Ultra Clean (US:UCTT)2025-04-29 20:06Revenue Performance - For the three months ended March 28, 2025, total revenues increased by 8.6% to $518.6 million compared to $477.7 million for the same period in 2024[100]. - Products segment revenues rose by 9.2% to $457.0 million, driven by increased customer demand and market improvement in the semiconductor industry[100]. - International revenues increased by 18.4% to $398.8 million, while U.S. revenues decreased by 15.0% to $119.8 million, reflecting a shift in product revenues to international markets[102]. Cost and Profitability - Cost of revenues increased by 10.0% to $434.6 million, with Products cost rising by 10.3% and Services cost increasing by 7.8%[104]. - Gross profit for the three months ended March 28, 2025, was $84.0 million, a 1.7% increase from $82.6 million in the prior year, with a total gross margin of 16.2%[106]. - Operating profit decreased by 25.4% to $12.9 million, with an operating margin of 2.5%, down from 3.6% in the prior year[109]. Expenses - Research and development expenses increased by 8.6% to $7.6 million, maintaining 1.5% of total revenues[112]. - General and administrative expenses rose by 9.0% to $48.6 million, primarily due to non-recurring separation costs related to the resignation of the former CEO[114]. Market Outlook - The semiconductor market is expected to continue growing due to multi-year industry demand driven by advancements in cloud, AI, and ML applications[96]. - The Services segment is benefiting from increased reliance on precision cleaning and coating by device manufacturers[96]. Interest and Other Income - Interest income for the three months ended March 28, 2025, was $1.1 million, a decrease of 21.4% compared to $1.4 million in the same period in 2024[115]. - Interest expense decreased to $9.9 million, down 18.9% from $12.2 million year-over-year, primarily due to lower interest rates[116]. - Other income (expense), net, increased by $4.6 million to $0.8 million, compared to a loss of $3.8 million in the prior year, driven by favorable foreign exchange transactions[116]. Tax and Cash Flow - Provision for income taxes was $7.4 million, a decrease of 25.3% from $9.9 million in the prior year, with an effective tax rate of 151.0% compared to 366.7%[118]. - Cash and cash equivalents increased to $317.6 million as of March 28, 2025, from $313.9 million at the end of December 2024, reflecting a net increase of $3.7 million[120]. - Operating activities generated cash of $28.2 million, a significant increase of $18.4 million compared to $9.8 million in the same period last year[120]. Capital Expenditures and Debt - Capital expenditures were $12.4 million for the three months ended March 28, 2025, primarily for investments in manufacturing facilities[131]. - The company had total bank debt of $480.9 million as of March 28, 2025, with a weighted average interest rate of 7.6%[126]. - As of March 28, 2025, the company had $146.4 million available under its revolving credit facility, in compliance with financial covenants[127]. - The company anticipates that existing cash and cash equivalents, along with operating cash flow, will be sufficient to meet liquidity needs for at least the next twelve months[123]. Management and Internal Controls - Management is in the process of designing and implementing change management and user access review controls for certain Fluid Solutions operating subsidiaries not yet migrated to the primary ERP system[143]. - Management continues to design and implement user access controls to ensure appropriate segregation of duties for financial applications and data[143]. - Controls over segregation of duties assessment are being established to identify key conflicts and maintain effective segregation of duties for international operating subsidiaries in the Products segment[143]. - Management believes that the actions taken will remediate the material weaknesses, but there is no assurance on the exact timing of completion[143]. - There were no changes in internal control over financial reporting during the quarter ended March 28, 2025, that materially affected internal controls[144].