Company Overview - Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry [3] - The company offers integrated outsourced solutions for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping, and high-precision manufacturing under its Products division [3] - UCT's Services Division provides tool chamber parts cleaning and coating, as well as micro-contamination analytical services [3] Leadership Appointment - Chris Cook has been appointed as Chief Business Officer of Ultra Clean Holdings, effective immediately [1] - Previously, Chris served as President of UCT's Products Division, where he successfully grew the product portfolio, expanded vertical content, and enhanced customer relationships [2] - In his new role, Chris will lead UCT's commercial strategy, focusing on strategic partnerships, identifying new market opportunities, and accelerating growth through an optimized portfolio of innovative products and services [2] Chris Cook's Background - Chris Cook has 28 years of leadership and general management experience in semiconductor and electronic systems companies, including Renesas Technologies, Infineon Technologies, Flex, and Cypress Semiconductor [2] - He specializes in driving profitable growth by developing valuable technologies and optimizing global operations [2] - Cook holds a B.S. in Electrical Engineering and Technology from Purdue University and completed the Program for Leadership Development at Harvard Business School [2]

Company Overview - Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry [2] - The company offers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping, and high-precision manufacturing under its Products division [2] - Under its Services Division, Ultra Clean provides tool chamber parts cleaning and coating, as well as micro-contamination analytical services [2] - The company is headquartered in Hayward, California [2] Upcoming Events - Ultra Clean Holdings will participate in two upcoming virtual investor conferences: - August 13, 2025: Oppenheimer Annual Virtual 1X1 Technology Conference - August 20, 2025: Needham 6th Annual Virtual Semiconductor & SemiCap 1x1 Conference [1] - The company will host one-on-one meetings only during these conferences [1]

Core Insights - The article emphasizes the importance of the Zacks Rank in identifying strong stocks through earnings estimates and revisions, while also acknowledging that investors have their own strategies [1] - Value investing is highlighted as a popular method for finding great stocks, utilizing various valuation metrics [2] Company Analysis: Ultra Clean (UCTT) - UCTT currently holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is among the best value stocks available [3] - The company's Price-to-Book (P/B) ratio is 1.14, which is attractive compared to the industry average of 2.22. UCTT's P/B has fluctuated between 0.86 and 2.20 over the past year, with a median of 1.70 [4] - UCTT's Price-to-Cash Flow (P/CF) ratio is 9.98, which is favorable compared to the industry's average of 13.84. The P/CF for UCTT has ranged from 7.55 to 30.93 in the past year, with a median of 16.45 [5] - The combination of UCTT's strong valuation metrics and positive earnings outlook suggests that the stock is likely undervalued at present [6]

[Report Information](index=1&type=section&id=Report%20Information) This section provides key administrative details of the quarterly report, including filing type, registrant, filer status, and common stock outstanding - Filing Type: Quarterly Report on Form 10-Q for the period ended June 27, 2025[2](index=2&type=chunk) - Registrant: Ultra Clean Holdings, Inc., a Delaware corporation[2](index=2&type=chunk) - Filer Status: Large accelerated filer[4](index=4&type=chunk) - Common Stock Outstanding (July 25, 2025): **45,343,968 shares**[4](index=4&type=chunk) [PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) For the six months ended June 27, 2025, Ultra Clean Holdings, Inc. reported a net loss of $162.9 million, a significant decline from net income in the prior year, primarily due to a $151.1 million goodwill impairment. Total assets decreased to $1,745.6 million, largely due to this impairment, while total equity also declined. Operating cash flow, however, improved to $57.4 million, driven by favorable working capital changes. The company adopted new income tax disclosure standards and is evaluating expense disaggregation standards. Detailed notes cover fair value measurements, borrowing arrangements, retirement plans, and segment performance, highlighting a shift in tax assertion for a China subsidiary and ongoing employee stock plans [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity, as of specific reporting dates Condensed Consolidated Balance Sheet Highlights (In millions) | Metric | June 27, 2025 | December 27, 2024 | Change | | :--------------------------------- | :-------------- | :---------------- | :----- | | Total Assets | $1,745.6 | $1,919.9 | $(174.3) | | Current Assets | $955.8 | $970.1 | $(14.3) | | Goodwill | $114.2 | $265.3 | $(151.1) | | Total Liabilities | $955.8 | $984.1 | $(28.3) | | Total Equity | $789.8 | $935.8 | $(146.0) | - Goodwill decreased significantly from **$265.3 million to $114.2 million**, indicating a substantial impairment[9](index=9&type=chunk) - Retained earnings decreased from **$370.4 million to $203.4 million**[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's revenues, expenses, and net income or loss over specific reporting periods Condensed Consolidated Statements of Operations Highlights (Six Months Ended, In millions, except per share) | Metric | June 27, 2025 | June 28, 2024 | YoY Change | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Total Revenues | $1,037.4 | $993.9 | 4.4% | | Total Cost of Revenues | $873.9 | $822.8 | 6.2% | | Gross Margin | $163.5 | $171.1 | (4.4)% | | Impairment of Goodwill | $151.1 | $— | N/A | | Income (loss) from Operations | $(128.9) | $40.2 | (420.6)% | | Net Income (Loss) | $(162.9) | $14.2 | (1247.2)% | | Net Income (Loss) attributable to UCT | $(167.0) | $9.7 | (1821.6)% | | Diluted EPS attributable to UCT | $(3.70) | $0.21 | (1857.1)% | - A goodwill impairment charge of **$151.1 million** was recorded for the six months ended June 27, 2025, significantly impacting operating and net income[12](index=12&type=chunk) - Total revenues increased by **4.4%** for the six months ended June 27, 2025, driven by growth in both Products and Services segments[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section reports the company's net income or loss and other comprehensive income or loss components for the period Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (Six Months Ended, In millions) | Metric | June 27, 2025 | June 28, 2024 | | :--------------------------------- | :-------------- | :-------------- | | Net Income (Loss) | $(162.9) | $14.2 | | Change in cumulative translation adjustment, net of tax | $10.0 | $(6.3) | | Total other comprehensive income (loss) | $10.0 | $(6.3) | | Comprehensive income (loss) | $(152.9) | $7.9 | | Comprehensive income (loss) attributable to UCT | $(161.2) | $6.7 | - The significant comprehensive loss is primarily due to the **net loss** reported for the period[13](index=13&type=chunk) - A positive change in cumulative translation adjustment of **$10.0 million** (vs. -$6.3 million prior year) provided a partial offset[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended, In millions) | Cash Flow Activity | June 27, 2025 | June 28, 2024 | YoY Change | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Net cash provided by operating activities | $57.4 | $33.0 | $24.4 | | Net cash used in investing activities | $(29.1) | $(30.9) | $1.8 | | Net cash provided by (used in) financing activities | $(18.8) | $12.5 | $(31.3) | | Net increase in cash and cash equivalents | $13.5 | $12.5 | $1.0 | | Cash and cash equivalents at end of period | $327.4 | $319.5 | $7.9 | - Operating cash flow increased by **$24.4 million**, driven by a **$25.9 million** favorable change in net working capital, including a **$34.3 million** decrease in accounts receivable[141](index=141&type=chunk)[17](index=17&type=chunk) - Financing activities shifted from providing **$12.5 million** in cash to using **$18.8 million**, primarily due to **$31.5 million** net cash proceeds from bank borrowings in the prior period[141](index=141&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including net income, share repurchases, and other comprehensive income Condensed Consolidated Statements of Stockholders' Equity Highlights (Six Months Ended, In millions) | Metric | December 27, 2024 | June 27, 2025 | Change | | :--------------------------------- | :---------------- | :-------------- | :----- | | Total Equity | $935.8 | $789.8 | $(146.0) | | Net income (loss) attributable to UCT | N/A | $(167.0) | N/A | | Repurchase of shares | N/A | $(3.4) | N/A | | Accumulated Other Comprehensive Income (Loss) | $(10.3) | $(4.5) | $5.8 | - Net loss attributable to UCT of **$167.0 million** was a primary driver of the equity reduction[18](index=18&type=chunk) - The company repurchased **$3.4 million** of shares during the six months ended June 27, 2025[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Index%20to%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Organization and Significant Accounting Policies](index=13&type=section&id=1.