Ultra Clean (NASDAQ: UCTT) posts Q2 profit, issues $600M convertible notes
Rhea-AI Filing Summary
Ultra Clean Holdings, Inc. grew Q2 2026 revenue to $644.9 million, up 24.3% year over year, with Products at $572.7 million and Services at $72.2 million. International customers supplied 78% of revenue, led by Singapore and other Asia-Pacific markets as semiconductor capital equipment demand improved.
Gross margin improved to 16.1%, and the company generated income from operations of $29.5 million versus a prior-year loss that included a $151.1 million goodwill impairment. Net income attributable to UCT was $8.7 million ($0.19 diluted EPS). Operating cash flow for the first half was $(74.4) million, driven mainly by a $238.9 million inventory build. Cash stood at $255.9 million, with inventories at $629.9 million and total assets of $1.92 billion. In March 2026 UCT issued $600.0 million of 0% Convertible Senior Notes due 2031, used in part to repay its term loan, and repurchased 0.7 million shares for $40.3 million. Long-term debt was $599.4 million, and $230.9 million remained available on the expanded U.S. revolving credit facility.
Positive
- None.
Negative
- None.
Filing Explained
Convertible notes remain debt, with conversion blocked for the September 25, 2026 quarter under the quarter-end price test.
Ultra Clean’s Form 10-Q, an unaudited quarterly report, reports that its
The notes were not convertible at holders’ option during the quarter ending
The related capped call has an initial cap price of
Future quarter-end tests based on the 20-of-30 trading-day condition will determine when holders may convert under that condition; the filing also describes other conversion triggers and the general conversion right beginning
Key Figures
Q2 2026 Revenue: $644.9 million
Q2 2026 Net Income attributable to UCT: $8.7 million
Q2 2026 Diluted EPS: $0.19 per share
+5 more
8 metrics
Q2 2026 Revenue
$644.9 million
Total revenues for the three months ended June 26, 2026
Q2 2026 Net Income attributable to UCT
$8.7 million
Net income attributable to UCT for the three months ended June 26, 2026
Q2 2026 Diluted EPS
$0.19 per share
Diluted net income per share for the three months ended June 26, 2026
Cash and Cash Equivalents
$255.9 million
Balance as of June 26, 2026
Inventories
$629.9 million
Inventory balance as of June 26, 2026
Convertible Senior Notes
$600.0 million
Principal amount of 0% Convertible Senior Notes due 2031 issued March 3, 2026
Operating Cash Flow H1 2026
$(74.4) million
Net cash provided by (used in) operating activities for six months ended June 26, 2026
Share Repurchases H1 2026
$40.3 million
Cost to repurchase 0.7 million shares during six months ended June 26, 2026
Key Terms
Convertible Senior Notes, capped call transactions, goodwill impairment, valuation allowance, +2 more
6 terms
Convertible Senior Notes financial
"the Company issued $600.0 million principal amount of 0% Convertible Senior Notes due 2031"
Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.
capped call transactions financial
"used a portion of the proceeds to repay its term loan and enter into capped call transactions"
Capped call transactions are agreements where investors buy options that give them the chance to benefit if a stock's price goes up, but with a limit on how much they can gain. This helps protect them from paying too much if the stock's price rises a lot, similar to having a maximum limit on a reward. They matter because they help investors manage risk while still allowing some upside potential.
goodwill impairment financial
"Impairment of goodwill | — | 151.1 | — | 151.1"
Goodwill impairment occurs when a company’s valued reputation or brand strength, known as goodwill, is found to be worth less than previously recorded on its financial statements. This usually happens when the company's performance declines or market conditions change, signaling that the expected benefits from acquisitions or brand value are no longer as strong. It matters to investors because it can indicate that a company's assets are less valuable than initially thought, potentially affecting its overall financial health.
valuation allowance financial
"concluded that a valuation allowance on its U.S. federal, state and certain foreign deferred tax assets was still appropriate"
A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.
Pillar Two financial
"global minimum tax framework, commonly referred to as Pillar Two, which established a minimum 15 percent income tax rate"
Pillar Two is an international tax framework that sets a global minimum tax rate for large multinational companies and requires extra payments when profits booked in low-tax locations fall below that floor. For investors, it matters because it raises the likely tax bill, reduces after-tax earnings and cash available for dividends or reinvestment, and can change company valuations—think of it as a tax “price floor” that limits how much a firm can lower its effective tax rate.
noncontrolling interests financial
"Noncontrolling interests are recognized to reflect the portion of equity in the Company’s consolidated subsidiaries"
The portion of a subsidiary’s equity and profits that belongs to outside owners rather than the parent company; when a parent reports consolidated results it includes the whole subsidiary but shows the noncontrolling slice separately. Think of a company’s subsidiary as a pie where the parent owns most slices but some are held by other investors — noncontrolling interests tell you how much of the pie and its future earnings don’t belong to the parent, which affects how much profit and net assets are truly attributable to the parent’s shareholders.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Ultra Clean (UCTT) perform financially in Q2 2026?
Ultra Clean reported Q2 2026 revenue of $644.9 million, up 24.3% year over year, and net income attributable to UCT of $8.7 million, compared with a $162.0 million loss in Q2 2025, which included a large goodwill impairment charge.
What were Ultra Clean (UCTT)’s segment results for Q2 2026?
In Q2 2026, the Products segment generated $572.7 million of revenue and the Services segment $72.2 million. Products operating profit was $24.8 million, while Services contributed $4.7 million, reflecting higher demand across both segments versus the prior year.
How strong is Ultra Clean (UCTT)’s balance sheet and liquidity?
As of June 26, 2026, Ultra Clean held $255.9 million in cash and cash equivalents and total assets of $1.92 billion. Long-term debt was $599.4 million, including $600.0 million of convertible notes, with $230.9 million available under its U.S. revolving credit facility.
What major financing actions did Ultra Clean (UCTT) take in 2026?
In March 2026, Ultra Clean issued $600.0 million of 0% Convertible Senior Notes due 2031, realizing net proceeds of about $583.3 million. It used proceeds to repay $481.5 million of term loan debt, entered a capped call, and repurchased 0.7 million shares for $40.3 million.
Why was Ultra Clean (UCTT)’s operating cash flow negative in the first half of 2026?
Net cash from operating activities was $(74.4) million for the first half of 2026, mainly due to a $238.9 million increase in inventories tied to higher production levels. Accounts payable and accrued compensation also rose, partially offsetting the working-capital outflow.
How did taxes affect Ultra Clean (UCTT) in Q2 2026?
Ultra Clean recorded an income tax provision of $18.1 million in Q2 2026, an effective tax rate of 60.3%. Results included discrete tax expenses of $15.1 million from a China earnings distribution and $9.6 million from a change in ownership of a China subsidiary.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
Form 10-Q
__________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 26, 2026
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from____________to
Commission file number 000-50646
__________________________________________________
(Exact name of registrant as specified in its charter)
__________________________________________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
(510 ) 576-4400
Registrant’s telephone number, including area code
__________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated
filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| x | Accelerated filer | o | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Number of shares outstanding of the issuer’s common stock as of July 29, 2026: 45,277,029
ULTRA CLEAN HOLDINGS, INC.
TABLE OF CONTENTS
| Page | |||||||||||
PART I—FINANCIAL INFORMATION | |||||||||||
| Item 1. | Unaudited Condensed Consolidated Financial Statements | 3 | |||||||||
Condensed Consolidated Balance Sheets | 3 | ||||||||||
Condensed Consolidated Statements of Operations | 4 | ||||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) | 5 | ||||||||||
Condensed Consolidated Statements of Cash Flows | 6 | ||||||||||
Condensed Consolidated Statements of Stockholders’ Equity | 7 | ||||||||||
Index to Notes to Condensed Consolidated Financial Statements | 10 | ||||||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 26 | |||||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 34 | |||||||||
| Item 4. | Controls and Procedures | 34 | |||||||||
PART II—OTHER INFORMATION | |||||||||||
| Item 1. | Legal Proceedings | 35 | |||||||||
| Item 1A. | Risk Factors | 35 | |||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 36 | |||||||||
| Item 3. | Defaults Upon Senior Securities | 37 | |||||||||
| Item 4. | Mine Safety Disclosures | 37 | |||||||||
| Item 5. | Other Information | 37 | |||||||||
| Item 6. | Exhibits | 38 | |||||||||
SIGNATURES | 39 | ||||||||||
- 2 -
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 26, 2026 | December 26, 2025 | ||||||||||
(In millions, except par value) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Deferred tax assets, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued compensation and related benefits | |||||||||||
| Operating lease liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred tax liabilities | |||||||||||
| Operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (See Note 8) | |||||||||||
| Equity: | |||||||||||
| UCT stockholders’ equity: | |||||||||||
Preferred stock — $ | |||||||||||
Common stock — $ | |||||||||||
| Additional paid-in capital | |||||||||||
Common shares held in treasury, at cost, | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total UCT stockholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
(See accompanying Notes to Condensed Consolidated Financial Statements)
- 3 -
Table of Contents
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | ||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
| Products | |||||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total cost revenues | |||||||||||||||||||||||
| Gross margin | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Impairment of goodwill | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income (loss) from operations | ( | ( | |||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense), net | ( | ( | ( | ||||||||||||||||||||
| Income (loss) before provision for income taxes | ( | ( | |||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income (loss) | ( | ( | ( | ||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||||||||
| Net income (loss) attributable to UCT | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Net income (loss) per share attributable to UCT common stockholders: | |||||||||||||||||||||||
| Basic | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Diluted | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Shares used in computing net income (loss) per share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
(See accompanying Notes to Condensed Consolidated Financial Statements)
- 4 -
Table of Contents
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Change in cumulative translation adjustment, net of tax | ( | ( | |||||||||||||||||||||
| Change in pension net actuarial gain, net of tax | |||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income, attributable to noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income (loss) attributable to UCT | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
(See accompanying Notes to Condensed Consolidated Financial Statements)
- 5 -
Table of Contents
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | |||||||||||
| June 26, 2026 | June 27, 2025 | ||||||||||
(In millions) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of intangible assets | |||||||||||
| Stock-based compensation | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Impairment of goodwill | |||||||||||
| Loss on extinguishment of debt | |||||||||||
| Loss on disposal of property, plant and equipment | |||||||||||
| Change in the fair value of financial instruments | ( | ||||||||||
| Deferred income taxes | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Inventories | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Other non-current assets | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Accrued compensation and related benefits | ( | ||||||||||
| Income taxes payable | ( | ( | |||||||||
| Operating lease right-of-use assets and operating lease liabilities | ( | ||||||||||
| Other liabilities | ( | ||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Proceeds from sale of equipment | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from the issuance of convertible notes | |||||||||||
| Borrowings on revolving credit facility | |||||||||||
| Proceeds from issuance of common stock | |||||||||||
| Payment of debt issuance costs | ( | ( | |||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Payment for capped call transactions | ( | ||||||||||
| Principal payments on bank borrowings | ( | ( | |||||||||
| Employees’ taxes paid upon vesting of restricted stock units | ( | ( | |||||||||
| Payments of dividends to a joint venture shareholder | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
| Income taxes paid, net of income tax refunds | $ | $ | |||||||||
| Interest paid | $ | $ | |||||||||
| Non-cash investing and financing activities: | |||||||||||
| Property, plant and equipment purchased included in accounts payable and other liabilities | $ | $ | |||||||||
(See accompanying Notes to Condensed Consolidated Financial Statements)
- 6 -
Table of Contents
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended June 26, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity of UCT | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance March 27, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance under employee stock plans | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employees' taxes paid upon vesting of restricted stock units | — | — | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares transfer from employee stock plans | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend payments to a joint venture shareholder | — | — | — | — | — | — | — | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 26, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 26, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity of UCT | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 26, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance under employee stock plans | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employees' taxes paid upon vesting of restricted stock units | — | — | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares transfer from employee stock plans | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Capped call transactions | — | — | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend payments to a joint venture shareholder | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
- 7 -
Table of Contents
| Other comprehensive loss | — | — | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 26, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
- 8 -
Table of Contents
| Three Months Ended June 27, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity of UCT | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance March 28, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance under employee stock plans | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employees' taxes paid upon vesting of restricted stock units | — | — | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend payments to a joint venture shareholder | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 27, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 27, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity of UCT | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 27, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance under employee stock plans | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employees' taxes paid upon vesting of restricted stock units | — | — | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend payments to a joint venture shareholder | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 27, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
- 9 -
Table of Contents
ULTRA CLEAN HOLDINGS, INC.
INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page | |||||||||||
| 1. | Organization and Significant Accounting Policies | 11 | |||||||||
| 2. | Balance Sheet Information | 13 | |||||||||
| 3. | Fair Value | 14 | |||||||||
| 4. | Goodwill and Intangible Assets | 14 | |||||||||
| 5. | Long-Term Debt | 15 | |||||||||
| 6. | Income Tax | 18 | |||||||||
| 7. | Retirement Plans | 18 | |||||||||
| 8. | Commitments and Contingencies | 19 | |||||||||
| 9. | Stockholders’ Equity and Noncontrolling Interests | 19 | |||||||||
| 10. | Employee Stock Plans | 20 | |||||||||
| 11. | Revenue Recognition | 21 | |||||||||
| 12. | Leases | 22 | |||||||||
| 13. | Net Loss Per Share | 22 | |||||||||
| 14. | Reportable Segments | 23 | |||||||||
- 10 -
Index to Notes
ULTRA CLEAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization — Ultra Clean Holdings, Inc., (the “Company” or “UCT”) a Delaware corporation, was founded in November 2002 and became a publicly traded company on the NASDAQ Global Market in March 2004. The Company is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry. UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and part and component manufacturing, as well as tool chamber parts cleaning and coating, and micro-contamination analytical services. The Company’s Products business primarily designs, engineers and manufactures production tools, components and parts, and modules and subsystems for the semiconductor and display capital equipment markets. Products include chemical delivery modules, frame assemblies, gas delivery systems, fluid delivery systems, precision robotics, process modules, sub-fab process equipment support racks, as well as other high-level assemblies. The Company’s Services business provides ultra-high purity parts cleaning, process tool part recoating, surface encapsulation and high sensitivity micro contamination analysis primarily for the semiconductor device makers and wafer fabrication equipment markets.
Fiscal Year — The Company uses a 52-53 week fiscal year. Fiscal year 2026 is a 53-week period ending January 1, 2027, and fiscal year 2025 was a 52-week period ended December 26, 2025. All references to quarters refer to fiscal quarters and all references to years refer to fiscal years.
Significant Accounting Policies — There were no changes to the accounting policies disclosed in Note 1, Organization and Significant Accounting Policies of the Company’s Annual Report on Form 10-K for the year ended December 26, 2025 that had a material impact on the Company’s condensed consolidated financial statements and related notes.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient for estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. This guidance is to be applied prospectively and is effective for annual periods, including interim periods, beginning after December 15, 2025, with early adoption permitted. The Company adopted this standard in the first quarter of 2026. The adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU No. 2024-03”) which requires entities to provide disaggregated disclosure of certain expense categories within relevant income statement captions, including, but not limited to, inventory purchases, employee compensation, depreciation, amortization, and depletion. In January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU No. 2025-01”), which
- 11 -
Index to Notes
confirmed that the guidance in ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The guidance is required to be applied prospectively, although retrospective application is permitted. The Company is currently evaluating the impact of ASU 2024-03 and ASU 2025-01 on its financial statement disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU No. 2025-06”). The amendments in this update provide targeted improvements to the accounting for internal-use software costs by removing the concept of “project stages,” introducing a new capitalization threshold based on when management authorizes and commits to funding the project, and requiring that capitalization only occur when completion of the software is probable. The ASU also introduces the concept of “significant development uncertainty,” under which capitalization should cease until such uncertainty is resolved. Additionally, the amendments relocate the guidance for website development costs from ASC 350-50 to ASC 350-40 and require expanded disclosures for capitalized internal-use software costs consistent with those for long-lived assets under ASC 360-10. Entities may apply the guidance prospectively, retrospectively, or using a modified retrospective approach, with early adoption permitted. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). ASU 2025-10 establishes authoritative guidance on the accounting for government grants received by business entities, including recognition, measurement, presentation, and disclosure requirements. Under the new guidance, a government grant should not be recognized until it is probable that the entity will both (i) comply with the conditions attached to the grant and (ii) receive the grant. The ASU distinguishes between (a) grants related to assets and (b) grants related to income, and requires entities to apply either a deferred-income approach or a cost-accumulation approach for grants related to assets. Grants related to income are to be recognized in earnings on a systematic and rational basis over the periods in which the entity recognizes the related costs. ASU 2025-10 also provides guidance on the accounting for forgivable loans, nonmonetary government grants, and repayments of previously recognized grants. For public business entities, ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim periods within those fiscal years. Early adoption is permitted. The standard permits modified prospective, modified retrospective, or full retrospective adoption approaches. The Company is currently evaluating the impact of ASU 2025-10 on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 provides enhancements and clarifications to the existing interim reporting framework in Topic 270. The amendments establish a comprehensive listing of required interim disclosures, clarify the applicability of interim reporting guidance, and improve navigability and consistency in interim reporting. The ASU also introduces a new disclosure principle that requires entities to disclose events occurring after the end of the most recent annual period that have a material impact on the entity. Additionally, the amendments clarify the types of interim financial statements subject to GAAP (including condensed statements) and provide presentation and content requirements for interim periods. ASU 2025-11 is effective for interim periods within fiscal years beginning after December 15, 2027, for public business entities and after December 15, 2028, for all other entities. Early adoption is permitted, and it may be applied prospectively or retrospectively to prior periods presented. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statement disclosures.
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements (“ASU No. 2025-12”), which addresses stakeholder feedback and makes incremental improvements to U.S. GAAP. The amendments clarify, correct errors, and make minor improvements to the Accounting Standards Codification to enhance understandability and application. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company will adopt this guidance in fiscal 2027 and does not expect the adoption to have a material impact on its consolidated financial position, results of operations, or disclosures.
In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) (“ASU 2026-02”). ASU 2026-02 improves the financial accounting for and disclosure of activities related to environmental credits and environmental credit obligations. This update provides recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. ASU 2026-02 is effective for the Company for annual reporting periods (and interim periods within those annual periods) beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2026-02 on its consolidated financial statements and related disclosures.
- 12 -
Index to Notes
2. BALANCE SHEET INFORMATION
Accounts Receivable Factoring Agreements
The Company has receivables factoring arrangements pursuant to which certain receivables are sold to a bank without recourse in exchange for cash. Transactions under this arrangement are accounted for as sales under ASC 860, Transfers and Servicing of Financial Assets, with the sold receivables removed from the Company’s balance sheet. Under these arrangements, the Company does not maintain any beneficial interest in the receivables sold, and the bank’s purchase of eligible receivables is subject to a maximum amount of $40.0 million of uncollected receivables originated within the United States. The Company services the receivables on behalf of the bank but otherwise maintains no significant continuing involvement with respect to the receivables. Sale proceeds, which are representative of the fair value of factored receivables, less a factoring fee, are reflected in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows, and the Company did not receive any proceeds in excess of the fair value of factored receivables during the periods presented. During the three and six month periods ended June 26, 2026, the Company received cash proceeds of $30.0 million and $49.0 million, respectively, from the sale of accounts receivable under these arrangements. As of June 26, 2026, $26.3 million of receivables factored under these arrangements had been sold and removed from the Company’s Consolidated Balance Sheets.
Inventories
Inventories consisted of the following:
| (In millions) | June 26, 2026 | December 26, 2025 | |||||||||
| Raw materials | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
| Total | $ | $ | |||||||||
Property, plant and equipment, net
Property, plant and equipment, net, consisted of the following:
| (In millions) | June 26, 2026 | December 26, 2025 | ||||||||||||
| Land | $ | $ | ||||||||||||
| Buildings | ||||||||||||||
| Leasehold improvements | ||||||||||||||
| Machinery and equipment | ||||||||||||||
| Computer equipment and software | ||||||||||||||
| Furniture and fixtures | ||||||||||||||
| Accumulated depreciation | ( | ( | ||||||||||||
| Construction in progress | ||||||||||||||
| Total | $ | $ | ||||||||||||
Capitalized interest was not significant for the six months ended June 26, 2026, or for the fiscal year ended December 26, 2025.
