UCTT - Earnings call transcript Q3 2024 | Ultra Clean Holdings, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the UCT Q3 2024 Earnings and Webcast Conference Call. [Operator Instructions] This call is being recorded on Monday, October 28, 2024. I would now like to turn the conference over to Rhonda Bennetto, Investor Relations. Please go ahead.

Rhonda Bennetto

Thank you, operator. thank joining and everyone, afternoon, you us. for Good Scholhamer, Officer; and me today Savage, Executive Jim are Officer. With Sheri Chief Chief Financial begin the call remarks prepared questions. will financial with business, for then will review, up Sheri the follow about open we'll and with Jim the some

contains call uncertainties. that to risks are Today's subject statements and forward-looking

we All to assumptions refer based on are them please information, Factors as more call. statements today, the Risk obligation section projections forward-looking and assume in after this For to our update of and SEC no filings. estimates,

over Discussion of posted will be be to a turn And on to found reconciliation presented call I'd our can on A of Jim. our financial that, Jim? non-GAAP release results non-GAAP to with basis. press website. in today's like GAAP the

James Scholhamer

thank the we joining the our everyone, share thoughts are quarter call detailed a before Thank our our afternoon. start for Hello, industry of call that, opening high-level a I summary up over for you, financial Sheri results third Rhonda. call I'll you more review operating for the on will for After with and seeing. to questions. the broader and and financial trends this turn

peer spend third for year, up largest Using QX UCT the over end of from infrastructure consensus our last by year and our is During in group, this of surpassing over range. on in guided of high midpoint the market coming our at domestic customers our increase to XX% of revenue customers. analyst quarter, resulted that expansion the track China build-outs supporting be guidance the an the our demand equipment AI and in revenue

several we the as the Chemical equipment demand chips. uptick advanced large for sales the include packaging AI Mechanical other past applications to such saw that third for or Planarization, specifically processes to broadened addition CMP, quarter AI-related in over quarters, In

leading-edge partnering UCT accelerate with flexible has are customers of menu their us technology and Because road diverse to solutions, such maps. a

local China. our remained to that Shanghai higher of ones government expand into fabs XXXX. our believe online, local supporting regional Chinese spend customers new will by supported and Revenue facility local to OEMs manufacturing -- leads this to with that expectation level us and continue come will from Turning will conversations Recent continue elevated. investments, will

We to spending will or patterns regularly local meet watch any our our customers change alter opinion. continue could and sentiment with that for in Chinese

that computing improved realigned, and spending to quarter, industry Last mentioned keep being metrics chips could managed high-performance some to And robust. broader continue I balanced. we Memory are demand reporting tracking supply and shipments increased, towards of they data fabs have utilization of actively mostly is that Inventories recovery, a very the center are rates. point improve. is

healthy to extremely AI-related leading-edge In technologies they recently through world's leading of announced second capacity with that chipmaker the "Continue acceleration observe of half fact, demand beyond." next year rates XXXX, process for into and signs increased the to largest utilization

UCT beyond solutions. for extends and diversified gas of builds the that line fluid delivery industry far our a products reach

thousands of see center parts, that uses device semiconductor UCT goes and touches every today. smartphone, If will indirectly our every nearly fab, data you that artificial card, and a through into walk smart components could intelligence you modules. chip

across last a competitive and offering all map solutions high-value have a by road differentiated markets. to end We built leverage our advantage

remain of are year been two-pronged. last scale, revenue healthy been Semiconductor has of economics one Strong helping increased and Our and replacement customers increase, lengths cycles this has revenue. And to of the reach state-of-the-art XXX% upturn. grow is cycle begin is industry-wide optimistic of capacity-driven. UCT the outperformed reasons very cycle manufacturing laptops to we at abroad capacity the and and technology, that an expect of especially They as year, accelerate. innings the of behind. and time recovery. nearly investment here cycles We UCT early withstood phase our in has smartphones during meaningfully AI-enabled varying many are we every in since investments leading this momentum Malaysia, in technology-driven are where especially the far The debut to edge. shouldn't greater technology able has be has

achieve AI, billion In products, to by we vehicles. the our services, exceed increases the and will XXXX, efficiency digital summary, long-term the ballooning in outlook circuits be for $XXX remains investment meet maintain demand demands WFE by that in semiconductor very To We for and the will major coming. need our capacity trillion are and driven market this, the with positive. in semi-industry electrical $X range, integrated ready view to we global and economies see

that, over review. Sheri the with financial to I'll turn for And call Sheri? our

Sheri Brumm

Thanks, only. good numbers non-GAAP us. afternoon, for joining Jim, will Thanks be today's discussion, and I everyone. referring to In

third infrastructure China in total domestic XX.X% our compared the $XX.X million As $XXX.X to quarter continued mentioned, relating $XX.X was revenue $XXX compared at transportation in build-outs margin and QX. quarter. XX.X% costs. million prior Jim compared AI and due gross XX.X% increased to XX.X% from the revenue demand quarter-over-quarter market. came as customers Margins to manufacturing Products from from strength was to to to mix can in of from million material third volume, influenced last compared XX.X% XX.X% for quarter. $XXX.X was increased services for as was quarter revenue and compared Revenue QX. million Services by and well Total fluctuation last our was million in region gross up quarter. $XXX.X Total be to products million margin to the

be will quarter-to-quarter. variances there So

million million with for expense compared $XX.X $XX.X in was quarter QX. the Operating

