeptember 25, 2020 to the three and nine months endedSeptember 24, 2021 was primarily due to increased factory utilization, partially offset by increased materials and logistics costs and increased factory inefficiency due to challenges in our supply chain, primarily due to the EMCO restrictions at ourMalaysia factory in beginning inJune 2021 , as noted above in the commentary above under the heading, "COVID19 Pandemic and Market Conditions Update," and delivery timelines with certain key suppliers.
The following discrete, nonrecurring items favorably impacted our gross margin
for the three and nine months ended
Gross margin increased from the third quarter of 2020 to the third quarter of 2021 due to$0.4 million , or 18 basis points, in costs incurred in connection with the planned closure of ourUnion City, California facility in the third quarter of 2020 that did not recur in the third quarter of 2021. The facility ceased operations during the second quarter of 2021. Gross margin increased from the nine months endedSeptember 25, 2020 to the nine months endedSeptember 24, 2021 due to a$1.4 million , or 21 basis point, contract settlement loss in the first quarter of 2020 that did not recur in the nine months endedSeptember 24, 2021 . This was partially offset by a$0.4 million , or 6 basis point, increase inUnion City facility shutdown costs in the nine months endedSeptember 24, 2021 compared to the nine months endedSeptember 25, 2020 . Research and Development Three Months Ended Change Nine Months Ended Change September 24, September 25, September 24, September 25, 2021 2020 Amount % 2021 2020 Amount % (dollars in thousands) Research and development $ 3,905 $ 3,269$ 636 19.5 %$ 11,469 $ 10,100 $ 1,369 13.6 % The increase in research and development expenses from the three and nine months endedSeptember 25, 2020 to the three and nine months endedSeptember 24, 2021 was primarily due to increased employee-related expense, as we expand our engineering team to design and engineer next generation, high performance solutions for our customers.
Selling, General, and Administrative
Three Months Ended Change Nine Months Ended Change
September 24, September 25, September 24, September 25,
2021 2020 Amount % 2021 2020 Amount %
(dollars in thousands)
Selling, general, and
administrative $ 15,147 $ 13,367 $ 1,780 13.3 % $ 44,195 $ 43,098 $ 1,097 2.5 %
The increase in selling, general, and administrative expense from the third
quarter of 2020 to the third quarter of 2021 was primarily due (i) $1.6 million
in increased employee-related expense, which is inclusive of a $0.5 million
increase in share-based compensation expense, and (ii) $0.3 million in increased
computer hardware and software costs to support the growing organization and our
ERP implementation project, partially offset by (iii) $0.3 million in reduced
professional and consulting fees.
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The increase in selling, general, and administrative expense from the nine
months ended September, 2020 to the nine months ended September 24, 2021 was
primarily due to (i) $2.2 million in increased employee-related expense, which
is inclusive of a $0.2 million increase in share-based compensation expense,
(ii) $1.1 million in increased computer hardware and software costs to support
the growing organization and our ERP implementation project, and
(iii) $0.3 million in increase costs related to the shutdown of our Union City,
California facility, partially offset by (iv) $1.8 million in reduced executive
transition costs associated with the transition of our former CEO to executive
chairman in the first quarter of 2020 that did not recur in the first quarter of
2021 and (v) $1.2 million in reduced professional and consulting fees.
