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Ultra Clean (UCTT)
:UCTT
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Ultra Clean Holdings
(NASDAQ:UCTT)
59Neutral
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.
WFE recovery potential
UCTT stands to benefit from an eventual NAND WFE recovery.
Negative Factors
China exposure
UCTT's domestic China business sources internally & ships to China semicaps - a overhang for the stock since investors want to de-risk China exposure.
Tariff uncertainty
Management sees the slower than anticipated semi market recovery, along with uncertainty caused by tariffs continuing to be the headwind through the year.
Technical challenges
Ultra Clean reported a miss-and-cut quarter, primarily due to technical challenges faced by one European and one Chinese customer.
Ultra Clean Holdings (UCTT) vs. S&P 500 (SPY)
Market Cap
$910.66M
Dividend YieldN/A
Average Volume (3M)658.17K
Price to Earnings (P/E)32.6
Beta (1Y)2.22
Revenue Growth20.20%
EPS GrowthN/A
CountryUS
Employees6,773
SectorTechnology
Sector Strength68
IndustrySemiconductors
Share Statistics
EPS (TTM)0.62
Shares Outstanding45,149,090
10 Day Avg. Volume770,755
30 Day Avg. Volume658,175
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.52
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.89
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$30.75Price Target Upside52.45% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Ultra Clean Holdings Business Overview & Revenue Model
Company DescriptionUltra Clean Holdings, Inc. (UCTT) is a prominent provider of critical subsystems, ultra-high purity cleaning, and analytical services that are primarily used in the semiconductor capital equipment industry. The company operates within the technology sector, focusing on the design, engineering, and manufacturing of production tools, modules, and systems for the semiconductor industry. UCTT's core products and services are integral to the production of semiconductors and other high-tech components, offering solutions that help optimize manufacturing processes and ensure the highest quality standards.
How the Company Makes MoneyUltra 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 shows moderate financial performance. The income statement indicates stable yet pressured profitability margins, while the balance sheet highlights a strong equity position and low financial leverage. Cash flows are adequate but indicate a need for better capital management.Income Statement
Ultra Clean Holdings shows moderate performance in its income statement. The TTM gross profit margin stands at 16.73%, indicating efficient production cost management. However, the net profit margin is relatively low at 1.31%, suggesting challenges in controlling operational costs or high interest expenses. Revenue growth has been inconsistent, with a recent increase of 1.95% over the previous year, reflecting stability but also potential market pressures. The EBIT and EBITDA margins at 4.06% and 7.03% respectively, highlight a need for improved operational efficiency.72
Positive
Balance Sheet
The balance sheet of Ultra Clean Holdings reflects a healthy equity position with a debt-to-equity ratio of 0.19, indicating low financial leverage and reduced risk of insolvency. The return on equity (ROE) is 3.22%, which, while positive, suggests room for improvement in utilizing equity to generate profits. The equity ratio of 46.11% demonstrates a solid capital structure, providing a cushion against liabilities.75
Positive
Cash Flow
Cash flow analysis reveals areas for improvement. The operating cash flow to net income ratio of 2.97 indicates strong cash generation relative to accounting profits, although the free cash flow is modest at $25.5M. Free cash flow growth is positive, but the company needs to manage capital expenditures more effectively to enhance liquidity.68
Positive
| 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 |
| 660.30M | 639.90M | 611.20M | 635.21M | 311.75M | Net Debt |
| 346.40M | 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
Negative
20.17
Price Trends
22.75
Negative
29.97
Negative
33.88
Negative
Market Momentum
-0.91
Negative
46.42
Neutral
24.01
Neutral
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 20.17 is above the 20-day moving average (MA) of 19.74, below the 50-day MA of 22.75, and below the 200-day MA of 33.88, indicating a neutral trend. The MACD of -0.91 indicates Negative momentum. The RSI at 46.42 is Neutral, neither overbought nor oversold. The STOCH value of 24.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UCTT.
