Ultra Clean Holdings (UCTT) AI Stock Analysis

• Market Cap: $1.02B
• Dividend Yield: N/A
• Average Volume (3M): 554.74K
• Price to Earnings (P/E): 43.4
• Beta (1Y): 2.31
• Revenue Growth: 20.92%
• EPS Growth: N/A
• Country: US
• Employees: 6,773
• Sector: Technology
• Sector Strength: 62
• Industry: Semiconductors
• EPS (TTM): 0.52
• Shares Outstanding: 45,132,298
• 10 Day Avg. Volume: 481,975
• 30 Day Avg. Volume: 554,737
• PEG Ratio: 0.17
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.52
• Price to Cash Flow (P/CF): 16.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $39.33
• Price Target Upside: 74.88% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

Ultra Clean Holdings showcases strong financial performance with significant revenue growth and improved profitability. However, technical indicators suggest a bearish trend, and the high P/E ratio indicates overvaluation concerns. Earnings call insights suggest stable growth with challenges in the China market. The recent board appointment could positively impact future growth. Overall, the stock reflects stability with caution due to liquidity and valuation concerns.

Positive Factors

AI and HBM Demand

Positive AI, HBM related demand are driving growth in UCTT's CMP & chemistry plating business.

Leadership Transition

Ultra Clean has put the best possible plan in place for leadership transition, and no disruption to its business is expected.

Operational Efficiencies

Recent improvements in operational efficiencies are expected to pay dividends down the road.

Negative Factors

China Business Weakness

Ultra Clean reported a surprise miss-and-cut quarter, due to a large step down of the direct China business.

Gross Margins

Gross Margins compressed 100bps Q/Q in the Dec '24 quarter to 16.8% due in part to a poor product mix.

Tax Profile

Higher portion of sales from Czech Republic and Shanghai facilities result in a less favorable tax profile.

Ultra Clean Holdings Business Overview & Revenue Model

Company Description

Ultra Clean Holdings, Inc. develops and supplies critical subsystems, components and parts, and ultra-high purity cleaning and analytical services for the semiconductor industry in the United States and internationally. The company provides ultra-clean valves, high purity connectors, industrial process connectors and valves, pneumatic actuators, manifolds and safety solutions, hoses, pressure gauges, and gas line and component heaters; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; and gas delivery systems, such as weldments, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system. It also offers various industrial and automation production equipment; fluid delivery systems consist of one or more chemical delivery units, including PFA tubing, filters, flow controllers, regulators, component heaters, and an integrated electronic and/or pneumatic control system; precision robotic systems; top-plate assemblies; frame assemblies; process modules, a subsystem of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high-level assemblies. In addition, the company provides tool chamber parts cleaning and coating services; micro-contamination analysis services for tool parts, wafers and depositions, chemicals, cleanroom materials, deionized water, and airborne molecular contamination; and analytical verification services for process tool chamber part cleaning. It primarily serves original equipment manufacturing customers in the semiconductor capital equipment and semiconductor integrated device manufacturing industries, as well as display, consumer, medical, energy, industrial, and research equipment industries. The company was founded in 1991 and is headquartered in Hayward, California.

How the Company Makes Money

Ultra Clean Holdings generates revenue primarily through the sale of its critical subsystems and modules to semiconductor capital equipment manufacturers. These products are essential components in the semiconductor manufacturing process, helping equipment operate efficiently and reliably. Additionally, UCTT provides ultra-high purity cleaning and analytical services, which are crucial for maintaining the cleanliness and performance of semiconductor fabrication facilities. The company benefits from long-term partnerships with leading semiconductor equipment manufacturers, which contributes significantly to its revenue. UCTT's earnings are also influenced by the overall demand for semiconductor devices, as increased production typically leads to higher demand for their manufacturing equipment and services.

Ultra Clean Holdings Financial Statement Overview

Summary

Ultra Clean Holdings displayed strong revenue growth and improved profitability, benefiting from increased demand in the semiconductor sector. The company's balance sheet is robust with reduced leverage and a solid equity position. However, the decline in cash flow generation from operations and reduced free cash flow pose potential risks to liquidity management. Overall, the financial health of the company is stable, with positive growth trends tempered by cash flow challenges.

Income Statement

Ultra Clean Holdings demonstrated strong revenue growth of 20.93% year-over-year in 2024, indicating robust demand in the semiconductor industry. The gross profit margin improved to 16.99% from 15.99% in 2023, reflecting improved cost management. The net profit margin turned positive at 1.13%, a significant turnaround from the previous year's negative margin, suggesting enhanced profitability. However, EBIT and EBITDA margins, at 4.35% and 4.35% respectively, highlight potential areas for operational improvement.

