Ultra Clean Holdings, Inc.
For the period ended Jun 27, 2025. Filed Jul 29, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 27, 2025 · Filed Jul 29, 2025
UCTT$41.13+10.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-28; filed 2025-04-29.
0001628280-25-020658
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-27; filed 2025-07-29.
0001628280-25-036413
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 71 previous paragraphs and 84 current paragraphs.
38 unchanged; 23 reworded; 22 added; 10 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 13 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Goodwill
Current report
As discussed in Note 4, Goodwill and Intangible Assets Goodwill to our condensed consolidated financial statements, we performed a quantitative goodwill impairment assessment as of June 27, 2025, which resulted in goodwill impairment charges of $151.1 million related to the Fluid Solutions and Services reporting units. The fair value estimate of each reporting unit was derived from an income approach. Under the income approach, we estimated the fair value of the reporting unit based on the present value of estimated future cash flows. We prepared cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration historical performance and the current macroeconomic, industry, and market conditions. We based the discount rate on the weighted-average cost of capital considering company-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows.
Current report
Revenue growth rates, operating margins, and the discount rate applied were significant assumptions used to determine the fair value of each reporting unit. The concluded fair value of our reporting units was reconciled to our market capitalization. The excess of the concluded fair value over our market capitalization represents an implied control premium, which we reviewed for reasonableness by comparison to observed transaction premiums and consideration of specific attributes of the Company.
Current report
If the actual results are not consistent with the assumptions and judgments we have made in determining the fair value of our reporting units, we may record additional impairment losses.
Current report
The fair values of the Core Products and the Fluid Delivery Systems reporting units, both of which are part of the Products segment, were each substantially in excess of their respective carrying values.
Current report
Services gross profit and gross margin decreased for the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year, primarily due to higher cost of revenues driven by increased labor and compensation-related costs at a specific location.
Current report
Operating profit and operating margin for both Products and Services decreased for the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year. This decline was primarily driven by the goodwill impairment recorded during the second quarter of fiscal year 2025, as well as increases in stock-based compensation and severance costs due to restructuring activities, including both involuntary separations and a voluntary retirement program.
Current report
General and administrative expenses increased $3.2 million and $7.1 million in the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year.
Current report
The increase in the three-month period ended June 27, 2025 was primarily driven by an increase in stock-based compensation and severance payments due to restructuring activities, including both involuntary separations and a voluntary retirement program.
Current report
The increase in the six-month period ended June 27, 2025 was primarily driven by increase in stock-based compensation, separation payment made to the previous CEO, and increased restructuring activities, including both involuntary separations and a voluntary retirement program.
Current report
Impairment of Goodwill
Current report
Impairment of goodwill represents a non-cash charge of $151.1 million recorded during the three months ended June 27, 2025, as it was determined that the fair values of our Fluid Solutions and Services reporting units were below their carrying amounts. Refer to Note 4, Goodwill and Intangible Assets to the condensed consolidated financial statements for more information.
Current report
Interest income decreased in the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year due to lower interest earning balances.
Current report
Other income (expense), net, for the three-month period was primarily comprised of unrealized foreign exchange losses of $4.2 million offset by government grants received of $2.2 million. In the prior period, the Company recognized a $24.1
Current report
28 - million gain related to the fair value adjustment of the contingent earn-out from the HIS acquisition which was offset by unrealized foreign exchange losses of $2.8 million million and debt modification costs of $3.6 million.
Current report
Other income (expense), net, for the six-month period was primarily comprised of unrealized foreign exchange losses of $3.4 million offset by government grants received of $2.2 million. In the prior period, the Company recognized a $22.8 million million gain related to the fair value adjustment of the contingent earn-out from the HIS acquisition which was offset by unrealized foreign exchange losses of $5.2 million and debt modification costs of $3.6 million.
Current report
The tax provision for the three and six months ended June 27, 2025 includes the impact of a change in the Company’s plans for the earnings of one of its subsidiaries in China. In the past, the Company has asserted that the earnings of our foreign subsidiaries, with the exception of certain of its subsidiaries in Singapore, were considered indefinitely reinvested, thus avoiding the recognition of deferred taxes on the earnings considered indefinitely reinvested.