- 13 -
Index to Notes
3. FAIR VALUE
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy:
| Fair Value Measurement at Reporting Date Using | ||||||||||||||||||||||||||
| Description | June 26, 2026 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Other non-current assets: | ||||||||||||||||||||||||||
| Plan assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Other liabilities: | ||||||||||||||||||||||||||
| Pension obligation | $ | $ | $ | $ | ||||||||||||||||||||||
| Fair Value Measurement at Reporting Date Using | ||||||||||||||||||||||||||
| Description | December 26, 2025 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Other non-current assets: | ||||||||||||||||||||||||||
| Plan assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Other liabilities: | ||||||||||||||||||||||||||
| Pension obligation | $ | $ | $ | $ | ||||||||||||||||||||||
The estimated fair value of pension obligation is based on expected years of service and average compensation. The valuation model used to value pension obligation utilizes mortality rate, inflation, interest rate risks and changes in the life expectancy for pensioners. These assumptions are routinely made in the appraisal process by the independent actuary resulting in a Level 3 classification. As of June 26, 2026, the Company’s aggregate pension benefit obligations was $12.1 million and the fair value of the pension plan assets was $9.8 million, resulting in underfunded pension benefit obligations of $2.3 million. The Company recognizes the overfunded or underfunded status of defined benefit pension plans, measured as the difference between the fair value of the plan assets and the benefit obligation. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability.
4. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of tangible and identifiable intangible assets acquired, less liabilities assumed in a business combination. During the six months ended June 26, 2026, the Company did not Details of aggregate goodwill of the Company are as follows:
| (In millions) | Products | Services | Total | ||||||||||||||
| Balance at December 26, 2025 | $ | $ | $ | ||||||||||||||
| Balance at June 26, 2026 | $ | $ | $ | ||||||||||||||
Intangible Assets
Intangible assets are generally recorded in connection with business acquisitions and are amortized over their estimated useful lives. The Company evaluates the useful lives of its intangible assets each reporting period and reviews such assets for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
- 14 -
Index to Notes
Details of intangible assets were as follows:
| As of June 26, 2026 | As of December 26, 2025 | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Useful Life (In years) | Gross Carrying Amount | Accumulated Amortization | Carrying Value | Gross Carrying Amount | Accumulated Amortization | Carrying Value | ||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Recipes | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Intellectual property/know-how | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Tradename | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Standard operating procedures | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Developed technology | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
The Company amortizes its intangible assets on a straight-line or accelerated basis over the estimated economic life of the assets. Amortization expense was approximately $6.8 million and $13.7 million for the three and six months ended June 26, 2026, respectively. For the three and six months ended June 27, 2025, amortization expense was approximately $7.0 million and $14.3 million, respectively. Amortization expense related to recipes, standard operating procedures, developed technology and certain intellectual property/know-how is included in cost of revenues, while the remaining amortization expense is included in general and administrative expense. As of June 26, 2026, future estimated amortization expense is expected to be as follows:
| (In millions) | Amortization Expense | ||||
| 2026 (remaining in year) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
5. LONG-TERM DEBT
Long-term debt was as follows:
| (In millions) | June 26, 2026 | December 26, 2025 | |||||||||
| Term loan | $ | $ | |||||||||
| Revolver | |||||||||||
| Convertible Notes | |||||||||||
| Total debt | |||||||||||
| Current portion, net | ( | ||||||||||
| Debt issuance costs | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Term Loan and Revolving Credit Facilities
On April 23, 2026, the Company entered into the Tenth Amendment to its Credit Agreement, dated as of August 27, 2018 (as amended, the “Credit Agreement”), which increased the revolving credit facility from $150.0 million to $250.0 million and extended the maturity date from August 27, 2027 to April 23, 2031. The revolving credit facility bears interest at Term SOFR plus an applicable margin ranging from 1.25 % to 1.75 %, based on the Company's Consolidated Secured Net Leverage Ratio. The amended Credit Agreement requires the Company to maintain a maximum Consolidated Secured Net
- 15 -
Index to Notes
Leverage Ratio of 3.25 to 1.00 (or 3.75 to 1.00 for any reference period in which a Material Acquisition is consummated) and a minimum Cash Interest Coverage Ratio of 3.00 to 1.00. The Company incurred approximately $1.3 million in new debt issuance costs and had approximately $0.9 million of unamortized deferred issuance costs from the prior facility; of these amounts, approximately $1.9 million will be deferred and amortized over the new five-year term, while approximately $0.3 million was recognized as expense in the second quarter of fiscal 2026. As of June 26, 2026, total unamortized debt issuance costs related to the revolving credit facility were $1.9 million, which is included in other non-current assets in the accompanying condensed consolidated balance sheets.
The Company pays a quarterly commitment fee in arrears on the average daily available commitment outstanding, at a rate ranging from 0.20 % to 0.25 % based on the Company's Consolidated Secured Net Leverage Ratio.
Outstanding letters of credit and outstanding borrowings reduce the availability of the revolving credit facility. As of June 26, 2026, the Company had $230.9 million available under the revolving credit facility, net of $4.1 million of outstanding letters of credit and $15.0 million of outstanding borrowings. The letter of credit facility has an available commitment of $50.0 million and a maturity date of April 23, 2031. The Company pays a quarterly fee in arrears on the dollar equivalent of all outstanding letters of credit equal to the applicable margin for Term SOFR loans under the revolving credit facility, and a fronting fee equal to 0.125 % per annum of the undrawn and unexpired amount of each letter of credit. As of June 26, 2026, the Company had $4.1 million of outstanding letters of credit and $45.9 million of available commitments remaining under the letter of credit facility.
During the second quarter, the Company drew $15.0 million under the revolving credit facility, which remained outstanding as of June 26, 2026 and bore interest at a rate of 5.4 %. As of June 26, 2026, the Company was in compliance with the financial covenants contained within the Credit Agreement.
In addition, the Company maintains credit agreements with financial institutions in Czechia and in Israel, which provide for revolving credit facilities of up to 7.0 million euros (approximately $8.0 million) and $5.0 million, respectively. As of June 26, 2026, there were no borrowings outstanding under these facilities; however, $2.1 million of the Czechia facility was utilized for outstanding bank guarantees.
As of June 26, 2026, the Company had $230.9 million, $5.9 million and $5.0 million available to draw from its credit facilities in the U.S., Czechia and Israel, respectively.
During the quarter ended June 26, 2026, the Company prepaid the remaining $19.4 million outstanding under its term loan facility, retiring the facility in full. In connection with the prepayment, the Company wrote off $0.1 million of remaining unamortized debt issuance costs.
Convertible Notes and Related Capped Call Transactions
On March 3, 2026, the Company issued $600.0 million principal amount of 0 % Convertible Senior Notes due 2031 (the “Convertible Notes”) in a private offering, which amount included the full exercise of the initial purchasers’ option to purchase an additional $75.0 million principal amount of the Convertible Notes. The Convertible Notes mature on March 15, 2031 and do not bear regular interest. The total net proceeds from the issuance of the Convertible Notes, after deducting initial purchasers’ discounts and commissions and estimated debt issuance costs, were approximately $583.3 million.
Each $1,000 principal amount of the Convertible Notes is initially convertible into 11.80 shares of the Company’s common stock (the “Conversion Option”), which is equivalent to an initial conversion price of approximately $84.75 per share of common stock, subject to adjustment upon the occurrence of specified events. The initial conversion price represents a premium of approximately 42.5 % to the $59.47 per share closing price of the Company’s common stock on February 26, 2026. The Convertible Notes are convertible at the option of the holders prior to the close of business on the business day immediately preceding December 16, 2030, only under the following conditions: (1) during any fiscal quarter (and only during such fiscal quarter) commencing after the fiscal quarter ending on June 26, 2026, if the last reported sale price per share of common stock exceeds 130 % of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter; (2) during the 5 consecutive business days immediately after any 10 consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of common stock and the conversion rate on such trading day; (3) if the Company calls any Notes for redemption; or (4) upon the occurrence of specified distributions or corporate events. On or after December 16, 2030, holders may convert the Convertible Notes at any time until the close of business on the 2nd scheduled trading day immediately prior to the maturity date regardless of the foregoing conditions. Upon conversion, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in respect of the remainder, if any, of the conversion value in excess of the aggregate principal amount of the Convertible Notes being converted.
- 16 -
Index to Notes
If the Company undergoes a fundamental change (as defined in the indenture governing the Convertible Notes), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Notes, at a price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
The Company has the right, at its election, to redeem all or any portion of the Convertible Notes on or after March 20, 2029 and on or before the 40th scheduled trading day immediately preceding the maturity date, at a price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if the Convertible Notes are freely tradable and the last reported sale price per share of common stock exceeds 130 % of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding the redemption notice date.
During any fiscal quarter commencing after June 26, 2026, if the last reported sale price of the Company’s common stock exceeds 130 % of the initial conversion price for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter, the Convertible Notes are convertible at the option of the holders. There have been no changes to the initial conversion price of the Convertible Notes since issuance.
The closing market price of the Company's common stock of $118.82 per share as of June 26, 2026 was higher than $110.17 per share, which represents 130 % of the initial conversion price of $84.75 per share. However, the closing market price of the Company's common stock did not exceed $110.17 per share for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the quarter ended June 26, 2026. Accordingly, the Convertible Notes are not convertible at the option of the holders pursuant to this condition during the quarter ending September 25, 2026.
The Convertible Notes are the Company’s senior unsecured obligations and rank equal in right of payment to any of the Company’s existing and future senior, unsecured indebtedness; senior to any of the Company’s existing and future indebtedness that is expressly subordinated to the Convertible Notes; effectively subordinated to any of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing that indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and preferred equity, if any, of the Company’s subsidiaries.
