Ultra Clean Reports Second Quarter 2025 Financial Results

 ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share data)

Three Months Ended

Six Months Ended

June 27, 2025

June 28, 2024

June 27, 2025

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

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions)

June 27, 2025

December 27, 2024

ASSETS

Current assets:

Cash and cash equivalents

$          327.4

$             313.9

Accounts receivable, net of allowance for credit losses

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:

UCT stockholders' equity:

Common stock

0.1

0.1

Additional paid-in capital

568.8

558.4

Common shares held in treasury

(48.4)

(45.0)

Retained earnings

203.4

370.4

Accumulated other comprehensive loss

(4.5)

(10.3)

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

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

Six Months Ended

June 27,
2025

June 28,
2024

Cash flows from operating activities:

Net income (loss)

$           (162.9)

$              14.2

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

23.4

22.7

Amortization of intangible assets

14.3

15.3

Stock-based compensation

10.0

8.0

Amortization of debt issuance costs

1.1

1.9

Impairment of goodwill

151.1

—

Change in the fair value of financial instruments

(0.1)

(22.6)

Deferred income taxes

0.6

(0.5)

Loss on sale of property, plant and equipment

0.1

0.1

Changes in assets and liabilities:

Accounts receivable

34.3

(26.1)

Inventories

5.4

(25.4)

Prepaid expenses and other current assets

(7.8)

(1.5)

Other non-current assets

(0.5)

0.7

Accounts payable

(11.9)

41.4

Accrued compensation and related benefits

(2.6)

1.5

Income taxes payable

(4.2)

1.4

Operating lease assets and liabilities

11.1

0.5

Other liabilities

(4.0)

1.4

Net cash provided by operating activities

57.4

33.0

Cash flows from investing activities:

Purchases of property, plant and equipment

(29.2)

(31.0)

Proceeds from sale of equipment

0.1

0.1

Net cash used in investing activities

(29.1)

(30.9)

Cash flows from financing activities:

Proceeds from issuance of common stock

1.1

0.9

Principal payments on bank borrowings

(15.1)

(7.1)

Repurchase of shares

(3.4)

—

Employees' taxes paid upon vesting of restricted stock units

(0.7)

(2.2)

Payments of dividends to a joint venture shareholder

(0.1)

(0.1)

Proceeds from bank borrowings

—

67.7

Extinguishment of bank borrowings

—

(44.2)

Payment of debt issuance costs

—

(2.5)

Other financing activities

(0.6)

—

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

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in millions)

GAAP

Non-GAAP

Three Months Ended

Three Months Ended

June 27, 2025

June 27, 2025

Products

Services

Consolidated

Products

Services

Consolidated

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 %

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 %

Three Months Ended

June 27, 2025

Products

Services

Consolidated

Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in millions)

Reported gross profit on a GAAP basis

$        61.6

$        17.9

$        79.5

Amortization of intangible assets (1)

1.3

1.0

2.3

Stock-based compensation expense (2)

0.4

—

0.4

Restructuring charges (3)

2.2

0.2

2.4

Non-GAAP gross profit

$        65.5

$        19.1

$        84.6

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis

13.5 %

28.0 %

15.3 %

Amortization of intangible assets (1)

0.3 %

1.6 %

0.4 %

Stock-based compensation expense (2)

0.1 %

— %

0.1 %

Restructuring charges (3)

0.5 %

0.3 %

0.5 %

Non-GAAP gross margin

14.4 %

29.9 %

16.3 %

Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in millions)

Reported income from operations on a GAAP basis

$      (70.9)

$       (70.9)

$     (141.8)

Amortization of intangible assets (1)

4.1

2.9

7.0

Stock-based compensation expense (2)

6.5

0.6

7.1

Restructuring charges (3)

4.2

0.6

4.8

Legal-related costs (4)

0.3

—

0.3

Impairment of goodwill (5)

77.6

73.5

151.1

Non-GAAP income from operations

$        21.8

$          6.7

$        28.5

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis

(15.6) %

(110.9) %

(27.3) %

Amortization of intangible assets (1)

0.9 %

4.6 %

1.3 %

Stock-based compensation expense (2)

1.4 %

0.9 %

1.4 %

Restructuring charges (3)

0.9 %

0.9 %

0.9 %

Legal-related costs (4)

0.1 %

— %

0.1 %

Impairment of goodwill (5)

17.1 %

115.0 %

29.1 %

Non-GAAP operating margin

4.8 %

10.5 %

5.5 %

1    Amortization of intangible assets related to the Company's business acquisitions

2    Represents compensation expense for stock granted to employees and directors

3    Represents costs associated with employee separation, severance, retention, and facility related closures expenses

4    Represents estimated costs related to certain legal proceedings and a cybersecurity incident

5    Represents non-cash charges related to the impairment of goodwill

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Three Months Ended

June 27, 2025

June 28, 2024

March 28, 2025

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (in millions)

Reported net income (loss) attributable to UCT on a GAAP basis

$   (162.0)

$      19.1

$       (5.0)

Amortization of intangible assets (1)

7.0

7.6

7.3

Stock-based compensation expense (2)