Current report
The negative tax rates in the three and six-month periods ended June 27, 2025 are the result of pre-tax losses during those periods compared to pre-tax profits in the comparable periods ended June 28, 2024. The tax provision for the three and six months ended June 27, 2025 includes the impact of a change in the Company’s assertion that earnings from fiscal 2023 and going forward in one of its subsidiaries in China is no longer permanently reinvested. As a result, the Company has recorded a discrete tax expense of $3.4 million in the second quarter of 2025. The Company will also record deferred taxes on the undistributed current and future year earnings of this China subsidiary.
Current report
◦Accounts receivable decreased $34.3 million primarily due to the timing of shipments and collections, as well as the sale of accounts receivable through factoring arrangements. Inventories decreased by $5.4 million as inventory on hand was consumed. Operating lease assets and liabilities decreased $11.1 million, reflecting lease payments and amortization. Prepaid expenses and other current assets increased by $7.8 million due to advance payments and prepayments related to various expenses.
Current report
◦Accounts payable decreased $11.9 million, other liabilities by $4.0 million, accrued compensation and related benefits by $2.6 million, and income tax payable by $4.2 million, as a result of elevated prepayment activity.
Current report
In the second quarter of 2025, we entered into a factoring agreement with a financial institution to sell certain accounts receivables under a non-recourse agreement. Under the arrangement, we sell certain trade receivables on a non-recourse basis and account for the transaction as a sale of the receivables. The financial institution assumes the full risk of collection, without recourse to the Company in the event of a loss. As part of the factoring arrangements, we perform certain collection and administrative functions for the receivables sold. The applicable receivables are removed from our consolidated balance sheet when the cash proceeds are received by us. We utilize this factoring arrangement as part of our financing for working capital. For the three and six months ended June 27, 2025, we sold accounts receivable totaling $17.8 million under this arrangement.
Current report
In addition, Fluid Solutions has an existing factoring agreement with a financial institution to sell certain accounts receivables under a non-recourse agreement. For the three and six month periods ended June 27, 2025, we sold accounts receivable totaling $5.2 million and $11.6 million, respectively under this arrangement.
Removed paragraphs (10)
Previous report
Products gross profit increased for the three-month period ended March 28, 2025 compared to the same period in the prior year primarily due to higher revenue levels. However, Products gross margin decreased primarily due to an unfavorable product mix and a shift in sales volumes across different geographic regions.
Previous report
Operating profit and operating margin of Products decreased for the three-month period ended March 28, 2025 compared to the same period in the prior year. The decrease was primarily due to higher employee-related expenses, which were driven by increased compensation costs. These included annual salary increases, higher incentive compensation, and separation costs associated with the resignation of the Company’s former Chief Executive Officer (CEO).
Previous report
Operating profit and operating margin of Services were consistent for the three-month period ended March 28, 2025 compared to the same period in the prior year.
Previous report
General and administrative expenses increased $4.0 million in the three-month period ended March 28, 2025 compared to the same period in the prior year. The increase was primarily driven by non-recurring separation costs related to the resignation of the Company’s CEO, as well as an increase in employee-related expenses due to higher compensation costs, including annual salary increases and higher incentive compensation accruals. These increases were partially offset by a decrease in stock-based compensation expense resulting from the forfeiture of restricted stock units and performance stock units following the former CEO’s resignation.
Previous report
Interest income was consistent in the three-month period ended March 28, 2025 compared to the same period in the prior year.
Previous report
Other income (expense), net, increased by $4.6 million for the three-month period ended March 28, 2025 compared to the same period in the prior year. This increase was primarily due to favorable foreign exchange transaction and
Previous report
25 - remeasurement gains, as well as the absence of $1.3 million loss from the change in the fair value of contingent earn-out in the prior period.