The net carrying amount of the Convertible Notes as of June 26, 2026 was as follows (in millions):
| (In millions) | June 26, 2026 | ||||
| Principal | $ | ||||
| Unamortized issuance costs | ( | ||||
| Net carrying amount | $ | ||||
Interest expense related to the Convertible Notes for the three and six months ended June 26, 2026 was $0.8 million and $1.0 million, consisting of amortization of debt issuance costs. The Convertible Notes do not bear contractual interest. The debt issuance costs are amortized into interest expense over the term of the Convertible Notes at an effective interest rate of 0.6 %.
In connection with the issuance of the Convertible Notes, the Company entered into a privately negotiated capped call transactions (the “Capped Call”) with certain financial institutions. The Capped Call has an initial strike price of approximately $84.75 , subject to certain adjustments, which corresponds to the initial conversion price of the Convertible Notes. The Capped Call has an initial cap price of $104.07 per share, subject to certain adjustments. The Capped Call is expected to partially offset the potential dilution to the Company’s common stock upon any conversion of the Convertible Notes, with such offset subject to a cap based on the cap price. The Capped Call is subject to adjustment upon the occurrence of specified extraordinary events affecting the Company, including merger events, tender offers, and announcement events. In addition, the Capped Call is subject to certain specified additional disruption events that may give rise to a termination of the Capped Call, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings, and hedging disruptions. The Capped Call meets the conditions under the related accounting guidance for equity classification and is recorded in Additional paid-in capital. The Capped Call will not be remeasured as long as it continues to meet the conditions for equity classification.
The fair value of the Company’s long-term debt, which consists of a term loan facility and the Convertible Notes, is based on Level 2 inputs and was determined using quoted prices for the notes and similar instruments in inactive markets as of the last trading day of the reporting period. The Company’s long-term debt has been classified as Level 2 in the fair value
- 17 -
Index to Notes
hierarchy. As of June 26, 2026, the carrying value of the term loan approximates its fair value, and the estimated fair value of the Convertible Notes was $982.4 million.
6. INCOME TAXES
The Company recorded an income tax provision of $18.1 million and $7.2 million for the three months ended June 26, 2026 and June 27, 2025, respectively, and $37.2 million and $14.6 million for the six months ended June 26, 2026 and June 27, 2025, respectively.
The Company’s effective tax rate was 60.3 % and (4.7 )% for the three months ended June 26, 2026 and June 27, 2025, respectively, and 108.8 % and (9.8 )% for the six months ended June 26, 2026 and June 27, 2025, respectively.
The change in the respective tax rates primarily reflects the tax effects of a distribution of earnings from, and a change in ownership of, one of the Company’s foreign subsidiaries in the current year, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates and the impact of losses in jurisdictions with full valuation allowances on deferred tax assets. Management continuously evaluates the need for a valuation allowance and, as of June 26, 2026, concluded that a valuation allowance on its U.S. federal, state and certain foreign deferred tax assets was still appropriate.
The provision for income taxes for the three and six months ended June 26, 2026 includes the impact of a distribution of earnings of one of the Company’s China subsidiaries. As a result of this distribution, the Company recorded a discrete income tax expense of $0.3 million and $15.1 million in the three and six months ended June 26, 2026, respectively.
The provision for income taxes for the three and six months ended June 26, 2026 also includes the tax effect of a change in ownership of one of the Company’s China subsidiaries. As a result of this legal entity structure change, the Company recorded a discrete tax expense of $9.6
As of June 26, 2026 and December 26, 2025, the Company’s gross liability for unrecognized tax benefits, excluding interest, was $6.0 million and $5.6 million, respectively. Increases or decreases to interest and penalties on uncertain tax positions are included in the income tax provision in the Condensed Consolidated Statements of Operations. Although it is possible that some of the unrecognized tax benefits could be settled within the next twelve months, the Company cannot reasonably estimate the outcome at this time.
The Organization for Economic Cooperation and Development (“OECD”) reached agreement among certain member countries to implement a global minimum tax framework, commonly referred to as Pillar Two, which established a minimum 15 percent income tax rate. Pillar Two did not have a significant impact on the Company's financial statements for fiscal year 2025. This legislation is effective for us in additional jurisdictions beginning in fiscal 2026, most notably in Singapore and Malaysia where we currently enjoy a low tax rate under certain tax incentives. The Company has accounted for the impacts of Pillar Two in its provision for income taxes for the three and six months ended June 26, 2026.
7. RETIREMENT PLANS
Defined Benefit Plans
Cinos Korea has a noncontributory defined benefit pension plan covering substantially all of its employees upon their retirement. The Company’s entities in Israel also have noncontributory defined benefit pension plans covering their employees upon their retirement. The benefits for these plans are based on expected years of service and average compensation. The net period costs are recognized as employees render the services necessary to earn the postretirement benefits. The Company records annual amounts relating to the pension plan based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of return, compensation increases and turnover rates. The Company reviews its assumptions on an annual basis and makes modifications to the assumptions based on current and expected rates of return and trends when it is appropriate to do so. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income and amortized to net periodic cost over future periods using the corridor method. The Company believes that the assumptions utilized in recording its obligations under the plans are reasonable based on its experience and market conditions.
- 18 -
Index to Notes
As of June 26, 2026, the benefit obligation of the plans was $12.1 million and the fair value of the benefit plan assets was $9.8 million which are invested in several fixed deposit accounts with financial institutions. As of June 26, 2026, the underfunded balance of the plans of $2.3 million has been recorded by the Company and is included in other liabilities.
Amounts recognized in accumulated other comprehensive income (loss) and contributions made for the three and six months ended June 26, 2026 and June 27, 2025 were not material.
As of June 26, 2026, the Company’s future estimated payment obligations for the respective fiscal years are as follows:
| (In millions) | |||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Employee Savings and Retirement Plan
The Company sponsors a 401(k) savings and retirement plan (the “401(k) Plan”) for all U.S. employees who meet certain eligibility requirements. Participants can elect to contribute to the 401(k) Plan, on a pre-tax basis, up to 25 % of their salary to a maximum of the IRS limit. The Company matches 50.0 % of each employee's contribution, up to a maximum of 6 % of the employee’s eligible earnings. The Company made discretionary employer contributions of $0.9 million and $1.9 million to the 401(k) Plan for the three and six months ended June 26, 2026, respectively, and $0.9 million and $1.9 million to the 401(k) Plan for the three and six months ended June 27, 2025, respectively.
8. COMMITMENTS AND CONTINGENCIES
Commitments
The Company leases real estate and equipment under various non-cancelable operating leases.
Contingencies
From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcome of the various legal proceedings and claims individually or in the aggregate cannot be predicted with certainty, the Company has not had a history of outcomes to date that have been material to the Condensed Consolidated Statements of Operations and does not believe that any of these proceedings or other claims will have a material adverse effect on its consolidated financial condition, results of operations or cash flows.
9. STOCKHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS
Treasury Stock
On October 20, 2022, the Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $150 million of the Company’s common stock over a three-year period.
On October 23, 2025, the Board of Directors approved a renewal of the share repurchase program, authorizing the Company to repurchase up to $150.0 million of its common stock over a three-year period. No shares have been repurchased under the renewed program in the first half of 2026. For the three and six months ended June 27, 2025, approximately 0.2 3.4
During the six months ended June 26, 2026, the Company repurchased 0.7 million shares for $40.3 million through a privately negotiated transaction with one of the initial purchasers of the Company’s convertible notes. These shares are held as treasury stock. The Company accounts for treasury stock using the cost method. There were no share repurchases during the three months ended June 26, 2026.
- 19 -
Index to Notes
Non-controlling Interests
Noncontrolling interests are recognized to reflect the portion of equity in the Company’s consolidated subsidiaries that is not attributable, directly or indirectly, to the controlling stockholder. The Company’s consolidated entities include partially owned subsidiaries that provide outsourced cleaning and recycling of precision parts for the semiconductor industry through operating facilities in South Korea and China. The ownership interests held by other parties in these subsidiaries are presented as noncontrolling interests in the accompanying Consolidated Financial Statements. Net income (loss) attributable to noncontrolling interests is allocated based on the respective ownership interests and continues to be attributed even if such allocation results in a deficit noncontrolling interests balance.
10. EMPLOYEE STOCK PLANS
Employee Stock Plans
The Company grants stock awards in the form of restricted stock units (“RSUs”) and performance stock units (“PSUs”) to its employees as part of the Company’s long-term equity compensation plan. These stock awards are granted to employees with a unit purchase price of zero dollars and typically vest over three years , subject to the employee’s continued service with the Company and, in the case of PSUs, subject to achieving certain performance goals and market conditions. The Company also grants common stock to its board members in the form of restricted stock awards (“RSAs”), which vest on the earlier of the next Annual Shareholder Meeting, or one year from date of grant. The aggregate number of shares authorized for issuance under the plan is 18.1 million.
Stock-based compensation expense includes compensation costs related to estimated fair values of awards granted. The estimated fair value of the Company’s equity-based awards is amortized on a straight-line basis over the awards’ vesting period and is adjusted for performance as it relates to PSUs.
The following table shows the Company’s stock-based compensation expense included in the Condensed Consolidated Statements of Operations:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (In millions) | June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | |||||||||||||||||||
| Cost of revenues (1) | $ | $ | $ | $ | |||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | |||||||||||||||||||
Restricted Stock Units, Performance Stock Units and Restricted Stock Awards
The following table summarizes the Company’s combined RSU, PSU and RSA activity for the six months ended June 26, 2026:
| (In millions) | Number of Shares | Aggregate Intrinsic Value | |||||||||
| Outstanding at December 26, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding at June 26, 2026 | |||||||||||
| Expected to vest at June 26, 2026 | $ | ||||||||||
For the three and six months ended June 26, 2026, the Company granted 0.5 82.24
For the three and six months ended June 26, 2026, the Company granted 0.1 7.6 million.
- 20 -
Index to Notes
As of June 26, 2026, approximately $55.9 million of unrecognized stock-based compensation cost related to employee and director awards remains to be amortized on a straight-line basis over a weighted average period of 2.1 years, and will be adjusted for subsequent changes in future grants.
Under the current PSU program, the number of PSUs earned and eligible to vest at the end of the performance period is determined based on the achievement of specified performance objectives. Performance is measured over a three-year performance period and is evaluated on an annual basis.
