Ultra Clean Holdings, Inc. Q4 FY2025 earnings call

• James Xiao started by introducing UCT 3.0, emphasizing the shift to AI technology-driven industrial growth and the strong outlook for the semiconductor market with industry projections of $1 trillion in annual semiconductor revenue by 2027. • They've been focused on ramp readiness, with global capacity to support ~$3 billion in revenue and 65% utilization, planning to increase Asian capacity to 60%. • Accelerating design to production cycle, expanded MPX strategy, and digital transformation initiatives to improve operational visibility and agility. • Sheri Savage reviewed fourth quarter and full year results and provided first quarter guidance

For the fourth quarter, total revenue was $506.6 million. Revenue from products was $442.4 million and services revenue was $64.2 million. Full year total revenue was $2.1 billion, roughly flat with 2024. Fourth quarter total gross margin was 16.1%, products gross margin 14.1%, services 29.7%. Full year 2025 total gross margin was 16.5%. Fourth quarter operating expenses were $56.6 million, operating margin 4.9%. Full year operating expense as percentage of revenue was 11.2%, operating margin 5.3%. First quarter 2026 revenue projection is $505 million to $545 million, EPS $0.18 to $0.34

• Expect 15% to 20% year-over-year growth in WFE. • First quarter 2026 revenue projection $505 million to $545 million, EPS $0.18 to $0.34. • See a step function increase in the second half of 2026

Q: Your overall view on WFE and Q1 guidance shape.

A: James said WFE forecast increased, expecting 15%-20% year-over-year growth, and Q1 has midpoint with strong second half pickup.

Q: If WFE grows 15%-20%, can Ultra Clean outgrow that and sequential growth.

A: James said confident to be on par or higher with WFE growth, seeing growth in Q2 already with more step function in second half.

Q: China revenue percentage last quarter and growth.

A: James said China WFE flattish in 2026, China OEMs forecast flattish, less than 7% of overall revenue.

Q: Gross margin assumption for Q1.

A: Brian said Q4 and Q1 roughly in line, maybe slightly better in Q1, with sequential margin expansion in Q2,3,4 as volumes increase.

Q: Memory cycle strength and parameters.

A: James said memory segment multiyear upturn, shortage lasting until 2028, HBM and NAND upgrades driving growth.

Q: Utilization rate and capacity for $1 billion capacity.

A: James said weekly forecast drop, optimistic to fill capacity quickly, shifting focus to Asian manufacturing.

Q: Margin profile and service business growth.

A: James said double-digit growth in service business in 2026, weighted in second half with U.S. foundry logic ramp