Previous report
◦Accounts receivable decreased $23.1 million primarily due to the timing of shipments and collections and $6.4 million decrease in inventories due to increased production levels and corresponding consumption of inventory balances.
Previous report
◦Accounts payable decreased $8.5 million, other liabilities decreased $2.3 million, and accrued compensation and related benefits decreased $10.4 million, primarily due to the timing of payments.
Previous report
Fluid Solutions has an existing factoring arrangement with a financial institution in which a portion of its accounts receivable are sold on a non-recourse basis. As of March 28, 2025, there were outstanding customer invoices amounting to $7.5 million that we factored under this arrangement.
Reworded paragraphs (23)
Previous wording
Discussion of Results of Operations for the Three months ended March 28, 2025 compared to the Three months ended March 29, 2024
Current wording
Discussion of Results of Operations for the Three and Six months ended June 27, 2025 compared to the Three and Six months ended June 28, 2024
Previous wording
For the three-month period ended March 28, 2025, Products revenues increased compared to the same period in the prior year. The increase in Products revenues was primarily due to an increase in customer demand, along with an overall market improvement in the semiconductor industry.
Current wording
For the three and six-month periods ended June 27, 2025, Products revenues increased compared to the same periods in the prior year. The increase in Products revenues was primarily due to an increase in customer demand, along with an overall market improvement in the semiconductor industry.
Previous wording
Services revenues increased for the three-month period ended March 28, 2025 compared to the same period in the prior year primarily due to an increase in demand across its customer base.
Current wording
Service revenues for the three and six-month periods ended June 27, 2025, increased compared to the same periods in the prior year, primarily driven by higher demand across its customer base.
Previous wording
For the three months ended March 28, 2025, U.S. revenues decreased compared to the same period in the prior year, primarily due to a shift of product revenues from U.S. to international markets.
Current wording
For the three and six months ended June 27, 2025, U.S. revenues decreased compared to the same periods in the prior year, primarily due to a shift of product revenues from U.S. to international markets.
Previous wording
International revenues increased for the three months ended March 28, 2025 compared to the same period in the prior year, primarily as a result of market improvement driving higher customer demand.
Current wording
International revenues increased for the three and six months ended June 27, 2025 compared to the same periods in the prior year, primarily as a result of market improvement driving higher customer demand.
Previous wording
Cost of Products revenues consists of purchased materials, direct labor and manufacturing overhead. For the three-month period ended March 28, 2025, Cost of Products revenues increased by $36.3 million compared to the same period in the prior year. The increase was primarily driven by higher sales volumes, which resulted in a $30.7 million increase in material costs. The remaining increase was attributable to higher labor and overhead costs associated with increased production activity.
Current wording
Cost of Products revenues consists of purchased materials, direct labor and manufacturing overhead. For the three and six-month periods ended June 27, 2025, Cost of Products revenues increased by $9.4 million and $45.5 million, respectively, compared to the same periods in the prior year. The increase was primarily driven by higher sales volumes, which led to a $3.5 million increase in material costs for the three-month period, and $34.2 million increase for the six month-period. The remaining increase was attributable to higher labor and overhead costs associated with increased production activity, as well as restructuring activities, merit increases, and inflation.
Previous wording
Services Cost of revenues consists of direct labor, overhead, and materials such as chemicals, gases and consumables. For the three-month period ended March 28, 2025, Services Cost of revenues increased by $3.2 million compared to the same period in the prior year. The increase was driven by a higher volume of service orders, which resulted in increased labor costs of $1.7 million and overhead cost of $1.6 million.
Current wording
Services Cost of revenues consists of direct labor, overhead, and materials such as chemicals, gases and consumables. For the three and six-month periods ended June 27, 2025, Services Cost of revenues increased by $2.3 million and $5.6 million, respectively, compared to the same periods in the prior year. Revenue remained essentially flat for the three-month period ended June 27, 2025 compared to the same period in the prior year. The increase in labor costs of $2.3 million for the three-month period was primarily due to higher headcount, overtime, and incentive compensation for a specific location. The increase for the six-month period was driven by a higher volume of service orders, as well as higher headcount, overtime and incentive compensation for a specific location, resulting in a $4.2 million increase.