QX. both to improved largely expense higher on in Total operating and revenue. revenue, from to services XX.X% from XX.X% Margin the for quarter across As operating X.X% of prior in quarter. division to product operating by XX.X% business effective a was decreased X% second percentage improvements the our compared efficiency overall from units quarter. of was increased driven margin Products margin the to and margin management X.X% compared in XX.X% operating expenses The X.X% were

year-to-date XX.X% XX.X%. quarter quarter, rate effective to increased a of representing Our from this rate last XX.X% tax tax

of earnings to China mix has Republic. tax Our weighted higher and jurisdictions Czech the like been

result, the million $X.XX stay on now tax for $XX.X outstanding, million due the quarter net income to earnings a per $XX.X on higher shares the were compared to mid-XXs. expect income as Based for And quarter in net we prior in revenue. rate million on XX.X XXXX share of of to $X.XX the

EPS some During exchange to related per $X.XX we headwinds, negatively the quarter, the experienced that ringgit primarily impacted by share. foreign Malaysian

the sheet. Turning balance to

compared QX. to in cash was quarter, operations and $XX.X flow to Cash vendor Our of payments. million timing cash compared to $XXX.X million cash equivalents from and million million last $XX.X $XXX.X due collections were primarily

project we $XXX between $XXX For total revenue the million million. fourth and quarter,

EPS range the expect to We $X.XX $X.XX. of in

for And the with that, I'd over call to operator questions. like to turn the

Operator

first of Needham. you. Instructions] line Thank Shi question from the Your comes Charles [Operator from

Yu Shi

a about AMAT a The that the first When the little is down the question, look is China. revenue actually in question related maybe I'll Lam PowerPoint third bit. from from website, But the ask your What's percentage is altogether. up, the from on it's posted of quarter? revenue probably coming revenue the China I you at

the quarter? revenue the growth is the non-AMAT So in first the That's main China non-Lam, third contributor question. to

James Scholhamer

about we China XX-something So XX million, directly yes, what direct, this did we I'm I to from talking So -- -- so quarter OEMs. $XX Chinese right? like our I -- we about sell million think

from Lam, And OEMs, ASML some and simply so strength and but look seeing as read and into we're from that. Lam Chinese ASM percentages different others. just our strength too more you at Applied seeing you much some we're also and can't It's from

So fact to you those from some at to that equipment But we're makers. you're continuing going a see percentages significant think that I strength the around look I direct to way, little seeing think are our move sales bit. Chinese when

Yu Shi

direct. it. to million just I Got from $XX want China clarify.

James Scholhamer

to give you Charles. a reference, just Yes. like And

past, $XX $XX we a million if like So quarter. in the a quarter, we did had great maybe million

through with been this continue next just that strength. and met China, they I going the CEOs year as and year strong So to in think stay to continued that's the through well. has actually And

Yu Shi

it. to and question. this is it's it. maybe you, question you semi to the pretty the unique Chinese guys in access Got ask product Obviously, is industry. technology a maybe want cap I a Got for the Maybe

But CMP-related that well. edge, looks revenue with number but is general as talking year. your we about But you infrastructure tend to because it something there's your has to off, build-out? why We They this Strength the the, you -- That's bit quarter, about depth in number is exposure? related talked said infrastructure Can more AI AI the of one. specific I talk you're strength. which First the there's ramp that? done double with to Or electroplating, advanced the is Is CMP may build-out. know and it's a CMP have what product year. your going you than Lam's some about revenue all like You two next a tied more more continue manufacturing? this part for about nodes? is mean, it chip CMP just very associate AI large little -- said,

James Scholhamer

outperformance electrochemistry mentioned, Czech of strength what see just remain started for really quarter X to to I as continued is Republic etch started been has out But and of the the I'll interconnect reasons Sure. factory. business well business as our our see for wet that mean, Yes. increase. strong we've reiterate you the to we seeing we CMP this

have a position. really good Now we

a very something CMP. their And they're of off. chemical in we're the that significantly We chips But up and making. on is people high do in footprint spotty is have to seeing is get planarization kind mechanical yields that CMP what

-- becoming we since see across very like types different diversified said, in that we cover where we're to we of also investment technology. equipment that and platform space. this is more And many a I starting have So

up, And really starting area. there. invest a solid have kind -- especially we position to of to take to in yield companies the AI So see CMP we're their in then

