Ultra Clean Holdings, Inc.

Q2 2026 non-GAAP revenue was a record $644.9 million, up from $533.7 million in the prior quarter. Product revenue was $572.7 million versus $465.7 million, and services revenue was $72.2 million versus $68.0 million. Gross margin was 16.7% versus 16.5% in Q1; products gross margin was 15.1% versus 14.6%, and services gross margin was 28.9% versus 30.0%. Operating margin was 7.0% versus 5.1%, EPS was $0.70 versus $0.31, and net income was $32.3 million versus $14.5 million. Cash and cash equivalents were $255.9 million, and operating cash flow was negative $41.1 million. For Q3 2026, management guided to revenue of $700 million to $750 million and EPS of $0.83 to $1.03. The company also said it expects tax rate to stay in the low 20% range for 2026.

James Xiao struck an upbeat tone, saying demand was increasing across products and services and that AI-related investment is reshaping semiconductor capital equipment needs. He emphasized that customers are engaging earlier in the development cycle and giving UCT longer planning horizons, which he framed as evidence of deeper strategic importance. Strategically, he highlighted UCT 3.0, with ramp readiness, new product transfer capabilities, and digital transformation as the main pillars supporting durable growth.

Sheri Brumm said Q2 was another quarter of solid execution, with record revenue of $644.9 million and gross margin of 16.7%, up from 16.5% in Q1. She noted operating expenses were $62.5 million, or 9.7% of revenue, and operating margin improved to 7.0%. She also pointed to cash of $255.9 million, negative operating cash flow of $41.1 million, and ongoing inventory investment to support anticipated demand. On outlook, she said margins should continue to expand as factories are utilized more, with a goal of reaching the 20% gross margin / $4 billion revenue run rate profile during 2027, while tax rate should remain in the low 20% range.

Analysts focused on whether guidance was conservative relative to customers’ system growth, and management said timing differences, subsystem integration lags, and different customer quarter-ends create a revenue recognition gap. Management also said it sees upside if customers use UCT more as overflow capacity when their internal manufacturing is constrained. On capacity, James said UCT expects to be ready for a $4 billion run rate in the first half of 2027 and is already evaluating Southeast Asia expansion for a $5 billion run rate later. Questions also probed customer diversification, supply chain tightness, and service growth; management said the top two customers have fallen from 64% to the high 50s of revenue, it has not seen component shortages thanks to ramp-readiness work, and services should grow at double-digit rates but with some timing lag.