UCTT earnings analysis
What we found in UCTT's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Ultra Clean delivered strong Q2 growth, with revenue of $644.9 million up 24.3% year over year, gross margin expanding to 16.1%, and operating margin improving to 4.6% from negative 27.3%. Both Products and Services grew, supported by improved semiconductor capital-equipment demand, while the operating-profit comparison also benefited from the absence of $151.1 million in prior-year goodwill impairments. The main offset is cash conversion: a $238.9 million inventory build drove six-month operating cash flow to negative $74.4 million and free cash flow to negative $100.2 million, alongside a new $600.0 million convertible-note obligation.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue accelerated to $644.9M
- Q2 revenue rose 24.3% year over year to $644.9 million, and increased from $534 million in Q1 2026. International revenue grew 30.9% to $503.0 million, versus 5.4% growth to $141.9 million in the U.S.
- Both operating segments grew
- Products revenue increased 25.9% year over year to $572.7 million, while Services increased 13.0% to $72.2 million. Management attributed the gains to improved semiconductor-market conditions and broader customer demand.
- Gross-margin expansion continued
- Gross margin improved to 16.1%, up 80 basis points from 15.3% a year earlier and 30 basis points from 15.8% in Q1 2026. Products gross margin rose to 14.6% from 13.5%, aided by fixed-cost absorption, product mix and geographic volume mix.
- Operating profitability returned
- Operating income was $29.5 million, or a 4.6% margin, versus an operating loss of $141.8 million and a negative 27.3% margin a year ago; Q1 2026 operating margin was 2.1%. The year-over-year comparison benefits from the absence of $151.1 million of segment goodwill impairment charges in the prior-year quarter.
- Term-loan repayment reduced interest burden
- Interest expense declined to $1.1 million from $10.1 million in the prior-year quarter after repayment of the term loan. The company retired $481.5 million of term-loan borrowings and increased U.S. revolver commitments to $250.0 million, with $230.9 million available at quarter-end.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- New $615.0M gross-debt structure
- The updated debt risk factor cites $600.0 million of 0.00% convertible notes due 2031 plus $15.0 million drawn on the revolver as of June 26, 2026. Note conversions or fundamental-change repurchases may require cash settlement, and cross-default provisions could make obligations immediately payable.
- Convertible-note liquidity and conversion risk
- The 2031 convertible-note risk factor states that, if conditional conversion criteria are met before December 16, 2030, conversions must be settled partially or entirely in cash. The $600.0 million principal amount could also be reclassified as current even absent actual conversions, reducing reported working capital.
- Capped-call hedging may pressure shares
- The new capped-call risk factor warns counterparties' hedge adjustments may affect the share price. The company paid $25.1 million for capped-call transactions during the first six months of 2026, and an ineffective transaction could prompt counterparties to unwind hedges.
- Inventory build drove substantial cash use
- Six-month operating cash flow was negative $74.4 million, compared with positive $57.4 million a year earlier, as inventory increased $238.9 million. Capital expenditures of $25.8 million brought calculated six-month free cash flow to negative $100.2 million.
- Elevated tax rate limits earnings conversion
- The effective tax rate was 60.3% in Q2, with $18.1 million of tax provision on operating income of $29.5 million. Discrete tax expense included $9.6 million tied to a foreign-subsidiary ownership change; six-month discrete China distribution tax expense was $15.1 million.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.7
- Gross margin
- 16.1%
- Operating margin
- 4.6%
- Segment
- Products: $572.7 million, up 25.9% year over year
- Segment
- Services: $72.2 million, up 13.0% year over year
What they said about what is next.
The 10-Q does not provide quantitative revenue or EPS guidance. Management expects existing cash, operating cash flow and revolver availability to be sufficient for debt service, working capital and technology-development needs for at least the next 12 months; remaining 2026 capital expenditures are expected to be funded primarily with operating cash flow and cash on hand.
The filing reads better than the one before it.
What came before.
- 10-Q · May 1, 2026
- Ultra Clean Holdings, Inc. reported robust Q1 2026 results with revenue of $533.7M, exceeding estimates, and an EPS of $0.31, surpassing the consensus of $0.25. The company noted strong performance in both segments,…
- 10-Q · April 29, 2026
- Ultra Clean Holdings reported Q1 2026 revenue of $533.7M, surpassing estimates and showcasing an EPS of $0.31, exceeding the consensus of $0.25. The company demonstrated resilience with increased revenues in both…
- 10-K · February 23, 2026
- Ultra Clean reported FY2025 revenue of $2,054.0 million (down 2.1% YoY) with Products revenue of $1,799.3 million and Services revenue of $254.7 million. The company recorded a non‑cash goodwill impairment of $151.1…
- 10-K · February 25, 2025
- Ultra Clean reported fiscal 2024 revenue of $2,097.6 million, up 20.9% year-over-year, driven by Products revenue of $1,853.7 million (up 23.4%). Gross margin improved to 17.0% and operating profit rose to $91.2 million…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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