Operator

Oppenheimer. Edward Your next comes question from line the of from Yang

Edward Yang

would mentioned quarter. deeper your or understand, UCT, to I technology and outsourcing wanted you and faster? customers. dig a more your have that customers congrats to on your end such partners your And is, a grow faster help Jim, I overweight of any meaningfully this rates? platforms? than wanted are particular customers into outlook, you right a is demand Or bit to great you broad-based That exposure, function market on you areas exposed growing like relying win underweight are

James Scholhamer

Yes, hi, Edward.

the -- we start we yes, markets as started to this the And bring typically So see as seen the years. and over start outgrow we've definitely to back the turn industry in to you up industry up. the years

outsource happens to customers bit you more. So begin a what is see start our to

of So that. have we some

want customers We take And also been to where we've that exploiting. new also have region been that in gains in platform we've lithography growing. that advantage of our Malaysia, low-cost

So in our strengths. are starting those basic see from yes, we to outperform these areas

think I things. those are So main like the

to history do experience bit, higher But see if moving the a will our of XX of were and up share last experience do you look we the over years, industry to gain. you outsourcing, level a that market higher starts back when a level we

Edward Yang

I question on just to piggyback Charles' China. wanted on

$XX any is And it lumpiness but seeing mentioned $X.X moderation? there that You did just was China within the is -- year-over-year, from up of quarterly that kind revenue, billion. that Or from I it you your is any is quarter. mean? see seasonality you're billion down Is revenue there? there about Or prior triple digits

James Scholhamer

Yes.

customers but details, issues there, Edward, some yes, into and So our go we and it's issue. main not X quality with have internal is can't and X dealing I

is X growing Another faster.

we about prospects. long-term like lumpiness, concerned is but nothing be to had it -- the So it's

Operator

Group. from comes Capital the of Schwab Christian question line next from Your Craig-Hallum

Christian Schwab

about of quarter, 'XX broader in talked mean, you first seeing 'XX, market the which obviously half the been last I half second has guys of improvement versus correct.

for a of kind on about -- time. largest percentages call really us but I about We of year-over-year you really kind any being customer talked have last 'XX, about think in understand also I on an hear WFE there? what seeing we talked your talked update Do didn't update on that. strong We the But basis growth.

James Scholhamer

Yes.

looking -- that, continue I at update Christian. think and we've been to we

the at that to XX% WFE or say. to a XX% So we still we XX% or right? up XX%, look like changes it's difficult very depends, to year going increase. But is baseline to continue in obviously, on are And positive bit. XX% Whether how So XX%. it the very -- little the all ends 'XX,

will the be But we for be in we 'XX. good that I 'XX We will believe But need think better it's we do a see think than I that. up, more believe next definitely we to could out 'XX how estimate will with ends year. than and come like -- up really before we

Christian Schwab

other Great. questions. No

Operator

of line from next comes question Your Krish TD from Cowen. Sankar the

Robert Mertens

have just to on domestic segmented more China broad-based? you jump Krish. Robert or back do you're or sort out Have before real witnessing. have December Maybe sort would you you Mertens are next to know if is what it's strength between strong memory you heading visibility in of the for into at based This customers of -- still China? and confidence what And year also, expecting on within remain foundry just quick quarter, but that visibility then the be helpful. it that I

James Scholhamer

going everything thing. the with in a so right the customers. I've discussion investing and see panel And been modules. to of piece is it there. clear But -- XXXX. the type. are piece every going going they're with out I they definitely to dinner level before, which them actually in just obviously door equipment the these provide segmented market in our for continue just had I experiencing Mostly we've to gas out every area, we what Robert, we they share. of business. That's of the now, They CEOs is gain deposition in at basically, their I have chip Yes. mentioned And Not to to to XXXX customers, not was we the companies. same every is over had can. I made XX% of that etch equipment from be those as trip trying continue Especially could to the that continue get

a comfortable products, and together with we're diversified going with that some that market So AI the to in we're different confident together recovery that, broader of at point, continue. strength we're seeing our very parts

in and things guided going get QX, we continue better we're to to As up better. see

Robert Mertens

Great. more, just if And That's X then helpful. I may.

the the quarterly product basis? a been the into have does the doing mix? margins, play takes bigger of well margins they've sales quarter. to a terms of Or that In just due in Is on September more and puts volume

Sheri Brumm

They just depends. both do. It

Sometimes we'll shipments have margin a mix higher where happening. there's

ship Specifically, for coming couple factor the a of volume plays certain volumes just We've locations for years. if of certain with more general us types. more it's we But our up, huge in definitely out last product added because fixed of costs. covering over the capacity

some covers of associated So expenses with it definitely that. those

out the it. probably that's So of factor more major

Operator

Scholhamer will There are no continue. further back call closing now questions at this for turn remarks. Please the time. Jim to I

James Scholhamer

you, Thank call you Thank everyone. for our joining today.

about could and join forward. you hope can think go I the pick up, we're it. really next quarter, looking to excited And you. us you forward I Thank

Operator

this call. today's for you Thank and Ladies gentlemen, participation. your conference concludes

You may now disconnect.

Ultra Clean (UCTT) 28 Oct 242024 Q3 Earnings call transcript