Ultra Clean Reports Third Quarter 2025 Financial Results

 ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share data)

Three Months Ended

Nine Months Ended

September 26,
2025

September 27,
2024

September 26,
2025

September 27,
2024

Revenues:

Products

$            445.0

$            479.0

$         1,356.9

$          1,350.2

Services

65.0

61.4

190.4

184.1

Total revenues

510.0

540.4

1,547.3

1,534.3

Cost of revenues:

Products

380.4

403.3

1,163.9

1,141.2

Services

47.4

43.7

137.8

128.6

Total cost revenues

427.8

447.0

1,301.7

1,269.8

Gross margin

82.2

93.4

245.6

264.5

Operating expenses:

Research and development

7.8

7.1

23.2

21.2

Sales and marketing

15.1

14.4

45.5

42.9

General and administrative

48.7

46.7

144.1

135.1

Impairment of goodwill

—

—

151.1

—

Total operating expenses

71.6

68.2

363.9

199.2

Income (loss) from operations

10.6

25.2

(118.3)

65.3

Interest income

1.1

1.1

3.0

3.9

Interest expense

(9.9)

(12.0)

(29.9)

(35.8)

Other income (expense), net

(1.2)

(4.1)

(2.5)

9.3

Income (loss) before provision for income taxes

0.6

10.2

(147.7)

42.7

Provision for income taxes

8.7

9.9

23.3

28.2

Net income (loss)

(8.1)

0.3

(171.0)

14.5

Less: Net income attributable to noncontrolling interests

2.8

2.6

6.9

7.1

Net income (loss) attributable to UCT

$            (10.9)

$              (2.3)

$          (177.9)

$                7.4

Net income (loss) per share attributable to UCT common stockholders:

Basic

$            (0.24)

$            (0.05)

$            (3.93)

$              0.16

Diluted

$            (0.24)

$            (0.05)

$            (3.93)

$              0.16

Shares used in computing net income (loss) per share:

Basic

45.4

45.0

45.2

44.8

Diluted

45.4

45.0

45.2

45.4

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions)

September 26,
2025

December 27,
2024

ASSETS

Current assets:

Cash and cash equivalents

$            314.1

$             313.9

Accounts receivable, net of allowance for credit losses

199.5

241.1

Inventories

382.2

381.0

Prepaid expenses and other current assets

45.6

34.1

Total current assets

941.4

970.1

Property, plant and equipment, net

329.1

325.9

Goodwill

114.2

265.3

Intangible assets, net

163.7

184.9

Deferred tax assets, net

3.1

3.1

Operating lease right-of-use assets

156.9

161.0

Other non-current assets

12.1

9.6

Total assets

$          1,720.5

$          1,919.9

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank borrowings

$                9.9

$              16.0

Accounts payable

191.2

212.5

Accrued compensation and related benefits

49.6

50.1

Operating lease liabilities

18.6

18.6

Other current liabilities

24.1

38.4

Total current liabilities

293.4

335.6

Bank borrowings, net of current portion

466.5

476.5

Deferred tax liabilities

16.4

16.1

Operating lease liabilities

155.1

149.2

Other liabilities

7.8

6.7

Total liabilities

939.2

984.1

Equity:

UCT stockholders' equity:

Common stock

0.1

0.1

Additional paid-in capital

572.8

558.4

Common shares held in treasury

(48.4)

(45.0)

Retained earnings

192.5

370.4

Accumulated other comprehensive loss

(7.1)

(10.3)

Total UCT stockholders' equity

709.9

873.6

Noncontrolling interests

71.4

62.2

Total equity

781.3

935.8

Total liabilities and equity

$          1,720.5

$          1,919.9

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

Nine Months Ended

September 26,
2025

September 27,
2024

Cash flows from operating activities:

Net income (loss)

$           (171.0)

$              14.5

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

Depreciation and amortization

35.5

34.1

Amortization of intangible assets

21.2

22.9

Stock-based compensation

14.4

12.7

Amortization of debt issuance costs

2.1

2.4

Impairment of goodwill

151.1

—

Change in the fair value of financial instruments

(0.1)

(21.7)

Deferred income taxes

0.4

(1.2)

Loss on sale of property, plant and equipment

0.7

1.2

Changes in assets and liabilities:

Accounts receivable

41.6

(47.3)

Inventories

(1.2)

(28.1)

Prepaid expenses and other current assets

(6.3)

(2.9)

Other non-current assets

(1.0)

0.6

Accounts payable

(22.8)

46.1

Accrued compensation and related benefits

(0.6)

0.2

Income taxes payable

(12.1)

1.4

Operating lease assets and liabilities

10.2

8.1

Other liabilities

(4.6)

