Ultra Clean Returns to Profit as Product Sales Accelerate
Second-quarter revenue reached $644.9 million, exceeding the top end of management’s forecast.
The semiconductor-equipment supplier Ultra Clean Holdings (UCTT) returned to a quarterly profit as revenue rose 24.3% from a year earlier, driven by faster growth in its Products business.
The quarter marked a sharp acceleration from the start of the year. Revenue increased 20.8% sequentially, while GAAP operating margin more than doubled to 4.6% from 2.1% and non-GAAP operating margin widened to 7.0% from 5.1%.
Ultra Clean reported second-quarter revenue of $644.9 million, up from $518.8 million a year earlier. GAAP net income was $8.7 million, or $0.19 a diluted share, compared with a $162.0 million loss, or $3.58 a share; the year-earlier period included a $151.1 million goodwill impairment that didn’t recur.
Products revenue grew 25.9% to $572.7 million and accounted for 88.8% of total revenue, up from 87.7% a year earlier. Services revenue increased 13.0% to $72.2 million, reducing its share of the total to 11.2% from 12.3%.
Improved volume also carried through to profitability. GAAP gross margin expanded to 16.1% from 15.8% in the prior quarter and 15.3% a year earlier, while restructuring charges fell to $0.7 million from $4.8 million in both comparison periods.
For the third quarter, Ultra Clean expects revenue of $700 million to $750 million, implying sequential growth of 8.5% to 16.3%. The company forecasts GAAP earnings of $0.67 to $0.87 a share and adjusted earnings of $0.83 to $1.03 a share.
The expansion required more working capital. Inventories climbed 61.1% from year-end to $629.9 million, and first-half operating cash flow swung to a $74.4 million outflow from $57.4 million generated a year earlier. Ultra Clean also increased first-half share repurchases to $40.0 million as cash declined to $255.9 million.