Previous wording
Services gross profit and gross margin decreased for the three-month period ended March 28, 2025 compared to the same period in the prior year. The decrease was primarily due to higher fixed costs which did not scale proportionately with the increase in Services revenue.
Current wording
Products gross profit and gross margin decreased for the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year primarily due to higher employee and restructuring related costs.
Previous wording
Research and development expenses remained consistent for the three-month period ended March 28, 2025 compared to the same period in the prior year.
Current wording
Research and development expenses remained consistent for both the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year.
Previous wording
Sales and marketing expenses increased for the three-month period ended March 28, 2025 compared to the same period in the prior year primarily due to higher employee-related expenses.
Current wording
Sales and marketing expenses remained consistent for both the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year.
Previous wording
Interest expense decreased for the three-month period ended March 28, 2025 compared to the same period in the prior year primarily due to lower interest rates and reduced amortization of debt issuance costs.
Current wording
Interest expense decreased for the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year primarily due to lower interest rates and reduced amortization of debt issuance costs.
Previous wording
The decrease in the effective tax rate for the three-month period ended March 28, 2025 compared to the same period in the prior year is primarily attributable to changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates and the impact of losses in jurisdictions with full valuation allowances on deferred tax assets.
Current wording
The decrease in the effective tax rate for the three and six-month periods ended June 27, 2025 compared to the same periods in the prior year is primarily attributable to the changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates and the impact of losses in jurisdictions with full valuation allowances on deferred tax assets. The negative tax rates in the three and six-month periods ended June 27, 2025 are the result of pre-tax losses in those periods compared to pre-tax profits in the comparable periods ended June 28, 2024.
Previous wording
•For the three-month period ended March 28, 2025, we generated cash from operating activities of $28.2 million compared to $9.8 million for the same period in the prior year. The $18.4 million increase in net cash provided by operating activities was primarily driven by a $16.4 million favorable change in net working capital and a $4.7 million increase in net income, partially offset by $2.7 million decrease in non-cash items included in net income.
Current wording
•For the six-month period ended June 27, 2025, we generated cash from operating activities of $57.4 million compared to $33.0 million for the same period in the prior year. The $24.4 million increase in net cash provided by operating activities was primarily driven by a $25.9 million favorable change in net working capital.
Previous wording
•The major contributors in net changes in operating assets and liabilities for the three-month period ended March 28, 2025 were as follows:
Current wording
•The major contributors in net changes in operating assets and liabilities for the six-month period ended June 27, 2025 were as follows:
Previous wording
•Net cash used in investing activities during the three-month period ended March 28, 2025 and March 29, 2024 consisted primarily of $12.4 million and $18.0 million purchases of property, plant and equipment, respectively.
Current wording
•Net cash used in investing activities during the six-month periods ended June 27, 2025 and June 28, 2024 consisted primarily of $29.2 million and $31.0 million purchases of property, plant and equipment, respectively.
Previous wording
•During the three-month period ended March 28, 2025, cash used in financing activities was $12.2 million compared to $4.5 million in the same period in the prior year. The $7.7 million increase in net cash used by financing activities was primarily due to $7.5 million additional principal payments on bank borrowings.
Current wording
•During the six-month period ended June 27, 2025, cash used in financing activities was $18.8 million compared to $12.5 million cash provided in the same period in the prior year. The $31.3 million increase in net cash used by financing activities was primarily due to $31.5 million net cash proceeds from bank borrowings related to the debt modification in the prior period.
Previous wording
We believe we have sufficient capital to fund our working capital needs, satisfy our debt obligations, maintain our existing capital equipment, purchase new capital equipment and make strategic acquisitions from time to time. As of March 28, 2025, we had cash and cash equivalents of $317.6 million compared to $313.9 million as of December 27, 2024. Our cash and cash equivalents, cash generated from operations, and amounts available under our revolving line of credit described below were our principal sources of liquidity as of March 28, 2025.