The number of PSUs earned is calculated by applying performance results to the participant’s target award. Performance is based on (i) the Company's average annual revenue goal attainment percentage, (ii) a relative total shareholder return (“TSR”) modifier percentage, and (iii) an average annual operating margin modifier percentage. The relative TSR modifier is based on the Company’s stock price performance compared to a designated peer group, and the operating margin modifier reflects the average annual difference between non-GAAP operating margin achieved and the applicable operating plan.
The percentage of the target award earned may range from zero to 200 %, depending on the level of performance achieved and the impact of the applicable performance modifiers. One-third of the target award is allocated to each year of the three-year performance period.
At the end of the three-year performance period, the total number of PSUs earned, if any, reflects the application of the performance formula to the target award, subject to a maximum payout cap of 200 % of the target PSUs granted. Earned PSUs vest and are settled in shares of the Company’s common stock in accordance with the terms of the applicable award agreements.
Recipients of PSU awards generally must remain employed by the Company on a continuous basis through the end of the three-year performance period in order to receive any amount of the PSUs covered by that award. In events such as death, disability or retirement, the recipient may be entitled to pro-rata amounts of PSUs as defined in the Plan. Target shares subject to PSU awards do not have voting rights of common stock until earned and issued following the end of the three-year performance period.
Employee Stock Purchase Plan
The ESPP permits employees to purchase common stock at a discount through payroll withholdings at certain specified dates (purchase period) within a defined offering period. The purchase price is 85 % of the fair market value of the common stock at the end of the purchase period and is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. The aggregate number of shares authorized for issuance under the plan is 1.5 million.
During the three and six months ended June 26, 2026, the Company issued 49
11. REVENUE RECOGNITION
Revenue is recognized when the Company satisfies the performance obligations as evidenced by the transfer of control of the promised goods or services to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company sells its products and services primarily to customers in the semiconductor capital equipment industry. The Company’s revenues are highly concentrated and therefore highly dependent upon a small number of customers. Typical payment terms with our customers range from to sixty days .
The Company’s products are manufactured and services are provided at the Company’s locations throughout the Americas, Asia Pacific and Europe and the Middle East (“EMEA”). Sales to customers are initiated through a purchase order and are governed by our standard terms and conditions, written agreements, or both. Revenue is recognized when performance obligations under the terms of an agreement with a customer are satisfied; generally, this occurs with the transfer of control of the products or when the Company provides the services. Under the Company’s contracts with customers, the Company does not have an enforceable right to payment that includes a reasonable profit throughout the contract term for products it manufactures that have no alternative use. Consignment sales are recognized in revenue at the earlier of the period that the goods are consumed or after a period of time subsequent to receipt by the customer as specified by terms of the agreement, provided control of the promised goods or services has transferred.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales, value-added, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Certain of our customers may receive cash-based incentives, such as rebates or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. Accruals for unpaid customer rebates of $2.2 million and $1.9 million as of June 26, 2026 and
- 21 -
Index to Notes
December 26, 2025, were netted against accounts receivable. The Company’s disaggregated revenues are apportioned by segments within the Company’s Condensed Consolidated Statement of Operations. Certain services performed by the Company related to products sold to customers are included in Products revenue in the Condensed Consolidated Statement of Operations. These services are not material for any of the periods presented.
The Company’s principal markets include Americas, Asia Pacific and EMEA. The Company’s foreign operations are conducted primarily through its subsidiaries in China, Czechia, Israel, Malaysia, Singapore, South Korea, Taiwan, and the United Kingdom. Revenues by geographic area are categorized based on the customer’s location to which the products were shipped or services were performed. The following table sets forth revenue by geographic area (in millions):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | ||||||||||||||||||||
| Singapore | $ | $ | $ | $ | |||||||||||||||||||
| United States | |||||||||||||||||||||||
| China | |||||||||||||||||||||||
| Austria | |||||||||||||||||||||||
| South Korea | |||||||||||||||||||||||
| Malaysia | |||||||||||||||||||||||
| Taiwan | |||||||||||||||||||||||
| Others | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The Company’s most significant customers (having individually accounted for 10% or more of revenues) are primarily from the Products segment and their related revenues as a percentage of total revenues were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | ||||||||||||||||||||
| Lam Research Corporation | % | % | % | % | |||||||||||||||||||
| Applied Materials, Inc. | |||||||||||||||||||||||
| Total | % | % | % | % | |||||||||||||||||||
As of June 26, 2026, gross accounts receivable from two customers each exceeded 10% of the Company's total gross accounts receivable, representing approximately 25.3 % of the total in aggregate.
As of December 26, 2025, gross accounts receivable from one customer exceeded 10% of the Company's total gross accounts receivable, representing approximately 17.1 % of the total in aggregate.
12. LEASES
13. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of outstanding shares of common stock during the period. Diluted net income (loss) per share is computed using the treasury stock method for stock-based awards, and the if-converted method for convertible notes. Under the treasury stock method, the denominator is adjusted to include, when dilutive, incremental shares issuable upon the assumed exercise of stock options, ESPP shares to be issued, and vesting of service-based and performance-based restricted stock units. Under the if-converted method, interest expense is not added back to the numerator because the terms of the convertible notes require the principal to be settled in cash upon conversion. The denominator includes the incremental shares assumed to be issued to settle the conversion premium, based on the average market price of the Company's common stock during the reporting
- 22 -
Index to Notes
period, to the extent the effect is dilutive. The Company has a single class of common stock. The computation of basic and diluted net income (loss) per share is as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (In millions, except per share amounts) | June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | |||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) attributable to UCT | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Shares used in computation — basic: | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
| Shares used in computation — diluted: | |||||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Effect of potential dilutive securities: | |||||||||||||||||||||||
| Convertible notes | |||||||||||||||||||||||
| Employee stock plans | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
| Net income (loss) per share attributable to UCT: | |||||||||||||||||||||||
| Basic | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Diluted | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
The following outstanding potentially dilutive shares were excluded from the calculation of diluted net income (loss) per share of common stock because their impact would have been antidilutive for the period presented:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (In millions) | June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | |||||||||||||||||||
| Employee equity plan | |||||||||||||||||||||||
| Employee stock purchase plan | |||||||||||||||||||||||
| Convertible notes | |||||||||||||||||||||||
| Common shares excluded from calculation of diluted net income (loss) per share | |||||||||||||||||||||||
14. REPORTABLE SEGMENTS
The Company’s Chief Executive Officer is the Company’s chief operating decision maker (CODM). The CODM primarily uses income from operations to evaluate each segment’s performance and allocate resources, primarily through periodic budgeting and segment performance reviews. Significant expenses within segment operating profit include cost of revenue, research and development, and selling, general and administrative expenses, which are each separately presented on the Company’s Condensed Consolidated Statements of Operations.
The Company’s reportable segments are determined based on the nature of their revenue streams and the Company’s internal organization structure.
The Company prepared financial results based on two operating segments (Products and Services) and two reportable segments (Products and Services).
The following table describes each segment:
- 23 -
Index to Notes
| Segment | Product or Services | Primary Markets Served | Geographic Areas | |||||||||||||||||
| Products | Assembly Weldments Machining Fabrication | Semiconductor | Americas Asia Pacific EMEA | |||||||||||||||||
| Services | Cleaning Analytics Coating | Semiconductor | Americas Asia Pacific EMEA | |||||||||||||||||
The CODM uses segment operating profit or loss to evaluate performance and to allocate capital resources. Segment operating profit or loss is defined as a segment’s income or loss from continuing operations before interest and other income (expense), net and provision for income taxes. Any intercompany sales and associated profit (and any other intercompany items) are eliminated from segment results.
Segment Data
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (In millions) | June 26, 2026 | June 27, 2025 | June 26, 2026 | June 27, 2025 | |||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total segment revenues | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total segment cost of revenues | $ | $ | $ | $ | |||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total segment gross profit | $ | $ | $ | $ | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Products | |||||||||||||||||||||||
| Research and development | $ | $ | $ | $ | |||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Impairment of goodwill | |||||||||||||||||||||||
| Total Products operating expenses | |||||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Impairment of goodwill | |||||||||||||||||||||||
| Total Services operating expenses | |||||||||||||||||||||||
| Total segment operating expenses | $ | $ | $ | $ | |||||||||||||||||||
| Segment operating profit (loss): | |||||||||||||||||||||||
| Products | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Services | ( | ( | |||||||||||||||||||||
- 24 -
Index to Notes
| Total segment operating profit (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Reconciliation of segment operating profit (loss): | |||||||||||||||||||||||
| Total segment operating profit (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense), net | ( | ( | ( | ||||||||||||||||||||
| Income (loss) before provision for income taxes | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Expenditures for segment property, plant and equipment | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total expenditures for segment assets | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
| (In millions) | June 26, 2026 | December 26, 2025 | |||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Products | $ | $ | |||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total segment assets | $ | $ | |||||||||||||||||||||
Long-lived assets comprised of operating lease right-of-use assets and property, plant and equipment, net, are reported based on the location of the asset. The carrying amount of long-lived assets in United States, Malaysia, Israel, South Korea and other foreign countries were $165.1 million, $87.5 million, $66.2 million, $46.2 million and $116.8 million, respectively as of June 26, 2026, and $172.6 million, $81.0 million, $69.6 million, $50.0 million and $108.4 million, respectively as of December 26, 2025.
- 25 -
Table of Contents
ITEM 2. Management’s Discussion And Analysis of Financial Condition And Results Of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with the Condensed Consolidated Financial Statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the SEC on February 23, 2026. This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements regarding our expectations, beliefs, intentions, strategies, future operations, future financial position, future revenue, projected expenses, gross margins and plans and objectives of management. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “continue,” “objective,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These forward-looking statements reflect our current views about future events and involve known risks, uncertainties and other factors that may cause our actual results, performance or achievement to be materially different from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the SEC on February 23, 2026. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Overview
Ultra Clean Holdings, Inc., (“UCT”, the “Company” or “We”) is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry. UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and part and component manufacturing, as well as tool chamber parts cleaning and coating, and micro-contamination analytical services. We report results for two segments: Products and Services. Our Products segment primarily designs, engineers and manufactures production tools, components and parts, and modules and subsystems for the semiconductor and display capital equipment markets. Products include chemical delivery modules, frame assemblies, gas delivery systems, fluid delivery systems, precision robotics, process modules as well as other high-level assemblies. Our Services segment provides ultra-high purity parts cleaning, process tool part recoating, surface encapsulation and high sensitivity micro contamination analysis primarily for the semiconductor device makers and wafer fabrication equipment (“WFE”) markets.