7.1

4.7

2.6

Restructuring charges (3)

4.8

0.5

3.6

Fair value related adjustments (4)

—

(24.1)

(0.1)

Debt refinancing costs expensed (5)

—

3.6

—

Legal-related costs (6)

0.3

—

0.7

Impairment of goodwill (7)

151.1

—

—

Income tax effect of non-GAAP adjustments (8)

(34.1)

1.9

(2.8)

Income tax effect of valuation allowance (9)

37.9

1.1

6.4

Non-GAAP net income attributable to UCT

$      12.1

$      14.4

$      12.7

Reconciliation of GAAP Income (loss) from operations to Non-GAAP Income from operations (in millions)

Reported income (loss) from operations on a GAAP basis

$   (141.8)

$      22.9

$      12.9

Amortization of intangible assets (1)

7.0

7.6

7.3

Stock-based compensation expense (2)

7.1

4.7

2.6

Restructuring charges (3)

4.8

0.5

3.6

Legal-related costs (6)

0.3

—

0.7

Impairment of goodwill (7)

$    151.1

$         —

$         —

Non-GAAP income from operations

$      28.5

$      35.7

$      27.1

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis

(27.3) %

4.4 %

2.5 %

Amortization of intangible assets (1)

1.3 %

1.5 %

1.4 %

Stock-based compensation expense (2)

1.4 %

0.9 %

0.5 %

Restructuring charges (3)

0.9 %

0.1 %

0.7 %

Legal-related costs (6)

0.1 %

— %

0.1 %

Impairment of goodwill (7)

29.1 %

— %

— %

Non-GAAP operating margin

5.5 %

6.9 %

5.2 %

Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in millions)

Reported gross profit on a GAAP basis

$      79.5

$      88.5

$      84.0

Amortization of intangible assets (1)

2.3

2.3

2.3

Stock-based compensation expense (2)

0.4

0.5

0.2

Restructuring charges (3)

2.4

0.2

—

Non-GAAP gross profit

$      84.6

$      91.5

$      86.5

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis

15.3 %

17.1 %

16.2 %

Amortization of intangible assets (1)

0.4 %

0.5 %

0.5 %

Stock-based compensation expense (2)

0.1 %

0.1 %

— %

Restructuring charges (3)

0.5 %

0.0 %

— %

Non-GAAP gross margin

16.3 %

17.7 %

16.7 %

Reconciliation of GAAP Other income (expense), net to Non-GAAP Other income (expense), net (in millions)

Reported Other income (expense), net on a GAAP basis

$       (2.2)

$      17.4

$        0.8

Fair value related adjustments (4)

—

(24.1)

(0.1)

Debt refinancing costs expensed (5)

—

3.6

—

Non-GAAP Other income (expense), net

$       (2.2)

$       (3.1)

$        0.7

Reconciliation of GAAP Income (Loss) Per Diluted Share to Non-GAAP Earnings Per Diluted Share

Diluted net income (loss) on a GAAP basis

$     (3.58)

$      0.42

$     (0.11)

Amortization of intangible assets (1)

0.15

0.17

0.16

Stock-based compensation expense (2)

0.16

0.10

0.06

Restructuring charges (3)

0.10

0.01

0.08

Fair value related adjustments (4)

0.00

(0.53)

0.00

Debt refinancing costs expensed (5)

—

0.08

—

Legal-related costs (6)

0.01

—

0.01

Impairment of goodwill (7)

3.34

—

Income tax effect of non-GAAP adjustments (8)

(0.75)

0.04

(0.06)

Income tax effect of valuation allowance (9)

0.84

0.03

0.14

Non-GAAP net earnings

$      0.27

$      0.32

$      0.28

Weighted average number of diluted shares (in millions) on a non-GAAP basis

45.3

45.4

45.4

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE

Three Months Ended

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 (8)

34.1

(1.9)

2.8

Income tax effect of valuation allowance (9)

(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

Amortization of intangible assets (1)

7.0

7.6

7.3

Stock-based compensation expense (2)

7.1

4.7

2.6

Restructuring charges (3)

4.8

0.5

3.6

Fair value related adjustments (4)

—

(24.1)

(0.1)

Debt refinancing costs expensed (5)

—

3.6

—

Legal-related costs (6)

0.3

—

0.7

Impairment of goodwill (7)

151.1

—

—

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 %

1    Amortization of intangible assets related to the Company's business acquisitions

2    Represents compensation expense for stock granted to employees and directors

3    Represents costs associated with employee separation, severance, retention, and facility related closures expenses

4    Fair value adjustments related to contingent consideration

5    Represents the third party transaction costs related to the amended credit agreement and the previously capitalized costs of extinguished debt

6    Represents estimated costs related to certain legal proceedings and a cybersecurity incident

7    Represents non-cash charges related to the impairment of goodwill

8    Tax effect of items (1) through (7) above based on the non-GAAP tax rate

9    The Company's GAAP tax expense is generally higher than the Company's non-GAAP tax expense, primarily due to losses in the U.S. with full federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense considers the tax implications as if there was no federal or state valuation allowance position in effect