Ultra Clean Holdings Risk Analysis
Ultra Clean Holdings disclosed 40 risk factors in its most recent earnings report. Ultra Clean Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ultra Clean Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Neutral | $1.14B | 16.00 | 10.43% | ― | 7.63% | ― | |
69 Neutral | $1.32B | 16.88 | 9.11% | 3.64% | -4.43% | 57.01% | |
60 Neutral | $10.94B | 10.58 | -7.08% | 2.98% | 7.52% | -12.04% | |
59 Neutral | $910.66M | 32.65 | 3.30% | ― | 20.20% | ― | |
58 Neutral | $776.75M | ― | -9.87% | ― | -36.86% | -351.11% | |
50 Neutral | $716.03M | ― | -3.30% | ― | 4.68% | 55.72% | |
39 Underperform | $923.34M | ― | -39.36% | ― | -33.12% | -39.38% |
* Technology Sector Average
Performance Comparison
UCTT
Ultra Clean Holdings
20.17
-22.79
-53.05%
COHU
Cohu
16.69
-12.23
-42.29%
HIMX
Himax Technologies
7.69
2.69
53.80%
MXL
Maxlinear
10.69
-9.44
-46.90%
VECO
Veeco
19.67
-17.82
-47.53%
ICHR
Ichor Holdings
20.99
-18.31
-46.59%
Ultra Clean Holdings Earnings Call Summary
Earnings Call Date:Apr 28, 2025
(Q1-2025)
| % Change Since: -9.55%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative aspects. While there were notable achievements in services growth, supply chain strategy success, and operational efficiencies, the company experienced significant revenue and margin declines, missed guidance targets, and projected continued revenue decline. The balance of these factors results in a neutral sentiment.Q1-2025 Updates
Positive Updates
Services Business Growth
Revenue from the services business increased from $59.8 million in Q4 to $61.6 million in Q1, primarily from two of their top customers.
Localized Supply Chain Strategy Success
UCT has initiated a localized supply chain strategy to mitigate future supply chain disruptions post-COVID, ensuring faster market responsiveness and enhanced resilience by securing reliable local supply sources for global sites.
Cash Flow Improvement
Cash flow from operations was $28.2 million compared to $17.1 million last quarter, mostly due to working capital efficiency and tight inventory control.
Arizona Fab Acceleration
The accelerated ramp of the Arizona fab owned by the world's largest chip maker is scaling up twice as fast as originally planned, benefiting UCT's services business.
Investment in Capacity and Operational Efficiencies
Strategic investments in capacity and operational efficiencies at global sites are expected to maximize profitability as utilization increases with demand.
Negative Updates
Revenue Miss
Missed the midpoint of revenue guidance range by about $12 million due to push-outs and shipment delays caused by technical challenges faced by customers.
Operating Margin Decline
Total operating margin for the quarter came in at 5.2% compared to 7.7% last quarter, with products margin decreasing from 6.6% to 4.6%.
Revenue Decline
Total revenue for Q1 was $518.6 million compared to $563.3 million in the prior quarter. Revenue from products was $457 million compared to $503.5 million last quarter.
Guidance for Continued Revenue Decline
Projected total revenue for Q2 of 2025 is between $475 million and $525 million, indicating a modest decline in demand.
EPS Decline
Earnings per share for the quarter were $0.28 on net income of $12.7 million compared to $0.51 on net income of $22.9 million in the prior quarter.
Company Guidance
During the Q1 2025 financial results conference call, UCT provided guidance for the upcoming quarter and beyond, acknowledging a modest decline in demand for Q2 2025 with anticipated revenues between $475 million and $525 million and EPS ranging from $0.17 to $0.37. Despite missing the midpoint of their Q1 revenue guidance by $12 million due to shipment delays and technical challenges faced by their customers, UCT remains focused on optimizing their business systems to align with a $2 billion annual run rate. They are implementing cost-saving measures, including headcount and organizational adjustments, to protect profitability. The company is also navigating the impact of global tariffs, with plans to pass on some of these costs to customers. Looking forward, UCT expects to maintain revenue levels similar to the June quarter for the rest of the year, while focusing on enhancing operational efficiency and exploring growth opportunities in the semiconductor market despite ongoing geopolitical uncertainties.Ultra Clean Holdings Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Ultra Clean Holdings CEO Resigns Due to Health Reasons
Neutral
Mar 5, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.