Ultra Clean Holdings, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue reached a record $759.0 million, an 18% increase from Q2 2026 ($644.9 million) and a 49% increase from Q3 2025 ($510.0 million).
• Product revenue was $681.9 million, while Services revenue was $77.1 million.
• GAAP gross margin was 16.9% (compared to 16.1% in Q2 2026 and 16.1% in Q3 2025).
• Non-GAAP gross margin was 17.3% (compared to 16.7% in Q2 2026 and 17.0% in Q3 2025).
• GAAP operating margin was 7.1% (compared to 4.6% in Q2 2026 and 2.1% in Q3 2025).
• Non-GAAP operating margin was 9.0% (compared to 7.0% in Q2 2026 and 5.7% in Q3 2025).
• GAAP net income was $39.1 million ($0.85 per diluted share), compared to $8.7 million ($0.19 per diluted share) in Q2 2026 and a net loss of $10.9 million ($0.24 per diluted share) in Q3 2025.
• Non-GAAP net income was $53.2 million ($1.15 per diluted share), compared to $32.3 million ($0.70 per diluted share) in Q2 2026 and $11.0 million ($0.24 per diluted share) in Q3 2025.
• Cash and cash equivalents were $270.9 million as of September 25, 2026, down from $311.8 million at December 26, 2025.
• Total debt increased to $635.1 million (long-term) from $467.0 million at December 26, 2025; current portion of long-term debt was $0.
• Inventories increased to $723.3 million from $390.9 million at December 26, 2025.
• Net cash used in operating activities for the nine months ended September 25, 2026, was $116.7 million, compared to $57.5 million provided in the same period in 2025.

Guidance and Future Outlook:

• The Company expects Q4 2026 revenue to be between $800 million and $860 million.
• GAAP diluted net income per share for Q4 2026 is expected to be between $1.02 and $1.26.
• Non-GAAP diluted net income per share for Q4 2026 is expected to be between $1.11 and $1.35.
• Management indicated positioning to capture value from the next phase of AI-driven industry expansion.

Business Segments and Product Lines:

• The Products division contributed $681.9 million in revenue with a GAAP gross margin of 15.6% and a non-GAAP gross margin of 15.9%.
• The Services division contributed $77.1 million in revenue with a GAAP gross margin of 28.8% and a non-GAAP gross margin of 30.1%.
• The Company offers integrated outsourced solutions for major subassemblies, design-to-delivery cycle times, prototyping, and high-precision manufacturing under its Products division.
• The Services division provides tool chamber parts cleaning and coating, as well as micro-contamination analytical services.

Market and Competitive Landscape:

• Management cited accelerating customer demand and the company's ability to scale production with speed and agility.
• The Company is co-innovating with customers to develop more advanced solutions.
• The press release references the semiconductor capital equipment market and the AI-driven industry expansion as key growth drivers.

Risks and Challenges:

• Forward-looking statements regarding the semiconductor capital equipment market and outlook involve risks and uncertainties that could cause actual results to differ materially.
• Specific risks include those identified in the "Risk Factors" and "Management's Discussion and Analysis" sections of the Form 10-K for the year ended December 26, 2025.
• The Company noted a cybersecurity incident included in legal-related costs.

Management Commentary and Tone:

• CEO James Xiao stated the quarter delivered "strong growth and solid operational performance."
• Management emphasized executing with "focus and discipline" through "UCT 3.0" to build a more agile and efficient company.
• The tone was confident regarding the company's ability to anticipate customer needs and translate industry growth into shareholder value.

Other Key Points:

• The Company issued convertible notes generating $600.0 million in proceeds during the nine months ended September 25, 2026.
• The Company repurchased common stock for $40.0 million during the nine months ended September 25, 2026.
• Proceeds from the issuance of common stock under an at-the-market offering were $34.0 million for the nine months ended September 25, 2026.
• Legal-related costs of $0.6 million were incurred in Q3 2026, representing estimated costs related to legal proceedings and a cybersecurity incident.
• Restructuring charges of $0.6 million were incurred in Q3 2026.
• Stock-based compensation expense was $6.9 million in Q3 2026.
• Amortization of intangible assets was $6.8 million in Q3 2026.
• The Company recorded an unrealized loss on foreign exchange of $2.6 million in Q3 2026.
• A loss on extinguishment of debt of $3.4 million was recorded in the nine months ended September 25, 2026.