4.9

Net cash provided by operating activities

57.5

47.9

Cash flows from investing activities:

Purchases of property, plant and equipment

(40.2)

(46.2)

Other investing activities

3.2

—

Net cash used in investing activities

(37.0)

(46.2)

Cash flows from financing activities:

Proceeds from bank borrowings

59.3

67.7

Extinguishment of bank borrowings

(59.3)

(44.2)

Proceeds from issuance of common stock

1.1

0.9

Principal payments on bank borrowings

(18.2)

(10.1)

Repurchase of shares

(3.4)

—

Employees' taxes paid upon vesting of restricted stock units

(1.1)

(2.5)

Payments of dividends to a joint venture shareholder

(0.1)

(0.5)

Payment of debt issuance costs

—

(2.5)

Other financing activities

(0.6)

—

Net cash provided by (used in) financing activities

(22.3)

8.8

Effect of exchange rate changes on cash and cash equivalents

2.0

0.7

Net increase in cash and cash equivalents

0.2

11.2

Cash and cash equivalents at beginning of period

313.9

307.0

Cash and cash equivalents at end of period

$             314.1

$             318.2

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in millions)

GAAP

Non-GAAP

Three Months Ended

Three Months Ended

September 26, 2025

September 26, 2025

Products

Services

Consolidated

Products

Services

Consolidated

Revenues

$   445.0

$    65.0

$      510.0

$   445.0

$     65.0

$      510.0

Gross profit

$     64.6

$    17.6

$        82.2

$     67.4

$     19.5

$        86.9

Gross margin

14.5 %

27.1 %

16.1 %

15.1 %

30.0 %

17.0 %

Income from operations

$       7.9

$      2.7

$        10.6

$     22.0

$       7.2

$        29.2

Operating margin

1.8 %

4.2 %

2.1 %

4.9 %

11.1 %

5.7 %

Three Months Ended

September 26, 2025

Products

Services

Consolidated

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

Reported gross profit on a GAAP basis

$     64.6

$     17.6

$        82.2

Amortization of intangible assets (1)

1.3

1.0

2.3

Stock-based compensation expense (2)

0.5

—

0.5

Restructuring charges (3)

1.0

1.1

2.1

VAT settlement (5)

—

(0.2)

(0.2)

Non-GAAP gross profit

$     67.4

$     19.5

$        86.9

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis

14.5 %

27.1 %

16.1 %

Amortization of intangible assets (1)

0.3 %

1.5 %

0.4 %

Stock-based compensation expense (2)

0.1 %

— %

0.1 %

Restructuring charges (3)

0.2 %

1.7 %

0.4 %

VAT settlement (5)

— %

(0.3) %

0.0 %

Non-GAAP gross margin

15.1 %

30.0 %

17.0 %

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

Reported income from operations on a GAAP basis

$       7.9

$       2.7

$        10.6

Amortization of intangible assets (1)

4.0

2.9

6.9

Stock-based compensation expense (2)

4.1

0.5

4.6

Restructuring charges (3)

5.8

1.3

7.1

Legal-related costs (4)

0.2

—

0.2

VAT settlement (5)

—

(0.2)

(0.2)

Non-GAAP income from operations

$     22.0

$       7.2

$        29.2

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis

1.8 %

4.2 %

2.1 %

Amortization of intangible assets (1)

0.9 %

4.4 %

1.3 %

Stock-based compensation expense (2)

0.9 %

0.8 %

0.9 %

Restructuring charges (3)

1.3 %

2.0 %

1.4 %

Legal-related costs (4)

0.0 %

— %

0.0 %

VAT settlement (5)

— %

(0.3) %

0.0 %

Non-GAAP operating margin

4.9 %

11.1 %

5.7 %

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 impact of value added tax ruling

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Three Months Ended

September 26,
2025

September 27,
2024

June 27,
2025

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

Reported net loss attributable to UCT on a GAAP basis

$         (10.9)

$           (2.3)

$    (162.0)

Amortization of intangible assets (1)

6.9

7.6

7.0

Stock-based compensation expense (2)

4.6

4.5

7.1

Restructuring charges (3)

7.1

0.3

4.8

VAT settlement (4)

(0.2)

—

—

Legal-related costs (5)

0.2

1.3

0.3

Debt refinancing costs expensed (6)

1.1

—

—

Fair value related adjustments (7)

—

0.8

—

Impairment of goodwill (8)

—

—

151.1

Acquisition related costs (9)

—

0.6

—

Income tax effect of non-GAAP adjustments (10)

(4.5)

(4.1)

(34.1)

Income tax effect of valuation allowance (11)

8.6

7.2

37.9

Non-GAAP net income attributable to UCT

$           12.9

$           15.9

$       12.1

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

Reported income (loss) from operations on a GAAP basis

$           10.6

$           25.2

$    (141.8)