Current wording
We believe we have sufficient capital to fund our working capital needs, satisfy our debt obligations, maintain our existing capital equipment, purchase new capital equipment and make strategic acquisitions from time to time. As of June 27, 2025, we had cash and cash equivalents of $327.4 million compared to $313.9 million as of December 27, 2024. Our cash and cash equivalents, cash generated from operations, and amounts available under our revolving line of credit described below were our principal sources of liquidity as of June 27, 2025.
Previous wording
As of March 28, 2025, we have cash of approximately $277.5 million in our foreign subsidiaries. It is not practicable to determine the tax liability that might be incurred if the undistributed earnings of these foreign subsidiaries were to be distributed. It is the Company’s practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those operations, except for certain of its subsidiaries based in Singapore. However, since there is no expected Singapore or U.S. tax liability on a distribution of those earnings, the Company does not have taxes accrued for unremitted foreign earnings as of March 28, 2025.
Current wording
As of June 27, 2025, we have cash of approximately $227.9 million in our foreign subsidiaries. It is not practicable to determine the tax liability that might be incurred if the undistributed earnings of these foreign subsidiaries were to be distributed. It is the Company’s practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those
Previous wording
At March 28, 2025, the Company had an outstanding amount under the Term Loan of $487.5 million, gross of unamortized debt issuance costs of $6.6 million. As of March 28, 2025, the interest rate on the outstanding Term Loan was 7.6%.
Current wording
At June 27, 2025, the Company had an outstanding amount under the Term Loan of $484.5 million, gross of unamortized debt issuance costs of $6.1 million. As of June 27, 2025, the interest rate on the outstanding Term Loan was 7.6%.
Previous wording
The Company maintains credit agreements with a local bank in Czechia and with a financial institution in Israel, which provide for revolving credit facilities of up to 7.0 million euros (approximately $7.5 million) and $5.0 million, respectively. As of March 28, 2025, there were no borrowings outstanding under these facilities.
Current wording
The Company maintains credit agreements with a local bank in Czechia and with a financial institution in Israel, which provide for revolving credit facilities of up to 7.0 million euros (approximately $8.2 million) and $5.0 million, respectively. As of June 27, 2025, there were no borrowings outstanding under these facilities.
Previous wording
As of March 28, 2025, the Company’s total bank debt was $480.9 million, net of unamortized debt issuance costs of $6.6 million. As of March 28, 2025, the Company had $146.4 million, $5.0 million and $7.5 million available to draw from our credit facilities in the U.S., Israel and Czechia, respectively.
Current wording
As of June 27, 2025, the Company’s total bank debt was $478.4 million, net of unamortized debt issuance costs of $6.1 million. As of June 27, 2025, the Company had $146.4 million, $5.0 million, and 5.5 million euros (approximately $6.4 million) available to draw from its credit facilities in the U.S., Israel and Czechia, respectively.
Previous wording
Capital expenditures were $12.4 million during the three months ended March 28, 2025 and were primarily attributable to the capital invested in our manufacturing facilities worldwide. The Company’s anticipated capital expenditures for the remainder of 2025 are expected to be financed primarily from our cash flow generated from operations and cash on hand.
Current wording
Capital expenditures were $29.2 million during the six months ended June 27, 2025 and were primarily attributable to the capital invested in our manufacturing facilities worldwide. The Company anticipates that capital expenditures for the remainder of 2025 will be financed primarily through cash flow generated from operations and cash on hand.
Previous wording
The Company had commitments to various third parties to purchase inventories totaling approximately $403.6 million as of March 28, 2025.
Current wording
The Company had commitments to various third parties to purchase inventories totaling approximately $407.9 million as of June 27, 2025.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
30 - operations, except for certain of its subsidiaries based in Singapore and China. There is no expected Singapore or U.S. tax liability on a distribution of the Singapore earnings. However, the Company has accrued taxes on the undistributed earnings of the China subsidiary in its financial statements as of June 27, 2025.