%20Organization%20and%20Significant%20Accounting%20Policies) UCT is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry - UCT is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry[25](index=25&type=chunk) - The Products business designs and manufactures production tools, components, and modules, while the Services business provides ultra-high purity parts cleaning, recoating, and micro-contamination analysis[25](index=25&type=chunk) - Adopted ASU No. 2023-09 (Income Taxes) in Q1 2025, which did not materially impact interim financial statements but will expand annual income tax disclosures[29](index=29&type=chunk)[30](index=30&type=chunk) - Currently evaluating ASU No. 2024-03 and ASU No. 2025-01 (Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2026[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [Note 2. Balance Sheet Information](index=14&type=section&id=2.%20Balance%20Sheet%20Information) This note provides detailed information on specific balance sheet accounts, including receivables factoring, inventories, and property, plant, and equipment - The Company has two active non-recourse receivables factoring arrangements, allowing for factoring up to **$25.0 million** (U.S.) and **$12.0 million** (EMEA/Asia Pacific)[35](index=35&type=chunk) Accounts Receivable Factoring (In millions) | Period | Cash Proceeds from Sales of Accounts Receivables | Uncollected Receivables Sold (as of June 27, 2025) | | :--------------------------------- | :--------------------------------------------- | :------------------------------------------------- | | Three Months Ended June 27, 2025 | $23.0 | N/A | | Six Months Ended June 27, 2025 | $29.4 | $25.4 | Inventories (In millions) | Category | June 27, 2025 | December 27, 2024 | | :-------------- | :------------ | :---------------- | | Raw materials | $202.0 | $195.4 | | Work in process | $122.1 | $130.8 | | Finished goods | $51.5 | $54.8 | | Total | $375.6 | $381.0 | Property, Plant and Equipment, Net (In millions) | Category | June 27, 2025 | December 27, 2024 | | :------------------------- | :------------ | :---------------- | | Total (net of depreciation) | $336.7 | $325.9 | [Note 3. Fair Value](index=15&type=section&id=3.%20Fair%20Value) This note details the fair value measurements of the company's financial instruments, particularly liabilities, using various input levels - Pension obligation is measured using **Level 3 unobservable inputs**, based on expected years of service, average compensation, mortality, inflation, and interest rate risks[38](index=38&type=chunk) Fair Value Measurement of Liabilities (In millions) | Description | June 27, 2025 (Level 3) | December 27, 2024 (Level 3) | | :---------------- | :---------------------- | :-------------------------- | | Pension obligation | $2.5 | $1.7 | | Contingent earn-out | $— | $0.1 | - The contingent earn-out liability for the HIS acquisition was reduced from **$0.1 million to zero** in Q1 2025 due to lower-than-expected financial performance, resulting in a **$0.1 million** increase in Other income (expense), net[40](index=40&type=chunk) - For the three and six months ended June 28, 2024, the Company recognized gains of **$24.1 million** and **$22.8 million**, respectively, related to the change in the fair value of contingent earn-out liability[41](index=41&type=chunk) [Note 4. Goodwill and Intangible Assets](index=16&type=section&id=4.%20Goodwill%20and%20Intangible%20Assets) This note provides a breakdown of goodwill by segment and details the carrying value and amortization of intangible assets Goodwill Carrying Amount by Segment (In millions) | Segment | December 27, 2024 | Impairment of Goodwill | June 27, 2025 | | :------- | :---------------- | :--------------------- | :------------ | | Products | $191.8 | $(77.6) | $114.2 | | Services | $73.5 | $(73.5) | $— | | Total | $265.3 | $(151.1) | $114.2 | - A goodwill impairment charge of **$151.1 million** was recorded in Q2 2025, with **$77.6 million** attributable to Products (Fluid Solutions) and **$73.5 million** to Services, due to a sustained decline in market capitalization and other factors[44](index=44&type=chunk)[45](index=45&type=chunk) - Fair value estimates for impairment tests were derived from an income approach using **Level 3 unobservable inputs**[46](index=46&type=chunk) Intangible Assets, Net (In millions) | Category | June 27, 2025 (Carrying Value) | December 27, 2024 (Carrying Value) | | :------------------------ | :----------------------------- | :--------------------------------- | | Customer relationships | $80.4 | $89.8 | | Recipes | $48.2 | $50.0 | | Intellectual property/know-how | $23.9 | $26.1 | | Tradename | $9.3 | $9.6 | | Standard operating procedures | $5.7 | $5.9 | | Developed technology | $3.1 | $3.5 | | Total | $170.6 | $184.9 | - Amortization expense for intangible assets was **$14.3 million** for the six months ended June 27, 2025[53](index=53&type=chunk) [Note 5. Borrowing Arrangements](index=18&type=section&id=5.%20Borrowing%20Arrangements) This note details the company's debt obligations, including term loans and revolving credit facilities, and compliance with financial covenants - Total bank debt as of June 27, 2025, was **$478.4 million**, net of unamortized debt issuance costs[62](index=62&type=chunk) - The U.S. Term Loan outstanding amount was **$484.5 million** with an interest rate of **7.6%** as of June 27, 2025[59](index=59&type=chunk) - The company has a **$150.0 million** revolving credit facility with **$146.4 million** available as of June 27, 2025, and was in compliance with all financial covenants[56](index=56&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk) - The fair value of long-term debt is based on **Level 2 inputs** and approximates its carrying value[63](index=63&type=chunk) [Note 6. Income Tax](index=18&type=section&id=6.%20Income%20Tax) This note provides information on the company's effective tax rate, provision for income taxes, and the impact of specific tax-related events and regulations Effective Tax Rate and Provision for Income Taxes (Six Months Ended, In millions) | Metric | June 27, 2025 | June 28, 2024 | | :---------------------- | :------------ | :------------ | | Effective Tax Rate | (9.8)% | 56.4% | | Provision for Income Taxes | $14.6 | $18.4 | - The negative effective tax rate is primarily due to pre-tax losses in the current period and the goodwill impairment charge[65](index=65&type=chunk)[137](index=137&type=chunk) - A discrete tax expense of **$3.4 million** was recorded in Q2 2025 due to a change in the permanent reinvestment assertion for a China subsidiary's earnings[139](index=139&type=chunk) - The company maintains a full valuation allowance on its U.S. federal, state, and certain foreign deferred tax assets[66](index=66&type=chunk)[140](index=140&type=chunk) - Pillar Two global minimum tax provisions are not expected to have a significant impact on fiscal year 2025 financial statements[68](index=68&type=chunk) - The company is evaluating the impact of the newly enacted One Big Beautiful Bill Act (OBBBA) on U.S. tax laws, but does not anticipate a material change to its effective tax rate due to existing valuation allowances[69](index=69&type=chunk) [Note 7. Retirement Plans](index=19&type=section&id=7.