Amortization of Intangible Assets
Three Months Ended Change Nine Months Ended Change
September 24, September 25, September 24, September 25,
2021 2020 Amount % 2021 2020 Amount %
(dollars in thousands)
Amortization of intangibles assets $ 3,388 $ 3,338
1.6 %
The increase in amortization expense from the three and nine months endedSeptember 25, 2020 to the three and nine months endedSeptember 24, 2021 was primarily due to incremental amortization expense from the acquisition of a customer relationship intangible asset inDecember 2020 in connection with our acquisition of a precision machining operation inNogales, Mexico . Interest Expense, Net Three Months Ended Change Nine Months Ended Change September 24, September 25, September 24, September 25, 2021 2020 Amount % 2021 2020 Amount % (dollars in thousands) Interest expense, net $ 1,487 $ 2,052$ (565 ) -27.5 % $ 4,997 $ 6,728$ (1,731 ) -25.7 % The decrease in interest expense from the third quarter of 2020 to the third quarter of 2021 was primarily due to a 47basis point decrease in our weighted average interest rate, from 3.37% to 2.90%, and a$38.7 million decrease in our average amount borrowed during the quarter. The decrease in interest expense from the nine months endedSeptember 25, 2020 to the nine months endedSeptember 24, 2021 was primarily due to an 81basis point decrease in our weighted average interest rate, from 3.89% to 3.08%, and a$21.6 million decrease in our average amount borrowed during the ninemonth period. The decrease in our weighted average interest rate during the three and nine months endedSeptember 24, 2021 was primarily driven by continued quarterly reductions in our consolidated leverage ratio, starting with the first quarter of 2020, which lowers the applicable margin component of our all-in interest rate. Additionally, for the nine months endedSeptember 24, 2021 , our weighted average interest rate was favorably impacted by reductions in LIBOR during the first half of 2021 compared to the first half of 2020. Interest expense for the three and nine months endedSeptember 24, 2021 is net of an insignificant amount of interest income, net of premium amortization, associated with our marketable securities, which were originally purchased inMay 2021 . Other Expense (Income), Net Three Months Ended Change Nine Months Ended Change September 24, September 25, September 24, September 25, 2021 2020 Amount % 2021 2020 Amount % (dollars in thousands) Other expense (income), net $ (104 ) $ 242$ (346 ) n/m $ 103 $ 213$ (110 )
-51.6 %
The change in other expense, net from the three and nine months endedSeptember 25, 2020 to the three and nine months endedSeptember 24, 2021 was primarily due to currency exchange rate changes during the quarter as a result of transactions denominated in the local currencies of our foreign operations. These local currencies consist primarily of theSingapore dollar, Malaysian ringgit, and euro. 19 -------------------------------------------------------------------------------- Income Tax Expense (Benefit) Three Months Ended Change Nine Months Ended Change September 24, September 25, September 24, September 25, 2021 2020 Amount % 2021 2020 Amount %
(dollars in thousands)
Income tax expense (benefit) $ 1,277 $ (310 )
The increase in income tax expense from the third quarter of 2020 to the third quarter of 2021 was primarily due to increased taxable income in theU.S. in 2021 and a reduction in benefits from share-based compensation activity during the quarter. The increase in income tax expense from the nine months endedSeptember 25, 2020 to the nine months endedSeptember 24, 2021 was primarily due to increased taxable income in theU.S. , partially offset by an increase in benefits from share-based compensation activity during the nine-month period.
NonGAAP Financial Results
Management uses non-GAAP metrics to evaluate our operating and financial
results. We believe the presentation of non-GAAP results is useful to investors
for analyzing business trends and comparing performance to prior periods, along
with enhancing investors' ability to view our results from management's
perspective. Non-GAAP gross margin is defined as non-GAAP gross profit divided
by net sales. Non-GAAP gross profit and non-GAAP net income are defined as:
gross profit or net income excluding, as applicable, (1) amortization of
intangible assets, share-based compensation expense, and non-recurring expenses,
including contract settlement losses and facility shutdown costs, to the extent
they are present in gross profit or net income; and (2) the tax impacts
associated with our non-GAAP adjustments, as well as non-recurring discrete tax
items. Non-GAAP diluted earnings per share ("EPS") is defined as non-GAAP net
income divided by weighted average diluted ordinary shares outstanding during
the period.
Non-GAAP results have limitations as an analytical tool, and you should not
consider them in isolation or as a substitute for our results reported under
GAAP. Other companies may calculate non-GAAP results differently or may use
other measures to evaluate their performance, both of which could reduce the
usefulness of our non-GAAP results as a tool for comparison.
Because of these limitations, you should consider non-GAAP results alongside
other financial performance measures and results presented in accordance with
GAAP. In addition, in evaluating non-GAAP results, you should be aware that in
the future we will incur expenses such as those that are the subject of
adjustments in deriving non-GAAP results and you should not infer from our
presentation of non-GAAP results that our future results will not be affected by
these expenses or any unusual or non-recurring items.
