Ultra Clean Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Ultra Clean Technology Reports Q2 2025 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, July 28, 2025. I would now like to turn the conference over to Ms. Rhonda Bonetto, Investor Relations. Thank you. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us. With me today are Clarence Granger, Chairman and Interim CEO, Sherry Savage, CFO, and Cheryl Kneffler, VP of Marketing. Clarence will begin with some prepared remarks about the business, and Sherry will follow with a 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 Clarence. Clarence?

Thank you, Rhonda, and good afternoon, everyone. We appreciate you joining our second quarter 2025 conference call. I'll start with a brief review of our Q2 results, followed by an update on three areas of focus for us, including new product introduction, flattening the organization, and business structure and processes. After that, I'll turn the call over to Sherry for a more detailed financial review. As we discussed during our last earnings call, we anticipate our quarterly revenue will continue to bounce around the $500 million revenue for the balance of this year. With this in mind, we are continuing to focus internally on what we can do to enhance our overall business performance. Specifically, we are focused on three key areas. The first of these is NPI, or new product introduction, and component qualifications with our customers. During these slower times, our customers have more time to partner with us on new business qualifications. We have already been awarded some new business in our Czech Republic facility that should result in an incremental revenue increase in Q4. We are also working with all of our major customers on qualification by our fluid solutions group. Since the fluid solutions components are going into subsystems that UCT already manufactures, it will not increase our overall revenue. However, it will enhance our margin profile. We expect to see the benefits of this beginning early in 2026. The second focus of our actions has been on flattening the structure and reducing the overall size of the organization to improve efficiency. As I've previously mentioned, we had anticipated a return to industry growth in 2024. and we were scaled to grow at a $4 billion run rate to support this. Unfortunately, given market conditions, we are currently operating at a $2 billion run rate. With this reality, we have taken steps to flatten and reduce the size of the overall organization. Specifically, we have had significant workforce reductions in April and July, and you can see the results of this effort in the reduction of our OPEX during Q2. While we anticipate some churning in this area during Q3, we anticipate this effort to be finalized in the coming months with notable savings heading into Q4. Larger, more complex initiatives, including driving factory efficiencies consolidating sites, and streamlining organizational layers are ongoing. While these more comprehensive strategies will take time to realize their full impact, they are critical to strengthening our long-term competitiveness. Importantly, these value creation initiatives are being executed in a way that preserves our ability to scale effectively and capture growth opportunities as market demand returns. Our third area of focus is on business systems and final integration of our acquisitions, including Fluid Solutions, Services, and HIS into UCT's core systems and processes. In the Fluid Solutions group, we just implemented our company-wide SAP business system at the beginning of July. This will add some integration costs in Q3, but will make us much more efficient by the end of the year. We've also completed strategic alignment between our products group and Fluid Solutions on qualification priorities with our customers. This will help us both with new business and improve margins. In the services group, we have identified several strategic new marketing initiatives to enable us to more fully utilize our factories. In addition, we have flattened the organization of the services group by combining the manufacturing and business unit functions under one leader. Finally, In our HIS business, we are working on streamlining the facilities and consolidating leadership positions for greater efficiency. These initiatives are all crucial as they enhance operational alignment, drive efficiencies, and capture additional value across the entire organization.