%20Retirement%20Plans) This note outlines the company's defined benefit pension plans and 401(k) plan, including benefit obligations, plan assets, and employer contributions - Defined benefit pension plans (Cinos Korea, Israel entities) had a benefit obligation of **$14.0 million** and plan assets of **$11.5 million** as of June 27, 2025, resulting in an underfunded balance of **$2.5 million**[71](index=71&type=chunk) Future Estimated Pension Payment Obligations (In millions) | Year | Payment Obligation | | :---------- | :----------------- | | 2025 (rem.) | $1.6 | | 2026 | $1.8 | | 2027 | $2.8 | | 2028 | $1.4 | | 2029 | $1.3 | | Thereafter | $12.3 | | Total | $21.2 | - The company made discretionary employer contributions of **$1.9 million** to its 401(k) Plan for the six months ended June 27, 2025[74](index=74&type=chunk) [Note 8. Commitments and Contingencies](index=20&type=section&id=8.%20Commitments%20and%20Contingencies) This note details the company's purchase commitments and potential liabilities from legal proceedings and indemnification agreements - The company has commitments to purchase inventories totaling approximately **$407.9 million** as of June 27, 2025[154](index=154&type=chunk) - The company is subject to various legal proceedings and claims, but does not believe they will have a material adverse effect on its financial condition, results of operations, or cash flows[76](index=76&type=chunk) - Standard indemnification is provided to customers against certain liabilities, including intellectual property infringement claims, with potential liability generally uncapped[155](index=155&type=chunk) [Note 9. Stockholders' Equity and Noncontrolling Interests](index=20&type=section&id=9.%20Stockholders'%20Equity%20and%20Noncontrolling%20Interests) This note provides information on share repurchase activities and the nature of noncontrolling interests within the company - The company repurchased approximately **0.2 million shares** for an aggregate cost of **$3.4 million** during the six months ended June 27, 2025, under its **$150 million** share repurchase program[78](index=78&type=chunk) - As of June 27, 2025, **1.5 million shares** had been repurchased and are held in treasury stock[79](index=79&type=chunk) - Noncontrolling interests relate to minority ownership in Cinos Korea and Cinos China, which provide outsourced cleaning and recycling services for the semiconductor industry[80](index=80&type=chunk)[81](index=81&type=chunk) [Note 10. Employee Stock Plans](index=21&type=section&id=10.%20Employee%20Stock%20Plans) This note details the company's stock-based compensation expense, RSU and PSU grants, unrecognized compensation costs, and Employee Stock Purchase Plan activities Stock-Based Compensation Expense (Six Months Ended, In millions) | Category | June 27, 2025 | June 28, 2024 | | :------------------------ | :------------ | :------------ | | Cost of revenues | $0.7 | $0.8 | | Research and development | $0.2 | $0.1 | | Sales and marketing | $0.9 | $1.0 | | General and administrative | $8.2 | $6.1 | | Total | $10.0 | $8.0 | - For the six months ended June 27, 2025, **0.8 million RSUs** were granted with a weighted average fair value of **$22.35 per share**, and **98 thousand PSUs** were granted with a fair value of **$2.2 million**[84](index=84&type=chunk)[85](index=85&type=chunk) - As of June 27, 2025, **$36.0 million** of unrecognized stock-based compensation cost remains, to be amortized over a weighted average period of **2.1 years**[86](index=86&type=chunk) - The Employee Stock Purchase Plan (ESPP) issued **72 thousand shares** during the six months ended June 27, 2025, resulting in **$0.4 million** of expense[91](index=91&type=chunk) [Note 11. Revenue Recognition](index=22&type=section&id=11.%20Revenue%20Recognition) This note provides a breakdown of revenues by segment and geography, and identifies significant customers Revenues by Segment (Six Months Ended, In millions) | Segment | June 27, 2025 | June 28, 2024 | Percent Change | | :------- | :------------ | :------------ | :------------- | | Products | $911.9 | $871.2 | 4.7% | | Services | $125.5 | $122.7 | 2.3% | | Total | $1,037.4 | $993.9 | 4.4% | Revenues by Geography (Six Months Ended, In millions) | Geography | June 27, 2025 | June 28, 2024 | Percent Change | | :---------- | :------------ | :------------ | :------------- | | United States | $257.6 | $287.1 | (10.3)% | | International | $779.8 | $706.8 | 10.3% | | Total | $1,037.4 | $993.9 | 4.4% | - Lam Research Corporation and Applied Materials, Inc. accounted for **57.4%** of total revenues for the six months ended June 27, 2025[97](index=97&type=chunk) - Gross accounts receivable from Lam Research Corporation exceeded **10%** of total gross accounts receivable as of June 27, 2025 (**13.9%**)[97](index=97&type=chunk) [Note 12. Leases](index=23&type=section&id=12.%20Leases) This note describes the company's operating lease arrangements for real estate and equipment across various regions - The company leases real estate and equipment under various non-cancelable operating leases in the United States, Asia Pacific, and EMEA[99](index=99&type=chunk) [Note 13. Net Loss Per Share](index=23&type=section&id=13.%20Net%20Loss%20Per%20Share) This note presents the calculation of basic and diluted net loss per share attributable to UCT, including the treatment of potential common shares Net Income (Loss) Per Share Attributable to UCT (Six Months Ended, In millions, except per share) | Metric | June 27, 2025 | June 28, 2024 | | :---------------------------------------- | :------------ | :------------ | | Net income (loss) attributable to UCT | $(167.0) | $9.7 | | Basic weighted average common shares outstanding | 45.2 | 44.7 | | Diluted weighted average common shares outstanding | 45.2 | 45.3 | | Basic EPS | $(3.70) | $0.22 | | Diluted EPS | $(3.70) | $0.21 | - Potential common shares from employee stock plans (**1.3 million** for six months ended June 27, 2025) were excluded from diluted loss per share calculation as their effect would have been antidilutive[100](index=100&type=chunk) [Note 14. Reportable Segments](index=24&type=section&id=14.%20Reportable%20Segments) This note provides financial information for the company's two reportable segments: Products and Services, including operating profit and assets - The company has two reportable segments: Products (design, engineering, manufacturing of production tools, components, modules) and Services (ultra-high purity parts cleaning, recoating, micro-contamination analysis)[103](index=103&type=chunk) Segment Operating Profit (Loss) (Six Months Ended, In millions) | Segment | June 27, 2025 | June 28, 2024 | Percent Change | | :------- | :------------ | :------------ | :------------- | | Products | $(60.7) | $33.5 | (281.2)% | | Services | $(68.2) | $6.7 | (1117.9)% | | Total | $(128.9) | $40.2 | (420.6)% | - Both segments experienced significant operating losses primarily due to the **goodwill impairment** recorded in Q2 2025[126](index=126&type=chunk) Segment Assets (In millions) | Segment | June 27, 2025 | December 27, 2024 | | :------- | :------------ | :---------------- | | Products | $1,468.6 | $1,657.0 | | Services | $277.0 | $262.9 | | Total | $1,745.6 | $1,919.9 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights UCT's role as a critical supplier to the semiconductor industry, anticipating long-term growth from AI/ML and OEM outsourcing. The company reported a net loss for the six months ended June 27, 2025, primarily due to a $151.1 million goodwill impairment. Revenues increased overall, but U.S. revenues declined while international revenues grew. Gross profit decreased due to higher costs, and operating profit was significantly impacted by the impairment and restructuring. Despite these challenges, operating cash flow improved, and the company maintains sufficient liquidity, utilizing receivables factoring and adhering to debt covenants [Overview](index=27&type=section&id=Overview) This section provides an overview of UCT's business, its segments, and the long-term growth drivers in the semiconductor market - UCT is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry[107](index=107&type=chunk) - The company's Products segment manufactures production tools and subassemblies, while the Services segment provides parts cleaning, recoating, and micro-contamination analysis[107](index=107&type=chunk) - Long-term growth in the semiconductor market is expected due to demand from new process architecture, memory devices for cloud, AI, and ML applications, and increased OEM outsourcing[109](index=109&type=chunk) [Critical