Ultra Clean Holdings, Inc. 2026 Q2 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the Ultra Clean Q2 2026 earnings call. At this time, all lines are in a 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, August 3rd, 2026. I would now like to turn the conference over to Rhonda Bennetto of Investor Relations.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. With me today are James Xiao, CEO, Sheri Savage, CFO, and Michael Keough, CFO beginning August 5th. James will begin with some prepared remarks about the industry and highlight some of the opportunities ahead for UCT. Sheri 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.

With that, I'd like to turn the call over to James. James, please go ahead. Thank you, Rhonda.

Good afternoon, everyone. We appreciate you joining us for our Q2 2026 earnings call. This afternoon, I will discuss industry environment and the trend shaping our customer investment, provide an update on our execution against UCT 3.0 strategy, and highlight how we are positioning UCT to deliver sustainable growth and long-term value. Following that, Sheri will provide a financial update, then we will open up the call for questions. Throughout the second quarter, we saw increased demand across both our Products and Services businesses, reflecting healthy activity across all our end markets. Momentum is building as AI-driven investment reshaped the semiconductor capital equipment landscape, driving increased volume and complexity in the system and components our customers require. As agentic AI become more mainstream, the incremental demand extend well beyond today's GPU-intensive training clusters to inference workloads utilizing higher volumes of CPU compute.

For companies like UCT, the implications are particularly meaningful because every layer of semiconductor manufacturing must scale to support this next wave of infrastructure investment and AI chip demand expansion beyond GPU and HBM. As volume and complexity increases, customers are engaging more strategically with trusted partners like UCT earlier in the development cycle to help ensure manufacturing readiness and accelerated execution. As technologies advance, we're confident that we will play an even more important role in our customers' long-term technology roadmaps and capacity expansion. That confidence is reinforced by the unprecedented visibility our customers are sharing with us now. They are extending their forecast and giving us longer planning horizons so we can make strategic decisions regarding capacity, supply chain readiness, engineering resources, and talent investment that support their product pipeline. As AI infrastructure scales, execution speed and innovation velocity at scale will set UCT apart from the competition.

Our customers need partners that can accelerate product development, qualify new technology faster, execute flawless production ramp, and support increasingly complex global manufacturing operations. UCT is becoming more deeply embedded in their success because these are the capabilities that consistently set us apart. UCT 3.0 is transforming the way we execute. Being ramp-ready is foundational to our customer-first mindset and long-term growth strategy. It is ensuring we're prepared to support our customers whenever and wherever they need us. Over the past couple of months, we have built out an additional 26,000 sq ft of clean room space in our Malaysia facility and will be increasing our capacity within the current footprint in Singapore and the Czech Republic over the coming quarters. With those expansions, we should be able to support a $4 billion annualized revenue run rate or 200 billion WFE by the middle of 2027.

We have begun the process of evaluating future capacity requirements, strategic geographic locations and greenfield opportunities to support a $5 billion revenue run rate of 250 billion WFE. We'll continue to align our investment with our customers' long-term demand outlook and commitment. Our NPX initiative, which integrates new product development, introduction, and transfers, reached a significant milestone recently. We have launched our first NPX Center of Excellence in Hillsboro, Oregon, designed to engage earlier and more closely with our customers. This will accelerate product qualification, improve the transition from development to high-volume manufacturing, and strengthen our position as a preferred co-innovation partner. By demonstrating our value from design to production, we're increasing our opportunities to win customers' new products that support a favorable long-term margin profile. Digital transformation, the third pillar of our UCT 3.0 strategy, is enabling a more efficient data-driven enterprise.

We have begun modernizing our systems, processes, and data infrastructure, starting with the ones that best support our ramp readiness efforts. These initiatives have already improved operational visibility, accelerated decision-making, and enabled faster execution across our global operations. Combined with automation, advanced analytics, and AI-enabled capabilities, we're increasing productivity and scaling the business more efficiently as customer demand accelerates. We believe our global manufacturing footprint, engineering expertise, operational discipline, and ability to execute with speed and agility position us to capture a greater share in the years ahead. Our objective is straightforward: to deepen our strategic co-innovation partnerships, outgrow the market we serve, and create sustainable long-term value for our shareholders. Before I turn to the financial review, I'd like to announce that this is going to be Sheri's last earning call as CFO of UCT.

I'd like to take a moment to recognize and thank Sheri for her 17 years of dedicated service to UCT. Sheri has been a trusted leader and an exceptional steward of our business, helping guide the company through the periods of significant growth and transformation while strengthening our financial foundation. On behalf of our Board of Directors and the entire UCT family, thank you, Sheri, for your many contributions, unwavering commitment to the company. We wish you all the best in your well-earned retirement. Over to you for the financial review.