We ship a majority of our products and provide most of our services to U.S. registered customers with both domestic and international locations. In addition to U.S. manufacturing and service operations, we manufacture products and provide parts cleaning and other related services in our Asia Pacific, Europe and Middle East (“EMEA”) facilities to support local and U.S. based customers. We conduct our operating activities primarily through our subsidiaries.
Over the long term, we believe the semiconductor market we serve will continue to grow due to multi-year industry demand from a broad range of drivers, such as new process architecture (e.g. gate all around) and memory devices (e.g. high bandwidth memory) necessary for cloud, artificial intelligence (“AI”) and machine learning (“ML”) applications. We also believe that semiconductor original equipment manufacturers (“OEM”) are increasingly relying on partners like UCT to fulfill their expanding capacity requirements. Additionally, our Services business is benefiting as device manufacturers rely on precision cleaning and coating to achieve ever more advanced devices.
In March 2026, the Company completed a significant financing transaction, issuing $600.0 million of convertible notes and using a portion of the proceeds to repay its term loan and enter into capped call transactions. Separately, the Company repurchased 0.7 million shares for $40.3 million through privately negotiated transactions at market price. See Note 5 - Long-Term Debt, of our Condensed Consolidated Financial Statements, for additional information.
Critical Accounting Estimates
Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure at the date of our Condensed Consolidated Financial Statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to inventories, income taxes, business combinations, contingent earn-out liabilities and goodwill, intangible assets and long-lived assets. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the
- 26 -
Table of Contents
circumstances, the results of which form the basis of our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. We consider certain accounting policies related to revenue recognition, inventory valuation, accounting for income taxes, business combinations, valuation of goodwill, intangible assets and long-lived assets to be critical policies due to the estimates and judgments involved in each.
There have been no significant changes to our critical accounting policies, significant judgments and estimates disclosed in our Annual Report on Form 10-K subsequent to December 26, 2025. For further information on our critical and other significant accounting policies and estimates, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 26, 2025, as filed with the SEC.
Results of Operations
Fiscal Year
Our fiscal year consists of a 52- or 53-week period. Fiscal year 2026 is a 53-week period ending January 1, 2027, and fiscal year 2025 was a 52-week period ended December 26, 2025. The fiscal quarters ended June 26, 2026 and June 27, 2025 were both 13-week periods.
Discussion of Results of Operations for the Three and Six months ended June 26, 2026 compared to the Three and Six months ended June 27, 2025
Revenues
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
Revenues by Segment (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Products | $ | 572.7 | $ | 454.9 | 25.9% | $ | 1,038.4 | $ | 911.9 | 13.9% | |||||||||||||||||||||||||
| Services | 72.2 | 63.9 | 13.0% | 140.2 | 125.5 | 11.7% | |||||||||||||||||||||||||||||
| Total revenues | $ | 644.9 | $ | 518.8 | 24.3% | $ | 1,178.6 | $ | 1,037.4 | 13.6% | |||||||||||||||||||||||||
| Products as a percentage of total revenues | 88.8% | 87.7% | 88.1% | 87.9% | |||||||||||||||||||||||||||||||
| Services as a percentage of total revenues | 11.2% | 12.3% | 11.9% | 12.1% | |||||||||||||||||||||||||||||||
For the three and six month periods ended June 26, 2026, Products revenues increased compared to the same periods in the prior year, primarily due to an increase in customer demand, driven by an overall market improvement in the semiconductor industry.
Services revenues increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to an increase in demand across its customer base.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
Revenues by Geography (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| United States | $ | 141.9 | $ | 134.6 | 5.4% | $ | 271.3 | $ | 257.6 | 5.3% | |||||||||||||||||||||||||
| International | 503.0 | 384.2 | 30.9% | 907.3 | 779.8 | 16.4% | |||||||||||||||||||||||||||||
| Total revenues | $ | 644.9 | $ | 518.8 | 24.3% | $ | 1,178.6 | $ | 1,037.4 | 13.6% | |||||||||||||||||||||||||
| United States as a percentage of total revenues | 22.0% | 25.9% | 23.0% | 24.8% | |||||||||||||||||||||||||||||||
| International as a percentage of total revenues | 78.0% | 74.1% | 77.0% | 75.2% | |||||||||||||||||||||||||||||||
Revenues by geographic area are categorized based on the location to which the products were shipped or the location where services were performed.
For the three and six months ended June 26, 2026, U.S. and international revenues increased compared to the same periods in the prior year, primarily reflecting improved conditions in the semiconductor capital equipment market, which drove higher customer demand across multiple regions. International revenue grew faster than U.S. revenue in both periods, shifting the geographic mix further toward international.
- 27 -
Table of Contents
Cost of Revenues
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
Cost of revenues by Segment (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Products | $ | 488.8 | $ | 393.3 | 24.3% | $ | 889.5 | $ | 783.5 | 13.5% | |||||||||||||||||||||||||
| Services | 52.4 | 46.0 | 13.9% | 101.0 | 90.4 | 11.7% | |||||||||||||||||||||||||||||
| Total Cost of revenues | $ | 541.2 | $ | 439.3 | 23.2% | $ | 990.5 | $ | 873.9 | 13.3% | |||||||||||||||||||||||||
| Products cost as a percentage of total Products revenues | 85.4% | 86.5% | 85.7% | 85.9% | |||||||||||||||||||||||||||||||
| Services cost as a percentage of total Services revenues | 72.6% | 72.0% | 72.0% | 72.0% | |||||||||||||||||||||||||||||||
Products cost of revenue consists of purchased materials, direct labor and manufacturing overhead.
For the three-month period ended June 26, 2026, Products cost of revenue increased by $95.5 million compared to the same period in the prior year. The increase was primarily driven by higher material and labor costs of $81.8 million and $18.4 million, respectively, associated with increased production activity, partially offset by a decrease in manufacturing overhead costs of $4.7 million.
For the six-month period ended June 26, 2026, Products cost of revenue increased by $106.0 million compared to the same period in the prior year. The increase was primarily driven by higher material and labor costs of $80.6 million and $27.8 million, respectively, associated with increased production activity, partially offset by a decrease in manufacturing overhead costs of $2.4 million.
Services Cost of revenues consists of direct labor, overhead, and materials such as chemicals, gases and consumables.
For the three and six month periods ended June 26, 2026, Services Cost of revenues increased by $6.4 million and $10.6 million, respectively, compared to the same periods in the prior year.
The increase for the three-month period was primarily driven by higher service volume, which resulted in increased labor, overhead, and material costs of $3.7 million, $1.7 million and $1.0 million, respectively.
The increase for the six-month period was primarily driven by higher service volume, which resulted in increased labor, overhead, and material costs of $5.9 million, $3.0 million and $1.7 million, respectively.
Gross Margin
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
Gross Profit by Segment (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Products | $ | 83.9 | $ | 61.6 | 36.2 % | $ | 148.9 | $ | 128.4 | 16.0 % | |||||||||||||||||||||||||
| Services | 19.8 | 17.9 | 10.6 % | 39.2 | 35.1 | 11.7 % | |||||||||||||||||||||||||||||
| Gross profit | $ | 103.7 | $ | 79.5 | 30.4 % | $ | 188.1 | $ | 163.5 | 15.0 % | |||||||||||||||||||||||||
| Gross Margin by Segment | |||||||||||||||||||||||||||||||||||
| Products | 14.6% | 13.5% | 14.3% | 14.1% | |||||||||||||||||||||||||||||||
| Services | 27.4% | 28.0% | 28.0% | 28.0% | |||||||||||||||||||||||||||||||
| Total Company | 16.1% | 15.3% | 16.0% | 15.8% | |||||||||||||||||||||||||||||||
Gross profit and gross margins fluctuate with revenue levels, product mix, material costs, and labor costs.
Products gross profit and margin increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, due to higher revenue levels, favorable absorption of fixed costs, a favorable product mix, and a shift in sales volumes across different geographic regions.
Services gross profit increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher revenue levels. Gross margin remained flat for the six-month period, as cost of revenue grew in line with revenue and offset improved absorption of fixed costs. For the three-month period, gross margin decreased slightly, as cost of revenue growth outpaced revenue growth.
- 28 -
Table of Contents
Operating Margin
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
Operating Profit by Segment (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Products | $ | 24.8 | $ | (70.9) | (135.0) % | $ | 31.8 | $ | (60.7) | (152.4) % | |||||||||||||||||||||||||
| Services | 4.7 | (70.9) | (106.6) % | 9.0 | (68.2) | (113.2) % | |||||||||||||||||||||||||||||
| Operating profit | $ | 29.5 | $ | (141.8) | (120.8) % | $ | 40.8 | $ | (128.9) | (131.7) % | |||||||||||||||||||||||||
| Operating Margin by Segment | |||||||||||||||||||||||||||||||||||
| Products | 4.3% | (15.6%) | 3.1% | (6.7%) | |||||||||||||||||||||||||||||||
| Services | 6.5% | (111.0%) | 6.4% | (54.3%) | |||||||||||||||||||||||||||||||
| Total Company | 4.6% | (27.3%) | 3.5% | (12.4%) | |||||||||||||||||||||||||||||||
Products operating income and operating margin increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily reflecting higher gross profit and the absence of the $77.6 million goodwill impairment charge recorded in the prior period.
Services operating income and operating margin increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily reflecting higher gross profit driven by increased revenue, with operating expenses not materially different, and the absence of the $73.5 million goodwill impairment charge recorded in the prior period.
Research and Development
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Research and development | $ | 8.8 | $ | 7.8 | 12.8 % | $ | 17.4 | $ | 15.4 | 13.0 % | |||||||||||||||||||||||||
| Research and development as a percentage of total revenues | 1.4% | 1.5% | 1.5% | 1.5% | |||||||||||||||||||||||||||||||
Research and development expenses consist primarily of activities related to new component testing and evaluation, test equipment and fixture development, product design, the advancement of cleaning and coating and analytical processes, and other product-development activities.