Accounting Estimates](index=27&type=section&id=Critical%20Accounting%20Estimates) This section discusses the key accounting policies that require significant judgment and estimation, particularly regarding goodwill impairment - Critical accounting policies include revenue recognition, inventory valuation, income taxes, business combinations, and valuation of goodwill, intangible assets, and long-lived assets[110](index=110&type=chunk) - A quantitative goodwill impairment assessment as of June 27, 2025, resulted in **$151.1 million** charges for the Fluid Solutions and Services reporting units[112](index=112&type=chunk) - Fair value estimates for goodwill impairment were derived from an income approach using present value of estimated future cash flows, with significant assumptions including revenue growth rates, operating margins, and discount rates[112](index=112&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, costs, gross profit, operating profit, and tax rates, for the reported periods Key Financial Performance (Six Months Ended, In millions, except percentages) | Metric | June 27, 2025 | June 28, 2024 | Percent Change | | :------------------------- | :------------ | :------------ | :------------- | | Total Revenues | $1,037.4 | $993.9 | 4.4% | | Total Cost of Revenues | $873.9 | $822.8 | 6.2% | | Gross Profit | $163.5 | $171.1 | (4.4)% | | Operating Profit (Loss) | $(128.9) | $40.2 | (420.6)% | | Impairment of Goodwill | $151.1 | $— | N/A | | General and Administrative | $95.4 | $88.3 | 8.0% | | Effective Tax Rate | (9.8)% | 56.4% | N/A | - Products revenues increased by **4.7%** and Services revenues by **2.3%** for the six-month period, driven by increased customer demand and market improvement[116](index=116&type=chunk)[117](index=117&type=chunk) - Gross margin decreased for both Products and Services due to higher employee, restructuring, labor, and compensation-related costs[124](index=124&type=chunk)[125](index=125&type=chunk) - General and administrative expenses increased by **8.0%** due to higher stock-based compensation, a CEO separation payment, and increased restructuring activities[129](index=129&type=chunk)[131](index=131&type=chunk) - Interest income decreased due to lower interest-earning balances, while interest expense decreased due to lower interest rates and reduced debt issuance cost amortization[133](index=133&type=chunk)[134](index=134&type=chunk) - Other income (expense), net, for the six-month period was primarily comprised of unrealized foreign exchange losses of **$3.4 million** offset by government grants received of **$2.2 million**, contrasting with a **$22.8 million** gain from contingent earn-out fair value adjustment in the prior year[136](index=136&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, cash flow activities, debt arrangements, capital expenditures, and the management of foreign cash balances Cash and Cash Equivalents (In millions) | Metric | June 27, 2025 | December 27, 2024 | Increase | | :---------------------- | :------------ | :---------------- | :------- | | Total cash and cash equivalents | $327.4 | $313.9 | $13.5 | - Net cash provided by operating activities increased by **$24.4 million** to **$57.4 million** for the six months ended June 27, 2025, driven by a **$25.9 million** favorable change in net working capital[141](index=141&type=chunk)[147](index=147&type=chunk) - Net cash used in financing activities was **$18.8 million**, a **$31.3 million** increase in cash usage compared to the prior year, primarily due to prior period debt modification proceeds[141](index=141&type=chunk)[147](index=147&type=chunk) - The company sold **$23.0 million** and **$29.4 million** in accounts receivable under factoring arrangements for the three and six months ended June 27, 2025, respectively[35](index=35&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - Total bank debt was **$478.4 million** as of June 27, 2025, with **$146.4 million** available under the U.S. revolving credit facility[152](index=152&type=chunk) - Capital expenditures were **$29.2 million** for the six months ended June 27, 2025, primarily for manufacturing facilities worldwide[153](index=153&type=chunk) - The company has approximately **$227.9 million** cash in foreign subsidiaries, with an intention to reinvest earnings, except for certain Singapore and China subsidiaries. Taxes have been accrued for undistributed earnings of the China subsidiary[147](index=147&type=chunk)[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There were no significant changes to the company's quantitative and qualitative disclosures about market risk during the period covered by this report, referring to the Annual Report on Form 10-K for a comprehensive discussion - No significant changes to quantitative and qualitative disclosures about market risk were reported during the period[156](index=156&type=chunk) - For a complete discussion of market risks, refer to Part II, Item 7A of the Annual Report on Form 10-K for the fiscal year ended December 27, 2024[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed ineffective as of June 27, 2025, due to continuing material weaknesses in internal control over financial reporting. These weaknesses include insufficient processes for risk identification and analysis, lack of competent personnel for control activities, and inadequate monitoring. Specific issues include ineffective IT general controls for certain Fluid Solutions subsidiaries and insufficient segregation of duties in other international operating subsidiaries. Management is actively implementing a remediation plan, including external advisors, new hires, formalized roles, risk assessments, and training, and has made progress, but full remediation is ongoing - Disclosure controls and procedures were not effective as of June 27, 2025, due to material weaknesses in internal control over financial reporting[157](index=157&type=chunk) - Material weaknesses include insufficient processes for identifying and analyzing risks, lack of competent personnel for control activities, and inadequate monitoring of control activities[159](index=159&type=chunk) - Specific material weaknesses: (a) ineffective IT general controls (program change management, user access) for certain Fluid Solutions operating subsidiaries not yet migrated to the primary ERP system; (b) ineffective segregation of duties controls across various business processes, including journal entries, for certain other international operating subsidiaries[160](index=160&type=chunk)[161](index=161&type=chunk) - Management's remediation plan includes engaging external advisors, hiring additional IT, accounting, and finance personnel, formalizing roles, performing entity-wide risk assessments, and developing training programs[163](index=163&type=chunk)[164](index=164&type=chunk) - The Fluid Solutions operating subsidiaries were migrated to the primary ERP system in Q3 2025, and controls over segregation of duties were designed and implemented for other international subsidiaries in Q2 2025[164](index=164&type=chunk) - While progress has been made, the material weaknesses are not yet fully remediated, and management cannot assure the exact timing of completion[164](index=164&type=chunk) [PART II—OTHER INFORMATION](index=37&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity security sales, defaults, mine safety, and other relevant information [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, none of which are currently believed to have a material adverse effect on its financial condition. The SEC investigation related to material weaknesses concluded with no enforcement action. However, a putative securities class action was filed on March 24, 2025, alleging misleading statements about Chinese market demand, which the company believes is meritless and intends to vigorously defend - The SEC investigation regarding material weaknesses and auditor change concluded on March 20, 2025, with no enforcement action recommendation[168](index=168&type=chunk) - A putative securities class action was filed on March 24, 2025, alleging misleading statements about Chinese market demand and artificial inflation of stock price[169](index=169&type=chunk) - The company believes the class action claims are meritless and intends to vigorously defend against them, but cannot reasonably estimate any loss or range of