Ultra Clean Holdings, Inc.

Good day, and welcome to the Ultra Clean Q3 2023 Earnings Call and Webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Rhonda Benetto, Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us. With me today are Jim Schulhammer, Chief Executive Officer, and Sherry Savage, Chief Financial Officer. Jim will begin with some prepared remarks about the business, and Sherry will follow with the financial review, then we'll open up the call for questions. Today's call contains forward-looking statements that are subject to risks and uncertainties. For more information, please refer to the risk factors section in our SEC filings. All forward-looking statements are based on estimates, projections, and assumptions as of today, and we assume no obligation to update them after this call. Discussion of our financial results will be presented on a non-GAAP basis. A reconciliation of GAAP to non-GAAP can be found in today's press release posted on our website. And with that, I'd like to turn the call over to Jim. Jim?

Thank you, Rhonda. Total revenue for the third quarter came in as expected, increasing 3% over the second quarter. Our product business grew just over 5% as some WFE fundamental dynamics began to show small signs of improvement. We believe that some progress has been made for equipment inventory reductions throughout the system and expect several more quarters until normal levels are achieved. We are aligned with our customers and their customers that, while we don't know the pace or the timing of the recovery, we believe the fundamentals are slowly setting the stage for the industry to return to growth. Our typically high-margin service business saw an abrupt decline in revenue due to a sudden and unexpected large reduction in wafer starts at a primary customer. While this pullback had a detrimental effect on our overall profitability and earnings, We believe that production cuts should help rebalance supply and demand and a recovery of chip prices. For the foreseeable future, we will continue to focus on optimizing our global footprint, driving operational efficiencies, and other strategic initiatives to further increase our value for our customers. These efforts will lay the foundation required to capitalize on share gain opportunities heading into the next ramp. We are in a strong position to increase our semi-manufacturing leadership position with the available capacity and geographic flexibility to meet accelerated demand when it returns. Along those lines, we are very pleased to report that we have acquired HIS Innovations Group. They provide design, manufacturing, integration of components, process solutions, and fully integrated subsystems to the semiconductor sub-fab segments. This acquisition has a higher gross margin and value product offering, increases our vertical capabilities and synergies, extends our reach into the sub-fab area, and expands our addressable market by approximately $1.5 billion. With over 60 fabs under construction globally, this acquisition aligns with our long-term strategy to pursue sustained and profitable growth and will be rolled into our product division. Lastly, we are deeply saddened and concerned by the current events in the Middle East. We are taking the situation very seriously and I'm relieved to say that all our employees are accounted for and we're doing all we can to assist with their safety and well-being. Both of our facilities in Israel are running at the capacity required to meet production targets. Our commitment to support our customers worldwide remains a priority. Israel's policy ensures business continuity across the industrial segments. So ports and airports are currently functioning and we can ship and receive the products and raw materials required to meet customer demand. We're also working together with other multinational companies that have substantial operations in Israel to ensure we are aligned and supporting each other. Overall, we are navigating through the demand variability in the current environment. Longer term, Our increased scale, operational efficiencies, expanded capacity, and new capabilities position us well to maintain our leadership position and outperform the industry. And with that, I will turn the call over to Sherry.