Ultra Clean Holdings, Inc. Q4 FY2024 earnings call

• UCT grew 21% in 2024, outperforming competitors and the WFE market, leveraging its vertically integrated offerings and global footprint.
• Benefited from AI investments, with activities in the Czech Republic and China supporting customer needs in the AI space.
• Semiconductor industry advancements in materials science and engineering create opportunities in advanced dep and etch applications.
• Experiencing demand softness in China due to extended qualification timelines and inventory digestion; focus on driving efficiencies and managing cost structure.

In the fourth quarter, total revenue was $563.3 million. Products revenue increased to $503.5 million from $479 million due to demand for advanced packaging and AI-related processes, offsetting some softness in the domestic China market. Services revenue was $59.8 million, down from $61.4 million in Q3. For the full year 2024, total revenue was $2.1 billion compared to $1.7 billion in 2023. Products contributed significantly, with its revenue growth driven by specific market demands, while Services had a smaller revenue portion. Revenue from Products in Q4 2024 was $503.5 million (contributing a major share), and Services was $59.8 million (smaller share).

• Projected Q1 2025 revenue between $505 million and $555 million, EPS $0.22 to $0.42.
• First half of 2025 expected to be somewhat flat, with hope for second half growth.
• Target to outperform WFE growth by 5%-10% in 2025.

• Demand softness in China related to extended qualification timelines and inventory digestion.
• Uncertainties in AI use cases reaching enterprise scale leading to fluctuations in demand.

Q: How much is the sales to China semi-cap customers in the December quarter?

A: Generally, about $40 million for Q4, $215 million for 2024.

Q: Are export restrictions factored into guidance?

A: Not factored in, and China shipments are local and not affected by export restrictions as manufacturing and engineering happen in China.

Q: Rank order of China issues impacting near-term air pockets?

A: Ranked as customer-specific ramp issue, inventory softening, and demand correction.

Q: What about balance sheet alternatives?

A: Conducting a comprehensive review of expense structure and evaluating balance sheet alternatives to optimize financial performance.

Q: WFE growth outperformance target?

A: Target to outperform WFE growth by 5%-10% in 2025, monitoring product mix to achieve this.