Balance Sheet

The company's debt-to-equity ratio improved significantly to 0.19 in 2024 from 0.76 in 2023, indicating reduced leverage and enhanced financial stability. The equity ratio remained relatively stable at 45.49%, reflecting a solid equity base. Return on equity was modest at 2.71%, suggesting room for improving shareholder returns. Overall, the balance sheet is healthy with a strong equity position and reduced debt levels.

Cash Flow

Operating cash flow decreased to $65 million from $135.9 million in the previous year, indicating a potential decline in cash generation from operations. Free cash flow remained positive at $1.5 million, albeit much lower than the previous year's $60.1 million, highlighting the impact of capital expenditures. The operating cash flow to net income ratio was strong at 2.74, reflecting good cash conversion from earnings. However, the decline in overall cash flow metrics suggests potential liquidity concerns.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.10B	1.73B	2.37B	2.10B	1.40B
	Gross Profit
356.30M	277.30M	465.00M	429.98M	291.76M
	EBIT
91.20M	35.20M	199.60M	185.67M	121.37M
	EBITDA
189.80M	99.20M	266.20M	253.20M	166.20M
	Net Income Common Stockholders
23.70M	-31.10M	40.40M	119.50M	77.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
313.90M	307.00M	358.80M	466.45M	200.27M
	Total Assets
1.92B	1.87B	1.96B	2.03B	1.10B
	Total Debt
167.80M	639.90M	611.20M	635.21M	311.75M
	Net Debt
-146.10M	332.90M	252.40M	168.76M	111.48M
	Total Liabilities
984.10M	970.50M	1.02B	1.13B	551.33M
	Stockholders Equity
873.60M	838.90M	887.90M	848.88M	532.65M
Cash Flow		Free Cash Flow
1.50M	60.10M	-52.90M	153.72M	60.85M
	Operating Cash Flow
65.00M	135.90M	47.20M	213.06M	97.28M
	Investing Cash Flow
-63.50M	-119.70M	-96.20M	-406.76M	-29.83M
	Financing Cash Flow
9.80M	-69.90M	-56.00M	460.83M	-31.11M

Ultra Clean Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.49
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UCTT, the sentiment is Negative. The current price of 22.49 is above the 20-day moving average (MA) of 20.04, below the 50-day MA of 24.59, and below the 200-day MA of 34.76, indicating a neutral trend. The MACD of -1.02 indicates Negative momentum. The RSI at 53.91 is Neutral, neither overbought nor oversold. The STOCH value of 95.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UCTT.

Ultra Clean Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VECO	70 Neutral	$1.12B	15.74	10.43%	―	7.63%	―
HIMX	63 Neutral	$1.21B	15.19	9.11%	3.95%	-4.43%	57.01%
UCTT	62 Neutral	$1.02B	43.43	2.77%	―	20.92%	―
Sector *	59 Neutral	$10.72B	10.22	-6.67%	3.02%	7.42%	-11.38%
ICHR	50 Neutral	$727.63M	―	-3.30%	―	4.68%	55.72%
COHU	48 Neutral	$785.60M	―	-7.73%	―	-36.86%	-351.11%
MXL	39 Underperform	$875.83M	―	-39.36%	―	-33.12%	-39.38%

Ultra Clean Holdings Corporate Events

Ultra Clean Holdings CEO Resigns Due to Health Reasons

On March 5, 2025, Ultra Clean Holdings announced the resignation of CEO James P. Scholhamer due to personal health reasons, effective March 4, 2025. Clarence L. Granger, the Chairman of the Board, will serve as interim CEO while the board searches for a permanent replacement. Granger, who has extensive experience with the company, will also continue as Chairman. The company has entered into a Separation Agreement with Scholhamer, providing him a lump sum payment. Ultra Clean has been expanding its portfolio and is well-positioned to support significant demand increases in the semiconductor industry.

Ultra Clean Holdings Appoints Joanne Solomon to Board

Ultra Clean Holdings, Inc. announced the appointment of Joanne Solomon to its Board of Directors, effective February 3, 2025. Ms. Solomon brings over 35 years of financial and corporate leadership experience, having served in significant roles such as Chief Financial Officer for multiple publicly traded companies. Her extensive background in the technology industry, particularly her tenure at Amkor Technology, is expected to contribute valuable insights to Ultra Clean’s growth strategy.