Ultra Clean Holdings Reports 24.2% Revenue Growth, Net Income Recovery in Latest Quarter

Ultra Clean Holdings, Inc. (UCT) reported significant financial performance improvements in its latest 10-Q filing for the three and nine months ended September 27, 2024. Total revenues for the third quarter reached $540.4 million, marking a 24.2% increase from $435.0 million in the same period of the previous year. For the nine months, revenues totaled $1,534.3 million, up 19.0% from $1,289.8 million. The growth was primarily driven by a 25.8% increase in product revenues, which amounted to $479.0 million for the quarter and $1,350.2 million for the nine months, compared to $380.9 million and $1,112.0 million, respectively, in the prior year.

Gross profit for the third quarter was $93.4 million, a 43.3% increase from $65.2 million, while gross profit for the nine months rose 28.2% to $264.5 million from $206.3 million. Operating income also saw substantial growth, with a total of $25.2 million for the third quarter, up from $5.7 million, and $65.3 million for the nine months, compared to $30.7 million in the prior year.

Despite these gains, UCT reported a net income of $0.3 million for the third quarter, a significant recovery from a net loss of $12.8 million in the same period last year. For the nine months, net income was $14.5 million, compared to a loss of $20.6 million in the previous year. The net income attributable to UCT for the third quarter was $(2.3) million, an improvement from $(14.5) million, while for the nine months, it was $7.4 million compared to $(27.3) million.

The company’s total assets increased to $1,947.5 million as of September 27, 2024, up from $1,867.7 million at the end of the previous fiscal year. Total liabilities also rose to $1,025.1 million from $970.5 million, with current liabilities increasing to $358.8 million from $310.0 million. UCT's stockholders' equity grew to $857.9 million, compared to $838.9 million previously.

Strategically, UCT completed the acquisition of HIS Innovations Group on October 25, 2023, for a total purchase price of $73.6 million, which included an initial cash consideration of $46.5 million and potential earn-out payments. The acquisition is expected to enhance UCT's market presence and technological capabilities.

The company also amended its credit agreement in April 2024, extending the maturity date of its term loan and revolving credit facilities, which resulted in an increase in bank borrowings. As of September 27, 2024, UCT had total bank debt of $492.2 million.

Despite these positive developments, UCT acknowledged material weaknesses in its internal controls over financial reporting, which are currently being addressed through remediation efforts. The company is cooperating with an SEC investigation related to these weaknesses.