Amortization of intangible assets (1)

6.9

7.6

7.0

Stock-based compensation expense (2)

4.6

4.5

7.1

Restructuring charges (3)

7.1

0.3

4.8

VAT settlement (4)

(0.2)

—

—

Legal-related costs (5)

0.2

1.3

0.3

Impairment of goodwill (8)

—

—

151.1

Acquisition related costs (9)

—

0.6

—

Non-GAAP income from operations

$           29.2

$           39.5

$       28.5

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis

2.1 %

4.7 %

(27.3) %

Amortization of intangible assets (1)

1.3 %

1.4 %

1.3 %

Stock-based compensation expense (2)

0.9 %

0.8 %

1.4 %

Restructuring charges (3)

1.4 %

0.1 %

0.9 %

VAT settlement (4)

0.0 %

— %

— %

Legal-related costs (5)

0.0 %

0.2 %

0.1 %

Impairment of goodwill (8)

— %

— %

29.1 %

Acquisition related costs (9)

— %

0.1 %

— %

Non-GAAP operating margin

5.7 %

7.3 %

5.5 %

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

Reported gross profit on a GAAP basis

$           82.2

$           93.4

$       79.5

Amortization of intangible assets (1)

2.3

2.3

2.3

Stock-based compensation expense (2)

0.5

0.3

0.4

Restructuring charges (3)

2.1

—

2.4

VAT settlement (4)

(0.2)

—

—

Non-GAAP gross profit

$           86.9

$           96.0

$       84.6

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis

16.1 %

17.3 %

15.3 %

Amortization of intangible assets (1)

0.4 %

0.4 %

0.4 %

Stock-based compensation expense (2)

0.1 %

0.1 %

0.1 %

Restructuring charges (3)

0.4 %

— %

0.5 %

VAT settlement (4)

0.0 %

— %

— %

Non-GAAP gross margin

17.0 %

17.8 %

16.3 %

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

$           (1.2)

$           (4.1)

$       (2.2)

Debt refinancing costs expensed (6)

1.1

—

—

Fair value related adjustments (7)

—

0.8

—

Non-GAAP Other income (expense), net

$           (0.1)

$           (3.3)

$       (2.2)

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

Diluted net loss on a GAAP basis

$         (0.24)

$         (0.05)

$      (3.58)

Amortization of intangible assets (1)

0.15

0.17

0.15

Stock-based compensation expense (2)

0.10

0.10

0.16

Restructuring charges (3)

0.16

0.00

0.10

VAT settlement (4)

0.00

—

—

Legal-related costs (5)

0.00

0.03

0.01

Debt refinancing costs expensed (6)

0.02

—

—

Fair value related adjustments (7)

—

0.02

—

Impairment of goodwill (8)

—

—

3.34

Acquisition related costs (9)

—

0.01

—

Income tax effect of non-GAAP adjustments (10)

(0.10)

(0.09)

(0.75)

Income tax effect of valuation allowance (11)

0.19

0.16

0.84

Non-GAAP net earnings

$           0.28

$           0.35

$       0.27

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

45.6

45.5

45.3

ULTRA CLEAN HOLDINGS, INC.

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

Three Months Ended

September 26,
2025

September 27,
2024

June 27,
2025

Provision for income taxes on a GAAP basis

$            8.7

$            9.9

$         7.2

Income tax effect of non-GAAP adjustments (10)

4.5

4.1

34.1

Income tax effect of valuation allowance (11)

(8.6)

(7.2)

(37.9)

Non-GAAP provision for income taxes

$            4.6

$            6.8

$         3.4

Income (loss) before income taxes on a GAAP basis

$            0.6

$           10.2

$    (153.3)

Amortization of intangible assets (1)

6.9

7.6

7.0

Stock-based compensation expense (2)

4.6

4.5

7.1

Restructuring charges (3)

7.1

0.3

4.8

VAT settlement (4)

(0.2)

—

—

Legal-related costs (5)

0.2

1.3

0.3

Debt refinancing costs expensed (6)

1.1

—

—

Fair value related adjustments (7)

—

0.8

—

Impairment of goodwill (8)

—

—

151.1

Acquisition related costs (9)

—

0.6

—

Non-GAAP income before income taxes

$           20.3

$           25.3

$       17.0

Effective income tax rate on a GAAP basis

1450.0 %

97.1 %

(4.7) %

Non-GAAP effective income tax rate

22.7 %

27.1 %

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    Represents impact of value added tax ruling

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

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

7    Fair value adjustments related to contingent consideration

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

9     Represents acquisition activity costs

10    Tax effect of items (1) through (9) above based on the non-GAAP tax rate

11    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