Ultra Clean Holdings Reports 8.6% Revenue Growth but Net Loss in Q1 FY 2025

Ultra Clean Holdings, Inc. (UCT) reported its financial results for the first quarter of fiscal year 2025, revealing total revenues of $518.6 million, an increase of 8.6% from $477.7 million in the same period last year. The growth was primarily driven by a 9.2% rise in product revenues, which reached $457.0 million, attributed to increased customer demand and an overall improvement in the semiconductor market. Service revenues also saw a modest increase of 4.1%, totaling $61.6 million, reflecting heightened demand across UCT's customer base.

Despite the revenue growth, UCT experienced a net loss of $5.0 million for the quarter, an improvement from a net loss of $9.4 million in the prior year. The company’s gross margin decreased slightly to 16.2% from 17.3%, influenced by a less favorable product mix and increased costs associated with higher sales volumes. Operating income fell to $12.9 million, down 25.4% from $17.3 million a year earlier, primarily due to rising employee-related expenses, including compensation increases and costs associated with the resignation of the former CEO.

In terms of operational metrics, UCT's cash and cash equivalents increased to $317.6 million from $313.9 million at the end of the previous fiscal year. The company generated $28.2 million in cash from operating activities, a significant rise from $9.8 million in the same quarter last year, largely due to favorable changes in working capital. However, cash used in financing activities rose to $12.2 million, compared to $4.5 million in the prior year, driven by increased principal payments on bank borrowings.

Geographically, UCT's revenue distribution shifted, with international sales accounting for 76.9% of total revenues, up from 70.5% in the previous year. U.S. revenues decreased by 15% to $119.8 million, while international revenues increased by 18.4% to $398.8 million. This shift indicates a strategic pivot towards international markets, which UCT is leveraging to meet growing demand.

Looking ahead, UCT remains optimistic about the semiconductor market's long-term growth, driven by advancements in technology and increasing reliance on partners for capacity fulfillment. The company plans to continue investing in its operations and may pursue strategic acquisitions to enhance its capabilities. However, UCT also acknowledged the need to address material weaknesses in its internal controls, which could impact financial reporting, and is actively working on remediation plans to strengthen its governance and operational effectiveness.