loss[169](index=169&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 27, 2024, during the period covered by this report - No material changes to risk factors were reported during the period[170](index=170&type=chunk) - Refer to Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended December 27, 2024, for previously disclosed risk factors[170](index=170&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not have any unregistered sales of equity securities or use of proceeds from securities during the period. Under its $150.0 million share repurchase program, 181,776 shares were repurchased for $18.64 per share during March 29, 2025 – April 25, 2025, leaving $105.1 million remaining under the program - No unregistered sales of equity securities or use of proceeds from securities were reported[171](index=171&type=chunk)[172](index=172&type=chunk) Equity Securities Repurchases (Six Months Ended June 27, 2025) | Period | Total Number of Shares Purchased | Average Price Per Share | Maximum Dollar Value Remaining Under Program (In millions) | | :------------------------------ | :------------------------------- | :---------------------- | :--------------------------------------------------------- | | March 29, 2025 — April 25, 2025 | 181,776 | $18.64 | $105.1 | - The share repurchase program, approved on October 20, 2022, authorizes up to **$150.0 million** of common stock purchases over three years[173](index=173&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities reported during the period - No defaults upon senior securities were reported[176](index=176&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[177](index=177&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - No other information was reported[178](index=178&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including certifications (302 and 906), Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase), and the Cover Page Interactive Data File - Exhibits include certifications of the Interim CEO and CFO (31.1, 31.2, 32.1) as per Sarbanes-Oxley Act[179](index=179&type=chunk) - Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) and the Cover Page Interactive Data File (104) are filed[179](index=179&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) This section contains the official signatures of the company's interim CEO and CFO, certifying the report's accuracy - The report was signed by Clarence L. Granger, Interim Chief Executive Officer, and Sheri Savage, Chief Financial Officer, on July 29, 2025[182](index=182&type=chunk)

Group 1 - The core issue for Ultra Clean Holdings (NASDAQ: UCTT) is the lagging margins despite recovering sales, which negatively impacts overall profitability [1] - The company has been making diversification efforts to improve its financial performance [1] Group 2 - The investment group "Value In Corporate Events" focuses on identifying opportunities in major corporate events such as IPOs, mergers & acquisitions, and earnings reports [1] - The group provides coverage of approximately 10 major events each month to find the best investment opportunities [1]

Company Performance - Ultra Clean Holdings (UCTT) reported quarterly earnings of $0.27 per share, matching the Zacks Consensus Estimate, but down from $0.32 per share a year ago [1] - The company posted revenues of $518.8 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 3.45% and slightly up from $516.1 million year-over-year [2] - Over the last four quarters, Ultra Clean has surpassed consensus revenue estimates three times [2] Stock Movement and Outlook - Ultra Clean shares have declined approximately 33.4% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The company's earnings outlook is crucial for understanding future stock performance, with current consensus EPS estimates at $0.19 for the upcoming quarter and $0.99 for the current fiscal year [7] Industry Context - The Electronics - Manufacturing Machinery industry, to which Ultra Clean belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable position [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Ultra Clean's stock performance [5]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $518.8 million, slightly up from $518.6 million in the previous quarter [15] - Revenue from products decreased to $454.9 million from $457 million, while services revenue increased from $61.6 million to $63.9 million [15] - Total gross margin for Q2 was 16.3%, down from 16.7% in Q1, with product gross margin at 14.4% compared to 14.9% [15] - Operating expenses decreased to $56.1 million from $59.4 million, reflecting a reduction in operating expenses as a percentage of revenue from 11.5% to 10.8% [16] - Earnings per share for the quarter were $0.27, down from $0.28 in the prior quarter [18] Business Line Data and Key Metrics Changes - The services business showed solid growth with revenues increasing to $63.9 million from $61.6 million [15] - Product gross margin decreased, while services margin slightly increased to 29.9% from 29.8% [15] Market Data and Key Metrics Changes - China revenue increased significantly from $21 million in Q1 to $35 million in Q2, representing about 7% of total revenue [24] - The company expects ongoing revenue from China to stabilize between $40 million to $50 million per quarter [25] Company Strategy and Development Direction - The company is focusing on new product introductions and component qualifications, particularly in the Czech Republic, which is expected to contribute to revenue in Q4 [5] - Efforts to flatten the organization and reduce overall size are aimed at improving efficiency and reducing operating expenses [6] - The integration of acquisitions and implementation of a company-wide SAP business system are ongoing to enhance operational efficiency [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about Q4, anticipating improvements due to cost reductions and new business opportunities [27] - The company remains confident in the long-term fundamentals of the semiconductor industry, particularly with increasing investments in AI [12][13] - There is ongoing uncertainty regarding tariffs, but management has not seen changes in customer demand related to tariffs [11][19] Other Important Information - The company has repurchased 182,000 shares at a cost of $3.4 million as part of its repurchase program [19] - A goodwill impairment charge was noted due to a decline in stock price, but management remains bullish about the underlying businesses [50][51] Q&A Session Summary Question: What contributed to the Q2 revenue exceeding guidance? - Management noted an increase in shipments from the Austin site and a rise in services revenue as key contributors [21][22] Question: Is the expectation for China revenue still positive? - Management confirmed that China revenue is expected to stabilize and improve in the second half of the year [23][25] Question: What is the outlook for Q4 revenue? - Management indicated a cautious optimism for Q4, with potential upward bias due to new business wins and cost reductions [27] Question: Are there concerns about AI regulations affecting revenue from China? - Management expressed confidence in their existing relationships and did not foresee significant risks from potential regulations [30][32] Question: How does the company view the inventory situation among customers? - Management indicated that customers are working down their inventory, which may lead to increased orders in the near future [60] Question: What is the status of tariff reimbursements from customers? - Management clarified that while there are delays in payments, they are confident that customers will eventually pay the outstanding amounts [44][48] Question: What drove the goodwill impairment charge? - The charge was triggered by a decline in stock price relative to the carrying value of goodwill, but management remains optimistic about future performance [50][51]

SUMMER2025 INVESTOR PRESENTATION Safe Harbor This presentation contains, or may be deemed to contain, "forward- looking statements" (as defined in the US Private Securities Litigation Reform Act of 1995) which reflect our current views with respect to future events and financial performance. We use words such as "anticipates," "projection," "outlook," "forecast," "believes," "plan," "expect," "future," "intends," "may," "will," "estimates," "see," "predicts," "should" and similar expressions to identify the ...