Research and development expenses increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher employee-related compensation costs.
Sales and Marketing
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Sales and marketing | $ | 16.4 | $ | 15.5 | 5.8 % | $ | 31.9 | $ | 30.5 | 4.6 % | |||||||||||||||||||||||||
| Sales and marketing as a percentage of total revenues | 2.5% | 3.0% | 2.7% | 2.9% | |||||||||||||||||||||||||||||||
Sales and marketing expenses consist primarily of salaries and commissions paid to our sales employees, salaries paid to our engineers who partner with sales and service employees to help determine the components and configuration requirements for new products and other costs related to the sales of our products.
Sales and marketing expenses increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher employee-related costs.
- 29 -
Table of Contents
General and Administrative
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| General and administrative | $ | 49.0 | $ | 46.9 | 4.5 % | $ | 98.0 | $ | 95.4 | 2.7 % | |||||||||||||||||||||||||
| General and administrative as a percentage of total revenues | 7.6% | 9.0% | 8.3% | 9.2% | |||||||||||||||||||||||||||||||
General and administrative expenses primarily consist of personnel expenses for executive, finance, legal, and human resources employees, professional fees for external accounting, legal and consulting services, and other corporate overhead costs, including compliance and reporting costs associated with operating as a public company.
General and administrative expenses increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher employee-related costs.
Interest and Other Expense, net
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Interest income | $ | 1.0 | $ | 0.8 | 25.0 | % | $ | 2.4 | $ | 1.9 | 26.3 | % | |||||||||||||||||||||||
| Interest expense | $ | (1.1) | $ | (10.1) | (89.1) | % | $ | (8.3) | $ | (20.0) | (58.5) | % | |||||||||||||||||||||||
| Other income (expense), net | $ | 0.6 | $ | (2.2) | (127.3) | % | $ | (0.7) | $ | (1.3) | (46.2) | % | |||||||||||||||||||||||
Interest income was relatively consistent for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year.
Interest expense decreased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to lower interest expense following the term loan prepayment, partially offset by higher amortization of debt issuance costs related to the convertible notes.
Other income (expense), net improved for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to favorable foreign exchange gains, partially offset by a loss on extinguishment of debt in the current-year six-month period.
Provision for Income Taxes
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 26, 2026 | June 27, 2025 | Percent Change | June 26, 2026 | June 27, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Provision for income taxes | $ | 18.1 | $ | 7.2 | 151.4 % | $ | 37.2 | $ | 14.6 | 154.8 % | |||||||||||||||||||||||||
| Effective tax rate | 60.3% | -4.7% | 108.8% | -9.8% | |||||||||||||||||||||||||||||||
The increase in the provision for income taxes for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year is primarily attributable to the impact of a distribution of earnings from, and change in ownership of, one of the Company’s foreign subsidiaries in the current year, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates, and the impact of losses in jurisdictions with full valuation allowances on deferred tax assets.
The Company recorded a discrete tax expense of $15.1 million in the six months ended June 26, 2026, due to the distribution of earnings from China. The Company recorded a discrete tax expense of $9.6 million in the quarter ended June 26, 2026, due to a change in ownership of one of the Company’s foreign subsidiaries.
Management continuously evaluates the need for a valuation allowance on its deferred tax assets and, as of June 26, 2026, concluded that a full valuation allowance on its U.S. federal, state and certain of its foreign deferred tax assets remained appropriate.
- 30 -
Table of Contents
Liquidity and Capital Resources
Cash and cash Equivalents
The following table summarizes our cash and cash equivalents:
| (In millions) | June 26, 2026 | December 26, 2025 | Increase | ||||||||||||||
| Total cash and cash equivalents | $ | 255.9 | $ | 311.8 | $ | (55.9) | |||||||||||
The following table summarizes the Condensed Consolidated Statements of Cash Flow information:
| Six Months Ended | |||||||||||
| (In millions) | June 26, 2026 | June 27, 2025 | |||||||||
| Operating activities | $ | (74.4) | $ | 57.4 | |||||||
| Investing activities | (25.7) | (29.1) | |||||||||
| Financing activities | 48.5 | (18.8) | |||||||||
| Effects of exchange rate changes on cash and cash equivalents | (4.3) | 4.0 | |||||||||
| Net increase (decrease) in cash and cash equivalents | $ | (55.9) | $ | 13.5 | |||||||
Our primary cash inflows and outflows were as follows:
•For the six-month period ended June 26, 2026, cash used in operating activities was $74.4 million, compared to cash provided by operating activities of $57.4 million for the same period in the prior year. The $131.8 million decrease in net cash provided by operating activities was primarily driven by an unfavorable change in net working capital of $145.0 million and an unfavorable change in non-cash items included in net loss of $146.7 million, partially offset by a $159.9 million improvement in net loss.
•The major contributors to net changes in operating assets and liabilities for the six-month period ended June 26, 2026 were as follows:
◦Accounts payable increased by $104.4 million, accrued compensation and related benefits increased by $11.3 million, and other liabilities increased by $13.8 million, primarily reflecting increased production activities and the timing of payments.
◦Accounts receivable decreased by $0.8 million, primarily due to the timing of shipments and collections. Inventories increased by $238.9 million due to higher production levels. Prepaid and other current assets increased by $13.8 million, primarily due to higher prepaid expenses and deposits.
•Net cash used in investing activities during the six-month period ended June 26, 2026 and June 27, 2025 consisted primarily of $25.8 million and $29.2 million purchases of property, plant and equipment, respectively.
•Net cash provided by financing activities was $48.5 million for the six-month period ended June 26, 2026, compared to cash used in financing activities of $18.8 million for the same period in the prior year. The increase was primarily driven by $600.0 million of proceeds from the issuance of convertible notes and a $15.0 million drawdown on the revolving credit facility. This was partially offset by principal payments on bank borrowings of $481.5 million, repurchases of common stock of $40.0 million, payments for capped call transactions of $25.1 million, and payments of debt issuance costs of $17.4 million. In the prior year, financing activities primarily reflected lower levels of debt repayments and minimal issuance costs, with no comparable convertible note issuance or share repurchase activity.
We believe we have sufficient capital to fund our working capital needs, satisfy our debt obligations, maintain our existing capital equipment, purchase new capital equipment and make strategic acquisitions. As of June 26, 2026, we had cash and cash equivalents of $255.9 million compared to $311.8 million as of December 26, 2025. Our cash and cash equivalents, cash generated from operations, and amounts available under our revolving line of credit described below were our principal sources of liquidity as of June 26, 2026.
The Company has entered into a factoring agreement with a financial institution to sell certain accounts receivable on a non-recourse basis. Under this arrangement, the Company sells certain trade receivables and accounts for the transactions as sales of receivables. The financial institution assumes the risk of collection, without recourse to the Company in the event of loss. The Company continues to perform certain collection and administrative functions for the receivables sold. The receivables are derecognized from the condensed consolidated balance sheet upon receipt of cash proceeds. The Company utilizes this arrangement as part of its working capital management.
- 31 -
Table of Contents
During the six months ended June 26, 2026, the Company sold accounts receivable totaling $49.0 million under this arrangement.
We anticipate that our existing cash and cash equivalents balance and operating cash flow will be sufficient to service our indebtedness and meet our working capital requirements and technology development projects for at least the next twelve months. The adequacy of these resources to meet our liquidity needs beyond that period will depend on our growth, the size and number of any acquisitions, the state of the worldwide economy, our ability to meet our financial covenants with our credit facility, the cyclical expansion or contraction of the semiconductor capital equipment industry and the other industries we serve and capital expenditures required to meet possible increased demand for our products.
In order to expand our business or acquire additional complementary businesses or technologies, we may need to raise additional funds through equity or debt financing. If required, additional financing may not be available on terms that are favorable to us, if at all. If we raise additional funds through the issuance of equity or convertible debt securities, our stockholders’ equity interest will be diluted and these securities might have rights, preferences and privileges senior to those of our current stockholders. We may also require the consent of our new lenders to raise additional funds through equity or debt financing. No assurance can be given that additional financing will be available or that, if available, such financing can be obtained on terms favorable to our stockholders and us.
As of June 26, 2026, we have cash of approximately $219.6 million in our foreign subsidiaries. It is not practicable to determine the tax liability that might be incurred if the undistributed earnings of these foreign subsidiaries were to be distributed. It is the Company’s practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those operations, except for certain of its subsidiaries based in Singapore and China. There is no expected Singapore or U.S. tax liability on a distribution of the Singapore earnings. However, the Company has accrued taxes on a portion of the undistributed earnings of the China subsidiary in its financial statements as of June 26, 2026.
Borrowing Arrangements
The following table summarizes our borrowings:
| June 26, 2026 | |||||||||||
| (Dollars in millions) | Amount | Weighted- Average Interest Rate | |||||||||
| Revolver | $ | 15.0 | 5.4 | % | |||||||
| Convertible Notes | 600.0 | 0.0 | % | ||||||||
| Debt issuance costs | (17.5) | ||||||||||
| $ | 597.5 | ||||||||||
The Company’s total gross debt as of June 26, 2026 reflects $600.0 million aggregate principal amount of 0.00% Convertible Notes due 2031 issued in fiscal year 2026 and a $15.0 million revolver drawdown. The Company's term loan facility was retired in full during fiscal year 2026 and carried no outstanding balance as of June 26, 2026.
On April 23, 2026, the Company entered into the Tenth Amendment to its Credit Agreement, which increased the aggregate revolving credit commitment from $150.0 million to $250.0 million and extended the maturity date to April 23, 2031. As of June 26, 2026, the Company had $15.0 million of borrowings outstanding under the revolving credit facility, and available borrowing capacity was $230.9 million, net of outstanding letters of credit and borrowings. The Company was in compliance with all financial covenants under the Amended Credit Agreement as of June 26, 2026.
The Company also maintains credit facilities in Czechia and Israel, which provide for revolving credit capacity of up to 7.0 million euros (approximately $8.0 million) and $5.0 million, respectively. As of June 26, 2026, there were no borrowings outstanding under either facility; however, $2.1 million of the Czechia facility was utilized for outstanding bank guarantees.
