Earnings

Ultra Clean Sales Hit $759 Million Record, But Inventory Build Pushes Cash Flow Negative

The chip-equipment supplier guided fourth-quarter revenue to $800 million to $860 million as inventories grew to $723.3 million.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

— 2 min read
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Ultra Clean Sales Hit $759 Million Record, But Inventory Build Pushes Cash Flow Negative

Ultra Clean Holdings, which makes subsystems and parts for semiconductor manufacturing equipment, reported record third-quarter revenue of $759.0 million, up 18% from the second quarter and 49% from a year earlier, in results released Tuesday. It guided fourth-quarter revenue higher, to $800 million to $860 million, while building inventory that drained cash.

Profit jumps, margins creep

Products brought in $681.9 million and services $77.1 million. Net income by standard accounting was $39.1 million, or $0.85 per share, against $8.7 million, or $0.19, in the second quarter. Adjusted earnings reached $1.15 per share, up from $0.70.

Margins moved far less than sales. Adjusted gross margin was 17.3%, versus 16.7% in the second quarter, and the standard-accounting figure was 16.9%, versus 16.1%.

For the fourth quarter, the company expects adjusted earnings of $1.11 to $1.35 per share and standard-accounting earnings of $1.02 to $1.26.

CEO James Xiao said the company "responded with speed and agility to scale production and meet accelerating customer demand." He said that through UCT 3.0 it is building "a more agile and efficient company."

Inventory soaks up cash

Inventories stood at $723.3 million on September 25, up from $390.9 million at the end of 2025. Operating cash flow for the first nine months was negative $116.7 million, against positive $57.5 million a year earlier.

The company funded the gap with debt. It took in $600.0 million from issuing convertible notes over the nine months and paid down $481.5 million of bank borrowings. Cash ended the period at $270.9 million, from $311.8 million at the end of 2025.

A supplier tied to chip tools

Ultra Clean, based in Hayward, California, builds gas and fluid delivery systems, chemical delivery modules, frame assemblies and other parts for chip equipment, and cleans and analyzes chamber parts. As of its fiscal 2025 annual report, Applied Materials and Lam Research together made up 58.7% of revenue.

Management holds a conference call at 1:45 p.m. PT.

The fourth-quarter guidance range of $800 million to $860 million is the next test of the demand Xiao describes.

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