Key Highlights

  • Revenue reached a record $759.0 million, up 49% from $510.0 million and up 18% from $644.9 million in the second quarter.
  • Non-GAAP EPS was $1.15, compared with $0.24 a year ago, and GAAP EPS was $0.85 versus a loss of $0.24.
  • Non-GAAP gross margin was 17.3%, compared with 16.7% in the second quarter and 17.0% a year ago.
  • Fourth-quarter revenue is guided to $800 million to $860 million, with non-GAAP EPS of $1.11 to $1.35.
  • Inventories rose to $723.3 million from $390.9 million at the end of 2025, and nine-month operating cash flow was negative $116.7 million.

Ultra Clean Earnings: Did the Quarter Beat the Company's Own Outlook?

Ultra Clean Holdings (NASDAQ:UCTT) reported third-quarter results on Tuesday, October 27, with record revenue of $759.0 million, up 49% from $510.0 million a year earlier and 18% from $644.9 million in the second quarter. Non-GAAP EPS was $1.15 and GAAP EPS was $0.85. Coverage of the company's August outlook put third-quarter revenue at $700 million to $750 million and EPS at $0.83 to $1.03, so the results landed above the top of both ranges.

Fourth-quarter guidance calls for revenue of $800 million to $860 million, GAAP EPS of $1.02 to $1.26 and non-GAAP EPS of $1.11 to $1.35.

Ultra Clean makes critical subsystems, including gas delivery and fluid systems, for semiconductor capital equipment makers, and provides cleaning and analytical services.

UCTT Segments: Where Did the Margin Gains Come From?

Products revenue was $681.9 million, with a non-GAAP gross margin of 15.9% and non-GAAP operating income of $58.1 million, an 8.5% margin. Services revenue was $77.1 million, with a non-GAAP gross margin of 30.1% and non-GAAP operating income of $10.5 million, a 13.6% margin.

Consolidated GAAP gross margin was 16.9%, versus 16.1% in both the second quarter and the year-earlier quarter.

GAAP operating income was $53.7 million, a 7.1% margin, versus 4.6% in the second quarter and 2.1% a year ago. Non-GAAP operating income was $68.6 million, a 9.0% margin, versus 7.0% and 5.7%.

Ultra Clean Earnings: How Much Net Income Did Scale Deliver?

GAAP net income attributable to the company was $39.1 million, compared with $8.7 million in the second quarter and a loss of $10.9 million a year ago. Non-GAAP net income was $53.2 million, using a 20.0% non-GAAP tax rate.

Nine-month revenue was $1,937.6 million, compared with $1,547.3 million. The prior-year period included a $151.1 million goodwill impairment, and restructuring charges fell to $0.6 million in the quarter from $7.1 million.

Management said it scaled production quickly to meet rising demand, and pointed to positioning the company for the next phase of AI-driven industry expansion and to its UCT 3.0 effort to be more agile and efficient.

UCTT Cash and Debt: What Did the Ramp Cost in Working Capital?

Growth absorbed cash. Nine-month operating cash flow was negative $116.7 million, compared with positive $57.5 million a year earlier, and capital expenditures were $45.3 million, implying free cash flow of about negative $162.0 million by calculation.

Inventories rose to $723.3 million from $390.9 million at December 26, 2025. Cash was $270.9 million, versus $311.8 million.

Financing activity included $600.0 million of convertible notes and $481.5 million of principal repayments. The company spent $40.0 million on share repurchases and raised $34.0 million through an at-the-market offering. Long-term debt was $635.1 million.

Ultra Clean Outlook: What Should Investors Watch Into the Fourth Quarter?

The guidance midpoint of $830 million, by calculation, implies about 9% sequential growth, so the key tests are inventory conversion into cash, gross margin held near 17%, and the pace of debt reduction. The release gave no fourth-quarter gross margin guidance.