As of June 26, 2026, the Company had $230.9 million, $5.9 million and $5.0 million available to draw from its credit facilities in the U.S., Czechia, and Israel, respectively.
See Note 5 - Long-Term Debt, of our Condensed Consolidated Financial Statements, included in Part 1 of this Form-10Q for additional information.
- 32 -
Table of Contents
Capital Expenditures
Capital expenditures were $25.8 million during the six months ended June 26, 2026 and were primarily attributable to the capital invested in our manufacturing and service facilities worldwide. Our anticipated capital expenditures for the remainder of 2026 are expected to be financed primarily from our cash flow generated from operations and cash on hand.
Contractual Obligations
The Company had commitments to various third parties to purchase inventories totaling approximately $971.1 million as of June 26, 2026.
In conjunction with the sale of our products in the ordinary course of business, we provide standard indemnification against certain liabilities to our customers, which may include claims of losses by their own customers resulting out of property damages, bodily injuries or deaths, or infringement of intellectual property rights by our products. Our potential liability arising out of intellectual property infringement claims by any third party is generally uncapped. As of June 26, 2026, we have not incurred any significant costs to defend lawsuits or settle claims related to these indemnification arrangements. As a result, we believe the estimated fair value of these arrangements is minimal.
- 33 -
Table of Contents
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
During the six months ended June 26, 2026, the Company repaid the remaining $481.5 million outstanding under its term loan facility, resulting in the term loan being fully paid off as of June 26, 2026. This significantly reduced the Company's variable-rate debt and corresponding exposure to interest rate risk. As of June 26, 2026, the Company's remaining variable-rate debt consisted of$15.0 million outstanding under its revolving credit facility. A hypothetical 100 basis point increase in borrowing rates on this outstanding balance would not have a material impact on the Company's results of operations. Refer to Part II, Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” included in our Annual Report on Form 10-K for our fiscal year ended December 26, 2025, for a more complete discussion of the market risks we encounter.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of June 26, 2026, pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 26, 2026, to provide reasonable assurance that the information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 26, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
- 34 -
Table of Contents
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
From time to time, we are subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, we have not had a history of outcomes to date that have been material to our Condensed Consolidated Statement of Operations and do not believe that any of these proceedings or other claims will have a material adverse effect on our condensed consolidated financial condition or results of operations.
ITEM 1A. Risk Factors
Except as set forth below, there have been no material changes to the risk factors disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 26, 2025.
We have significant existing indebtedness, which may limit our ability to expand or pursue our business strategy; and if we are unable to meet our debt obligations as they come due, including our obligations to repurchase or settle conversions of the 2031 Convertible Notes, our financial position could be materially and adversely affected.
As of June 26, 2026, we had approximately $15.0 million principal amount of indebtedness for borrowed money outstanding under our credit agreement and $600.0 million aggregate principal amount of indebtedness outstanding under our convertible notes issued in March 2026 (the “2031 Convertible Notes”).
Our indebtedness could have significant adverse consequences, including: requiring us to dedicate a substantial portion of our cash flows from operations to debt service payments, reducing the cash available for working capital, capital expenditures, acquisitions, and other general corporate purposes; increasing our vulnerability to adverse economic and industry conditions; limiting our flexibility to plan for, or react to, changes in our business; and impairing our ability to obtain additional financing on favorable terms, if at all.
Our credit agreement also contains covenants that restrict our ability to take certain actions, including incurring additional debt, providing guarantees, creating liens, making certain investments, engaging in transactions with affiliates, and engaging in certain mergers and acquisitions. We are also required to comply with certain financial covenants. Failure to comply with these covenants could result in the acceleration of our outstanding indebtedness, which could materially and adversely affect our financial condition.
In addition, holders of the 2031 Convertible Notes may require us to repurchase their notes for cash upon the occurrence of certain fundamental changes. In addition, all conversions of the 2031 Convertible Notes will be settled partially or entirely in cash. We may not have sufficient cash available, or be able to obtain financing, at the time we are required to repurchase the notes or settle any conversions. Our failure to repurchase notes or pay cash amounts due upon conversion when required will constitute a default under the indenture governing the 2031 Convertible Notes. We may not have sufficient funds to satisfy all amounts due under our existing credit agreement and the 2031 Convertible Notes simultaneously.
A default under the indenture governing our 2031 Convertible Notes would result in a default under our credit agreement, and a default under our credit agreement would result in a default under the indenture governing our 2031 Convertible Notes, which may result in that indebtedness becoming immediately payable in full.
The capped call transactions may affect the value of our common stock.
In connection with the pricing of the 2031 Convertible Notes, we entered into privately negotiated capped call transactions with certain financial institutions (the “Option Counterparties”). The capped call transactions are expected generally to reduce potential dilution to our common stock upon any conversion of the 2031 Convertible Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted notes, subject to a cap.
In connection with establishing their initial hedges of the capped call transactions, the option counterparties were expected to enter into various derivative transactions with respect to our common stock and/or purchase shares of our common stock concurrently with or shortly after the pricing of the 2031 Convertible Notes. This activity could have increased, or reduced the size of any decrease in, the market price of our common stock at that time.
In addition, the Option Counterparties may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock in secondary market transactions following the pricing of the 2031 Convertible Notes and prior to their maturity, and are likely to do so during the relevant valuation period under the capped call transactions and following any early conversion or repurchase of notes by us. This activity could cause or avoid an increase or a decrease in the market price of our common stock.
- 35 -
Table of Contents
In addition, if any such capped call transactions fail to become effective, the option counterparties or their respective affiliates may unwind their hedge positions with respect to our common stock, which could adversely affect the value of our common stock.
The conditional conversion feature of our 2031 Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
Before December 16, 2030, holders of the 2031 Convertible Notes will have the right to convert their notes only upon the occurrence of certain specified conditions. Many of these conditions are beyond our control. If one or more of these conditions is satisfied and holders elect to convert their notes, we will be required to settle conversions partially or entirely in cash. We may not have sufficient liquidity to satisfy any such conversion obligation at the time it arises, which could have a material adverse effect on our financial condition.
In addition, if any of the conditions to the convertibility of the 2031 Convertible Notes is satisfied, we may be required under applicable accounting standards to reclassify the liability carrying value of the notes as a current, rather than long-term, liability on our consolidated balance sheet. This reclassification could be required even if no holders ultimately convert their notes and could materially reduce our reported working capital, which may adversely affect how investors, analysts, and lenders evaluate our financial condition and liquidity.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Recent Sales of Unregistered Securities
None.
(b)Use of Proceeds from Securities
None.
(c)Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On October 23, 2025, the Board of Directors approved a renewal of the share repurchase program. The renewed program authorizes the Company to repurchase up to $150.0 million of the Company's common stock over a three year period. This program may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock.
The following table sets forth information related to repurchases of our equity securities during the six months ended June 26, 2026:
| Period | Total Number of Shares Purchased | Average Price Per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (In millions) | ||||||||||||||||||||||
| January 2026 | — | — | — | 150.0 | ||||||||||||||||||||||
| February 2026 | — | — | — | 150.0 | ||||||||||||||||||||||
| March 2026 | 672,608 [*] | 59.47 | — | 150.0 | ||||||||||||||||||||||
| April 2026 | — | — | — | 150.0 | ||||||||||||||||||||||
| May 2026 | — | — | — | 150.0 | ||||||||||||||||||||||
| June 2026 | — | — | — | 150.0 | ||||||||||||||||||||||
[*] All of the 672,608 shares repurchased during the period were purchased outside of the Company’s publicly announced share repurchase program in a privately negotiated transaction with one of the initial purchasers of the Company’s convertible notes. The purchase price per share was $59.47, for an aggregate purchase price of approximately $40.0 million, plus $0.3 million excise tax. These shares are held as treasury stock.
- 36 -
Table of Contents
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not Applicable.
ITEM 5. Other Information
On May 30, 2026 , Clarence Granger , a member of the Company's Board of Directors , entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. Mr. Granger's plan provides for the sale of up to 10,000 shares of the Company's common stock, subject to certain minimum price thresholds. Mr. Granger's trading plan is scheduled to terminate on March 1, 2029 , subject to early termination.
- 37 -
Table of Contents
ITEM 6. Exhibits
(a)Exhibits
The following exhibits are filed with this quarterly Report on Form 10-Q for the quarter ended June 26, 2026:
Exhibit Number | Description | Form | Exhibit | Filing Date | Filed Herewith | |||||||||||||||||||||||||||
| 10.1 | Tenth Amendment, dated as of April 23, 2026, by and among Ultra Clean Holdings, Inc., as parent borrower, the subsidiary guarantors party thereto, Barclays Bank PLC, as administrative agent, and the revolving lenders party thereto. | 8-K | 10.1 | April 24, 2026 | ||||||||||||||||||||||||||||
| 10.2† | Ultra Clean Holdings, Inc. Amended and Restated Stock Incentive Plan (amended and restated as of May 22, 2026) | S-8 | 99.1 | July 10, 2026 | ||||||||||||||||||||||||||||
| S-8 | ||||||||||||||||||||||||||||||||
| 10.3† | Employee Stock Purchase Plan (amended and restated as of May 22, 2026) | S-8 | 99.2 | July 10, 2026 | ||||||||||||||||||||||||||||
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||||||||||||||||||
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||||||||||||||||||
| 32.1* | Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document | |||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | |||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
† Denotes management contract or compensatory plan.
* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” or purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any of Ultra Clean Holdings, Inc.’s filings under the Securities Act of 1933, as amended, irrespective of any general incorporation language contained in such filing.
- 38 -
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ULTRA CLEAN HOLDINGS, INC. | ||||||||
| (Registrant) | ||||||||
Date: August 4, 2026 | ||||||||
| By: | /S/ JAMES XIAO | |||||||
| Name: | James Xiao | |||||||
| Title: | Chief Executive Officer | |||||||
(Principal Executive Officer and duly authorized signatory) | ||||||||
Date: August 4, 2026 | ||||||||
| By: | /S/ SHERI SAVAGE | |||||||
| Name: | Sheri Savage | |||||||
| Title: | Chief Financial Officer | |||||||
(Principal Financial Officer and duly authorized signatory) | ||||||||
- 39 -