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Ultra Clean Holdings (UCTT) Q1 Earnings Miss, Revenues Up Y/Y

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Ultra Clean Holdings (UCTT - Free Report) reported first-quarter 2022 adjusted earnings of 95 cents per share, which missed the Zacks Consensus Estimate by 5.94%. However, the figure improved 3.3% year over year.

Revenues of $564.1 million lagged the consensus mark by 0.15%. Yet, the top line increased 35.1% year over year. Ultra Clean’s first-quarter performance has gained from strong demand for semiconductor products and services, led by solid traction in the semiconductor market.

Products revenues (86.3% of total revenues) were $486.8 million, up 40.9% year over year. Services revenues (13.7% of total revenues) increased 7.4% year over year to $77.3 million.

Quarterly Update

Gross profit from the Products business segment (18.2% of product revenues) advanced 40.3% year over year to $88.4 million, courtesy of robust portfolio of diverse offerings and exposure to the fab construction, equipment building and production support ecosystem.

Gross profit from Services Business segment (35.5% of services revenue) was $27.45 million, up 6% year over year.

Total adjusted gross profit margin decreased by 80 bps on a year-over-year basis to 20.5%.

Ultra Clean Holdings, Inc. Price, Consensus and EPS Surprise

Ultra Clean Holdings, Inc. Price, Consensus and EPS Surprise

Ultra Clean Holdings, Inc. price-consensus-eps-surprise-chart | Ultra Clean Holdings, Inc. Quote

Operating Details

Research & development expenses, as a percentage of revenues, increased by 20 bps year over year. Also, sales and marketing, and general and administrative expenses, as a percentage of revenues, increased 60 bps and 10 bps respectively on a year-over-year basis.

In the first quarter, adjusted operating income from products business segment increased 22.1% year over year to $49.47 million. However, adjusted operating income margin decreased by 160 bps on a year-over-year basis to 10.2% on account of rising operating expenses and global supply chain challenges in the semiconductor industry.

Adjusted operating income from services business segment increased 18.1% year over year to $12.15 million. Adjusted operating income margin improved by 140 bps on a year-over-year basis to 15.7%.

Total adjusted operating income increased by 21.3% year over year to $61.6 million. However, adjusted operating margin decreased by 120 bps to 10.9%.

Balance Sheet

As of Apr 1, 2022, UCTT had cash and cash equivalent of $367 million compared with $264.2 million as of Mar 26, 2021.

Q2 Guidance

For the second quarter of 2022, UCTT anticipates revenues between $550 million and $630 million. The Zacks Consensus Estimate for revenues is currently pegged at $565.01 million, indicating growth of 35.29% from the year-ago quarter.

Non-GAAP earnings are expected to be between 84 cents and $1.20 per share.

The consensus mark for earnings is currently pegged at $1.01 per share, suggesting an improvement of 9.78% from the prior-year quarter.

Zacks Rank & Stocks to Consider

Currently, Ultra Clean carries a Zacks Rank #4 (Sell).

UCTT shares have underperformed the Zacks Computer & Technology sector in the year-to-date period. While UCTT shares have fallen 42.7%, the Computer & Technology sector has declined 23.2%. Here are some better-ranked stocks worth considering in the broader sector.

Analog Devices (ADI - Free Report) carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ADI shares have fallen 12.4% in the year-to-date period. ADI is expected to report second-quarter 2022 earnings on May 18.

Cisco Systems (CSCO - Free Report) carries a Zacks Rank of 2.

Cisco shares have declined 18.7% in the year-to-date period. Cisco is expected to report third-quarter 2022 earnings on May 18.

BWX Technologies (BWXT - Free Report) carries a Zacks Rank of 2.

BWX shares have returned 9.2% in the year-to-date period. BWX is anticipated to report first-quarter 2022 earnings on May 9.

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