[Executive Summary & Financial Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Financial%20Highlights) Ultra Clean Holdings reported Q2 2025 GAAP net loss due to goodwill impairment, while non-GAAP results showed a slight decline, with Q3 2025 outlook projecting stable revenue [Second Quarter 2025 Performance Overview](index=1&type=section&id=1.1%20Second%20Quarter%202025%20Performance%20Overview) Ultra Clean Holdings reported its Q2 2025 financial results, reflecting a dynamic environment, experiencing a significant GAAP net loss due to a goodwill impairment, while non-GAAP results showed a slight decline in net income compared to the prior quarter [CEO Commentary](index=1&type=section&id=1.1.1%20CEO%20Commentary) CEO commentary highlights a dynamic environment, stable near-term revenue, and confidence in outperforming semiconductor industry growth - UCT's second quarter results reflect the impact of a highly dynamic environment across a diverse customer base and product portfolio[2](index=2&type=chunk) - Expect near-term revenue to remain relatively stable, with benefits from operating expense reductions anticipated later this year[2](index=2&type=chunk) - Confident in ability to outperform broader semiconductor industry growth by navigating evolving conditions, expanding addressable market, gaining share, and delivering innovative products[2](index=2&type=chunk) [GAAP Financial Results](index=1&type=section&id=1.1.2%20GAAP%20Financial%20Results) Q2 2025 GAAP results show a significant net loss of $(162.0) million, primarily due to a $151.1 million goodwill impairment charge Second Quarter 2025 GAAP Financial Highlights | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Change (QoQ) | | :--------------------- | :----------------- | :----------------- | :----------- | | Total Revenue | $518.8 | $518.6 | +$0.2 | | Products Revenue | $454.9 | N/A | N/A | | Services Revenue | $63.9 | N/A | N/A | | Gross Margin | 15.3% | 16.2% | -0.9 pp | | Operating Margin | (27.3)% | 2.5% | -29.8 pp | | Net Loss | $(162.0) | $(5.0) | $(157.0) | | Diluted EPS | $(3.58) | $(0.11) | $(3.47) | - Q2 2025 GAAP results include a pre-tax noncash charge of **$151.1 million** from goodwill impairments[3](index=3&type=chunk) [Non-GAAP Financial Results](index=1&type=section&id=1.1.3%20Non-GAAP%20Financial%20Results) Q2 2025 Non-GAAP results indicate a net income of $12.1 million, with a slight quarter-over-quarter decline in gross and operating margins Second Quarter 2025 Non-GAAP Financial Highlights | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Change (QoQ) | | :--------------------- | :----------------- | :----------------- | :----------- | | Gross Margin | 16.3% | 16.7% | -0.4 pp | | Operating Margin | 5.5% | 5.2% | +0.3 pp | | Net Income | $12.1 | $12.7 | $(0.6) | | Diluted EPS | $0.27 | $0.28 | $(0.01) | [Third Quarter 2025 Outlook](index=1&type=section&id=1.2%20Third%20Quarter%202025%20Outlook) For Q3 2025, the company projects revenue between $480 million and $530 million, with GAAP diluted net loss per share expected between $(0.09) and $(0.29), and non-GAAP diluted net income per share between $0.14 and $0.34 Third Quarter 2025 Financial Outlook | Metric | Q3 2025 Outlook (Range) | | :----------------------------- | :---------------------- | | Revenue | $480M - $530M | | GAAP Diluted Net Loss Per Share| $(0.09) - $(0.29) | | Non-GAAP Diluted Net Income Per Share | $0.14 - $0.34 | [Company Information & Disclosures](index=2&type=section&id=2.%20Company%20Information%20%26%20Disclosures) This section provides an overview of Ultra Clean Holdings, its use of non-GAAP measures, and a safe harbor statement regarding forward-looking information [About Ultra Clean Holdings, Inc.](index=2&type=section&id=2.1%20About%20Ultra%20Clean%20Holdings%2C%20Inc.) Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily serving the semiconductor industry - Leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry[7](index=7&type=chunk) - Products division offers integrated outsourced solutions for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping, and high-precision manufacturing[7](index=7&type=chunk) - Services Division provides tool chamber parts cleaning and coating, as well as micro-contamination analytical services[7](index=7&type=chunk) [Use of Non-GAAP Measures](index=2&type=section&id=2.2%20Use%20of%20Non-GAAP%20Measures) Management utilizes non-GAAP measures (gross margin, operating margin, net income) to assess core business performance and trends, believing they offer investors a clearer view from management's perspective, though they are not a substitute for GAAP results - Management uses non-GAAP gross margin, operating margin, and net income to evaluate operating and financial results, believing it's useful for analyzing core business, trends, and comparing performance[8](index=8&type=chunk) - Non-GAAP results should not be considered a substitute for GAAP results[8](index=8&type=chunk) - Non-GAAP net income is defined as net income (loss) before amortization of intangible assets, stock-based compensation, restructuring charges, acquisition activity costs, fair value adjustments, debt refinancing costs, impairment of goodwill, legal-related costs, and their tax effects[9](index=9&type=chunk) - Reconciliation of non-GAAP net income per diluted share guidance for the subsequent quarter is not available due to unpredictable fluctuations in geographic earnings mix impacting the tax rate[10](index=10&type=chunk) [Safe Harbor Statement](index=2&type=section&id=2.3%20Safe%20Harbor%20Statement) The report includes forward-looking statements, identified by specific terminology, which involve risks and uncertainties, where actual results may differ materially from predictions, and the company undertakes no obligation to update these statements unless legally required - The report contains 'forward-looking statements' reflecting current views on future events and financial performance, identified by words like 'anticipates,' 'outlook,' 'expects,' etc[11](index=11&type=chunk) - All forward-looking statements address matters that involve risks and uncertainties, and actual results may differ materially from predictions due to factors identified in SEC filings (Form 10-K)[11](index=11&type=chunk) - Ultra Clean Holdings, Inc. undertakes no obligation to publicly update or review any forward-looking statements unless required by law[11](index=11&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=3&type=section&id=3.