The following table presents our unaudited nonGAAP gross profit and non-GAAP
gross margin and and a reconciliation from gross profit, the most comparable
GAAP measure, for the periods indicated:
Three Months Ended Nine Months Ended
September 24, September 25, September 24, September 25,
2021 2020 2021 2020
(dollars in thousands, except per share amounts)
U.S. GAAP gross profit $ 43,637 $ 32,506 $ 130,502 $ 90,542
Non-GAAP adjustments:
Share-based compensation 343 289 947 724
Other non-recurring expense, net (1) - - 106 -
Contract settlement loss (2) - - - 1,386
Facility shutdown costs (3) - 408 2,297 1,883
Fair value adjustment to inventory from
acquisitions (4) - - 211 -
Non-GAAP gross profit $ 43,980 $ 33,203 $ 134,063 $ 94,535
U.S. GAAP gross margin 16.6 % 14.3 % 16.1 % 13.5 %
Non-GAAP gross margin 16.7 % 14.6 % 16.6 % 14.1 %
(1) Included in this amount for the nine months ended
primarily a non-recurring settlement charge.
(2) During the first quarter of 2020, we reached a mutual settlement with the
counterparty of a contract dispute and, accordingly, recorded a
$1.4 million contract settlement loss to cost of sales.
(3) During the second quarter of 2020, we announced the closure of our
manufacturing facility in
the second quarter of 2021. As of the end of the second quarter of 2021,
the facility was closed and vacated, and no further charges are expected on
a go-forward basis.
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Included in this amount for the third quarter of 2020 are (i) severance costs
associated with affected employees of
Included in this amount for the nine months endedSeptember 24, 2021 are (i) write-off costs associated with inventories determined during the period to be obsolete of$2.6 million and (ii) severance costs associated with affected employees of$0.2 million , partially offset by (iii) a gain realized upon the sale of equipment and other fixed assets of$0.5 million . Included in this amount for the nine monthsSeptember 25, 2020 are (i) write-off costs associated with inventories determined during the period to be obsolete of$1.3 million , (ii) severance costs associated with affected employees of$0.4 million , and (iii) accelerated depreciation charges associated with property and equipment expected to be abandoned at the time of facility closure of$0.2 million .
(4) As part of our purchase price allocation for our acquisition of a precision
machining operation in Mexico in December 2020 , we recorded
acquired-inventory at fair value, resulting in a fair value step-up of
$0.2 million . This was subsequently released to cost of sales in the first
quarter of 2021 as acquired-inventory was sold.
The following table presents our unaudited nonGAAP net income and non-GAAP diluted EPS and a reconciliation from net income, the most comparable GAAP measure, for the periods indicated:
Three Months Ended Nine Months Ended
September 24, September 25, September 24, September 25,
2021 2020 2021 2020
(dollars in thousands, except per share amounts)
U.S. GAAP net income $ 18,537 $ 10,548 $ 56,040 $ 20,758
Non-GAAP adjustments:
Amortization of intangible assets 3,388 3,338 10,169 10,008
Share-based compensation 3,010 2,417 8,106 7,423
Other non-recurring expense, net (1) 110 239 498 3,124
Contract settlement loss (2) - - - 1,386
Facility shutdown costs (3) - 481 2,682 2,017
Fair value adjustment to inventory from
acquisitions (4) - - 211 -
Tax adjustments related to non-GAAP
adjustments (5) (1,624 ) (2,442 ) (6,253 ) (5,508 )
Non-GAAP net income $ 23,421 $ 14,581 $ 71,453 $ 39,208
U.S. GAAP diluted EPS $ 0.64 $ 0.45 $ 1.93 $ 0.89
Non-GAAP diluted EPS $ 0.81 $ 0.62 $ 2.47 $ 1.69
Shares used to compute diluted EPS 29,024,862 23,347,460 28,961,308 23,199,618
(1) Included in this amount for the third quarter of 2021 are primarily
non-capitalized costs incurred in connection with our implementation of a
new ERP system.
Included in this amount for the the third quarter of 2020 are primarily (i) non-capitalized costs incurred in connection with our implementation of a new ERP system and a Sarbanes-Oxley ("SOX") compliance program.
Included in this amount for the nine months ended
Included in this amount for the nine months ended
(2) See footnote 2 to the previous table reconciling gross profit to non-GAAP
gross profit.