%20Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) This section presents the company's GAAP condensed consolidated statements of operations, balance sheets, and cash flows [Statements of Operations](index=3&type=section&id=3.1%20Statements%20of%20Operations) For the three months ended June 27, 2025, total revenues were $518.8 million, resulting in a net loss attributable to UCT of $(162.0) million, primarily due to a significant goodwill impairment charge, and for the six months, total revenues were $1,037.4 million with a net loss of $(167.0) million Condensed Consolidated Statements of Operations (Unaudited; in millions, except per share data) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues: | | | | | | Products | $454.9 | $452.7 | $911.9 | $871.2 | | Services | $63.9 | $63.4 | $125.5 | $122.7 | | **Total revenues** | **$518.8** | **$516.1** | **$1,037.4** | **$993.9** | | Cost of revenues: | | | | | | Products | $393.3 | $383.9 | $783.5 | $738.0 | | Services | $46.0 | $43.7 | $90.4 | $84.8 | | **Total cost revenues** | **$439.3** | **$427.6** | **$873.9** | **$822.8** | | **Gross margin** | **$79.5** | **$88.5** | **$163.5** | **$171.1** | | Operating expenses: | | | | | | Research and development | $7.8 | $7.1 | $15.4 | $14.1 | | Sales and marketing | $15.5 | $14.8 | $30.5 | $28.5 | | General and administrative | $46.9 | $43.7 | $95.4 | $88.3 | | Impairment of goodwill | $151.1 | — | $151.1 | — | | **Total operating expenses** | **$221.3** | **$65.6** | **$292.4** | **$130.9** | | **Income (loss) from operations** | **$(141.8)** | **$22.9** | **$(128.9)** | **$40.2** | | Interest income | $0.8 | $1.4 | $1.9 | $2.8 | | Interest expense | $(10.1) | $(11.7) | $(20.0) | $(23.9) | | Other income (expense), net | $(2.2) | $17.4 | $(1.3) | $13.5 | | **Income (loss) before provision for income taxes** | **$(153.3)** | **$30.0** | **$(148.3)** | **$32.6** | | Provision for income taxes | $7.2 | $8.5 | $14.6 | $18.4 | | **Net income (loss)** | **$(160.5)** | **$21.5** | **$(162.9)** | **$14.2** | | Less: Net income attributable to noncontrolling interests | $1.5 | $2.4 | $4.1 | $4.5 | | **Net income (loss) attributable to UCT** | **$(162.0)** | **$19.1** | **$(167.0)** | **$9.7** | | Net income (loss) per share attributable to UCT common stockholders: | | | | | | Basic | $(3.58) | $0.43 | $(3.70) | $0.22 | | Diluted | $(3.58) | $0.42 | $(3.70) | $0.21 | | Shares used in computing net income (loss) per share: | | | | | | Basic | 45.2 | 44.9 | 45.2 | 44.7 | | Diluted | 45.2 | 45.4 | 45.2 | 45.3 | [Balance Sheets](index=4&type=section&id=3.2%20Balance%20Sheets) As of June 27, 2025, total assets decreased to $1,745.6 million from $1,919.9 million at December 27, 2024, primarily driven by a reduction in goodwill and accounts receivable, while total liabilities also decreased from $984.1 million to $955.8 million Condensed Consolidated Balance Sheets (Unaudited; in millions) | ASSETS | June 27, 2025 | December 27, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Current assets: | | | | Cash and cash equivalents | $327.4 | $313.9 | | Accounts receivable, net | $206.7 | $241.1 | | Inventories | $375.6 | $381.0 | | Prepaid expenses and other current assets | $46.1 | $34.1 | | **Total current assets** | **$955.8** | **$970.1** | | Property, plant and equipment, net | $336.7 | $325.9 | | Goodwill | $114.2 | $265.3 | | Intangible assets, net | $170.6 | $184.9 | | Deferred tax assets, net | $2.8 | $3.1 | | Operating lease right-of-use assets | $153.9 | $161.0 | | Other non-current assets | $11.6 | $9.6 | | **Total assets** | **$1,745.6** | **$1,919.9** | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current liabilities: | | | | Bank borrowings | $10.0 | $16.0 | | Accounts payable | $202.2 | $212.5 | | Accrued compensation and related benefits | $47.6 | $50.1 | | Operating lease liabilities | $18.6 | $18.6 | | Other current liabilities | $33.6 | $38.4 | | **Total current liabilities** | **$312.0** | **$335.6** | | Bank borrowings, net of current portion | $468.4 | $476.5 | | Deferred tax liabilities | $16.2 | $16.1 | | Operating lease liabilities | $151.4 | $149.2 | | Other liabilities | $7.8 | $6.7 | | **Total liabilities** | **$955.8** | **$984.1** | | Equity: | | | | Total UCT stockholders' equity | $719.4 | $873.6 | | Noncontrolling interests | $70.4 | $62.2 | | **Total equity** | **$789.8** | **$935.8** | | **Total liabilities and equity** | **$1,745.6** | **$1,919.9** | [Statements of Cash Flows](index=5&type=section&id=3.3%20Statements%20of%20Cash%20Flows) For the six months ended June 27, 2025, net cash provided by operating activities increased to $57.4 million from $33.0 million in the prior year, while net cash used in investing activities remained stable at $(29.1) million, and net cash used in financing activities was $(18.8) million, a shift from $12.5 million provided in the prior year Condensed Consolidated Statements of Cash Flows (Unaudited; in millions) | Cash Flows From | Six Months Ended June 27, 2025 | Six Months Ended June 28, 2024 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(162.9) | $14.2 | | **Net cash provided by operating activities** | **$57.4** | **$33.0** | | **Net cash used in investing activities** | **$(29.1)** | **$(30.9)** | | **Net cash provided by (used in) financing activities** | **$(18.8)** | **$12.5** | | Effect of exchange rate changes on cash and cash equivalents | $4.0 | $(2.1) | | Net increase in cash and cash equivalents | $13.5 | $12.5 | | Cash and cash equivalents at beginning of period | $313.9 | $307.0 | | Cash and cash equivalents at end of period | $327.4 | $319.5 | [Non-GAAP Reconciliations](index=7&type=section&id=4.%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations between GAAP and Non-GAAP financial measures, including segment performance, net income, and effective tax rates [Reportable Segments Reconciliation](index=7&type=section&id=4.1%20Reportable%20Segments%20Reconciliation) For Q2 2025, the Products segment reported GAAP gross margin of 13.5% and Non-GAAP gross margin of 14.4%, while the Services segment showed GAAP gross margin of 28.0% and Non-GAAP gross margin of 29.9%, and the consolidated Non-GAAP operating margin was 5.5%, significantly higher than the GAAP operating margin of (27.3)% due to adjustments, primarily goodwill impairment Q2 2025 GAAP to Non-GAAP Gross Profit and Margin by Segment (Unaudited; in millions) | Metric | Products (GAAP) | Services (GAAP) | Consolidated (GAAP) | Products (Non-GAAP) | Services (Non-GAAP) | Consolidated (Non-GAAP) | | :----------------- | :-------------- | :-------------- | :------------------ | :------------------ | :------------------ | :---------------------- | | Revenues | $454.9 | $63.9 | $518.8 | $454.9 | $63.9 | $518.8 | | Gross profit | $61.6 | $17.9 | $79.5 | $65.5 | $19.1 | $84.6 | | Gross margin | 13.5% | 28.0% | 15.3% | 14.4% | 29.9% | 16.3% | Q2 2025 GAAP to Non-GAAP Income from Operations and Operating Margin by Segment (Unaudited; in millions) | Metric | Products (GAAP) | Services (GAAP) | Consolidated (GAAP) | Products (Non-GAAP) | Services (Non-GAAP) | Consolidated (Non-GAAP) | | :----------------- | :-------------- | :-------------- | :------------------ | :------------------ | :------------------ | :---------------------- | | Income from operations | $(70.9) | $(70.9) | $(141.8) | $21.8 | $6.7 | $28.5 | | Operating margin | (15.6)% | (110.9)% | (27.3)% | 4.8% | 10.5% | 5.5% | - Key adjustments for reconciliation include amortization of intangible assets, stock-based compensation expense, restructuring charges, legal-related costs, and impairment of goodwill[22](index=22&type=chunk) [GAAP to Non-GAAP Adjusted Results Reconciliation](index=9&type=section&id=4.2%20GAAP%20to%20Non-GAAP%20Adjusted%20Results%20Reconciliation) The reconciliation for Q2 2025 shows a significant adjustment from a GAAP net loss of $(162.0) million to a Non-GAAP net income of $12.1 million, primarily due to the $151.1 million goodwill impairment charge and other non-cash or non-recurring items, which also translated to a GAAP diluted EPS of $(3.58) versus a Non-GAAP diluted EPS of $0.27 GAAP to Non-GAAP Net Income (Loss) Attributable to UCT (Unaudited; in millions) | Metric | June 27, 2025 | June 28, 2024 | March 28, 2025 | | :----------------------------------------- | :------------ | :------------ | :------------- | | Reported net income (loss) attributable to UCT on a GAAP basis | $(162.0) | $19.1 | $(5.0) | | Amortization of intangible assets | $7.0 | $7.6 | $7.3 | | Stock-based compensation expense | $7.1 | $4.7 | $2.6 | | Restructuring charges | $4.8 | $0.5 | $3.6 | | Fair value related adjustments | — | $(24.1) | $(0.1) | | Debt refinancing costs expensed | — | $3.6 | — | | Legal-related costs | $0.3 | — | $0.7 | | Impairment of goodwill | $151.1 | — | — | | Income tax effect of valuation allowance | $37.9 | $1.1 | $6.4 | | Income tax effect of non-GAAP adjustments | $(34.1) | $1.9 | $(2.8) | | **Non-GAAP net income attributable to UCT**| **$12.1** | **$14.4** | **$12.7** | GAAP to Non-GAAP Diluted Net Income (Loss) Per Share | Metric | June 27, 2025 | June 28, 2024 | March 28, 2025 | | :----------------------------------------- | :------------ | :------------ | :------------- | | Diluted net income (loss) on a GAAP basis | $(3.58) | $0.42 | $(0.11) | | Amortization of intangible assets | $0.15 | $0.17 | $0.16 | | Stock-based compensation expense | $0.16 | $0.10 | $0.06 | | Restructuring charges | $0.10 | $0.01 | $0.08 | | Fair value related adjustments | $0.00 | $(0.53) | $0.00 | | Debt refinancing costs expensed | — | $0.08 | — | | Legal-related costs | $0.01 | — | $0.01 | | Impairment of goodwill | $3.34 | — | — | | Income tax effect of non-GAAP adjustments | $(0.75) | $0.04 | $(0.06) | | Income tax effect of valuation allowance | $0.84 | $0.03 | $0.14 | | **Non-GAAP net earnings** | **$0.27** | **$0.32** | **$0.28** | - The primary driver for the difference between GAAP and Non-GAAP results in Q2 2025 was the **$151.1 million** impairment of goodwill[23](index=23&type=chunk)[24](index=24&type=chunk) [GAAP to Non-GAAP Effective Income Tax Rate Reconciliation](index=10&type=section&id=4.3%20GAAP%20to%20Non-GAAP%20Effective%20Income%20Tax%20Rate%20Reconciliation) For Q2 2025, the GAAP effective income tax rate was (4.7)%, while the Non-GAAP effective income tax rate was 20.0%, with this significant difference primarily due to the tax effects of non-GAAP adjustments and the impact of valuation allowances on U.S. losses GAAP to Non-GAAP Effective Income Tax Rate Reconciliation | Metric | June 27, 2025 | June 28, 2024 | March 28, 2025 | | :----------------------------------------- | :------------ | :------------ | :------------- | | Provision for income taxes on a GAAP basis | $7.2 | $8.5 | $7.4 | | Income tax effect of non-GAAP adjustments | $34.1 | $(1.9) | $2.8 | | Income tax effect of valuation allowance | $(37.9) | $(1.1) | $(6.4) | | **Non-GAAP provision for income taxes** | **$3.4** | **$5.5** | **$3.8** | | Income (loss) before income taxes on a GAAP basis | $(153.3) | $30.0 | $4.9 | | Non-GAAP income before income taxes | $17.0 | $22.3 | $19.0 | | **Effective income tax rate on a GAAP basis** | **(4.7)%** | **28.3%** | **151.0%** | | **Non-GAAP effective income tax rate** | **20.0%** | **24.7%** | **20.0%** | - The Company's GAAP tax expense is generally higher than non-GAAP tax expense due to losses in the U.S. with full federal and state valuation allowances, and the non-GAAP tax rate considers the tax implications as if there was no federal or state valuation allowance position in effect[26](index=26&type=chunk)

Core Viewpoint - Ultra Clean Holdings, Inc. reported its financial results for Q2 2025, highlighting a stable revenue outlook despite a challenging environment, with ongoing efforts to reduce operating expenses and a focus on outperforming the semiconductor industry growth [2][3]. Financial Performance - Total revenue for Q2 2025 was $518.8 million, with products contributing $454.9 million and services adding $63.9 million. This represents a slight increase from $518.6 million in the previous quarter [3]. - The gross margin was 15.3%, down from 16.2% in the prior quarter, while the operating margin was (27.3)%, compared to 2.5% previously. The net loss was $(162.0) million or $(3.58) per diluted share, a significant decline from a net loss of $(5.0) million or $(0.11) per diluted share in the prior quarter [3]. - On a non-GAAP basis, the gross margin was 16.3%, operating margin was 5.5%, and net income was $12.1 million or $0.27 per diluted share, compared to a gross margin of 16.7%, operating margin of 5.2%, and net income of $12.7 million or $0.28 per diluted share in the previous quarter [4]. Outlook - For Q3 2025, the company expects revenue to be in the range of $480 million to $530 million. The GAAP diluted net loss per share is anticipated to be between $(0.09) and $(0.29), while the non-GAAP diluted net income per share is projected to be between $0.14 and $0.34 [5]. Company Overview - Ultra Clean Holdings, Inc. specializes in developing and supplying critical subsystems, components, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry. The company offers integrated outsourced solutions for major subassemblies and high-precision manufacturing [7].