(3) During the second quarter of 2020, we announced the closure of our
manufacturing facility in
the second quarter of 2021. As of the end of the second quarter of 2021,
the facility was closed and vacated, and no further charges are expected on
a go-forward basis.
Included in this amount for the third quarter of 2020 are are (i) severance
costs associated with affected employees of
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Included in this amount for the nine months ended
Included in this amount for the nine monthsSeptember 25, 2020 are (i) write-off costs associated with inventories determined during the period to be obsolete of$1.3 million , (ii) severance costs associated with affected employees of$0.4 million , and (iii) accelerated depreciation charges associated with property and equipment expected to be abandoned at the time of facility closure of$0.3 million .
(4) See footnote 4 to the previous table reconciling gross profit to non-GAAP
gross profit.
(5) Adjusts
adjustments, as defined, including the impacts of excluding share-based
compensation, amortization of intangible assets, and other non-recurring
expenses. This adjustment also excludes the impact of non-recurring
discrete tax items.
Liquidity and Capital Resources
We ended the third quarter of 2021 with cash of$128.0 million , a decrease of$124.9 million fromDecember 25, 2020 . The decrease during the nine months endedSeptember 24, 2021 was primarily due to purchases of marketable securities of$105.0 million , payments on long-term debt of$36.6 million , and capital expenditures of$18.7 million , partially offset by cash provided by operating activities of$24.4 million , proceeds from maturities and sales of marketable securities of$6.0 million , and net proceeds from the issuance of shares under our share-based compensation plans of$4.5 million .
We believe that our cash, the amounts available under our revolving credit facility, and our cash flows from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months.
Cash Flow Analysis
The following table sets forth a summary of operating, investing, and financing activities for the periods presented:
Nine Months Ended
September 24 , September 25,
2021 2020
(in thousands)
Cash provided by (used in) operating activities
(1,878 )
Cash used in investing activities (117,233 ) (8,291 )
Cash provided by (used in) financing activities (32,039 ) 28,476
Net decrease in cash $ (124,861 ) $ 18,307
Operating Activities
Our cash provided by operating activities of $24.4 million during the nine
months ended September 24, 2021 consisted of net income of $56.0 million and net
non-cash charges of $27.3 million , partially offset by an increase in our net
operating assets and liabilities of $58.9 million . Net non-cash charges
primarily consisted of depreciation and amortization of $17.7 million ,
share-based compensation of $8.1 million , and deferred taxes of $1.0 million .
The increase in our net operating assets and liabilities was primarily due to
(i) an increase in inventories of $59.2 million , driven mostly by higher
purchasing activity pursuant to strong customer demand and certain supply chain
constraints, primarily due to a government-ordered shutdown of our Malaysia
factory in July 2021 , constraining production and shipments; (ii) an increase in
accounts receivable of $20.7 million , driven mostly by higher sales in the third
quarter of 2021 compared to the fourth quarter of 2020, as well as timing of
customer payments; partially offset by (iii) an increase in accounts payable of
$21.2 million , which is primarily due to higher purchases during the third
quarter of 2021 compared to the fourth quarter of 2020, partially offset by
timing of payments to suppliers.
22
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Our cash used in investing activities of$117.2 million during the nine months endedSeptember 24, 2021 consisted of purchases of marketable securities of$105.0 million , capital expenditures of$18.7 million , partially offset by proceeds from maturities and sales of marketable securities and proceeds from the sale of equipment and other fixed assets associated with our planned closure of ourUnion City, California facility of$0.5 million . Our capital expenditures primarily include capacity expansion projects, including machinery and clean rooms, at our factories. Pursuant to ASU 201815, implementation costs associated with our new ERP implementation of approximately$2.1 million are capitalized as other non-current assets on our consolidated balances sheets and are reflected in cash provided by operating activities.
Financing Activities
Our cash used in financing activities of$32.0 million during the nine months endedSeptember 24, 2021 consisted of payments on long-term debt of$36.6 million , of which$30.0 million was a paydown on our revolving credit facility, partially offset by net proceeds from the issuance of shares under our share-based compensation plans of$4.5 million .
Critical Accounting Policies
Our consolidated financial statements have been prepared in accordance withU.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected. The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are identified and described in our annual consolidated financial statements and the notes included in our Annual Report on Form 10K for the year endedDecember 25, 2020 (our "Annual Report").
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