What changed in this filing

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Item 1. Financial Statements

2024-07-26 compared with 2024-05-06 · 218 added, 140 removed, 488 unchanged (42% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 319.5 $ 307.0

Accounts receivable, net of allowance for credit losses of $ 1.8 and $ 1.0 at March 29, 2024 and December 29, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 2.1 and $ 1.0 at June 28, 2024 and December 29, 2023, respectively

Inventories 399.9 374.5

26 unchanged sentences

Common stock — $ 0.001 par value, 90.0 shares authorized;

46.1 and 46.1 shares issued and 44.6 and 44.6 shares outstanding at March 29, 2024 and December 29, 2023, respectively

46.5 and 46.1 shares issued and 45.0 and 44.6 shares outstanding at June 28, 2024 and December 29, 2023, respectively

Additional paid-in capital 548.2 541.5

Common shares held in treasury, at cost, 1.5 and 1.5 shares at March 29, 2024 and December 29, 2023, respectively

Common shares held in treasury, at cost, 1.5 and 1.5 shares at June 28, 2024 and December 29, 2023, respectively

( 45.0 ) ( 45.0 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

(In millions, except per share amounts)

20 unchanged sentences

Net income attributable to noncontrolling interests 2.4 1.2 4.5 5.0

Net loss attributable to UCT $ ( 9.4 ) $ ( 3.4 )

Net loss per share attributable to UCT common stockholders:

Net income (loss) attributable to UCT $ 19.1 $ ( 9.4 ) $ 9.7 $ ( 12.8 )

Net income (loss) per share attributable to UCT common stockholders:

Basic $ 0.43 $ ( 0.21 ) $ 0.22 $ ( 0.29 )

Diluted $ 0.42 $ ( 0.21 ) $ 0.21 $ ( 0.29 )

Shares used in computing net loss per share:

Shares used in computing net income (loss) per share:

Basic 44.9 44.7 44.7 44.8

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

(In millions)

5 unchanged sentences

Total other comprehensive loss ( 2.0 ) — ( 6.3 ) ( 1.7 )

Comprehensive loss ( 11.6 ) ( 1.3 )

Comprehensive income (loss), attributable to noncontrolling interests ( 0.1 ) 5.2

Comprehensive loss attributable to UCT $ ( 11.5 ) $ ( 6.5 )

Comprehensive income (loss) 19.5 ( 8.2 ) 7.9 ( 9.5 )

Comprehensive income, attributable to noncontrolling interests 1.3 2.2 1.2 7.4

Comprehensive income (loss) attributable to UCT $ 18.2 $ ( 10.4 ) $ 6.7 $ ( 16.9 )

(See accompanying Notes to Condensed Consolidated Financial Statements)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

2024 March 31,

Six Months Ended

2024 June 30,

(In millions)

6 unchanged sentences

Amortization of debt issuance costs 1.9 1.9

Deferred income taxes ( 0.7 ) ( 0.6 )

Change in the fair value of financial instruments ( 22.6 ) ( 0.2 )

Deferred income taxes ( 0.5 ) ( 0.6 )

Loss (gain) on sale of property, plant and equipment 0.1 ( 0.4 )

Changes in assets and liabilities:

14 unchanged sentences

Cash flows from financing activities:

Proceeds from bank borrowings 67.7 —

Proceeds from issuance of common stock 0.9 —

Extinguishment of bank borrowings ( 44.2 ) —

Principal payments on bank borrowings ( 7.1 ) ( 30.9 )

Payment of debt issuance costs ( 2.5 ) —

Employees' taxes paid upon vesting of restricted stock units ( 2.2 ) ( 2.2 )

Payments of dividends to a joint venture shareholder ( 0.1 ) ( 0.1 )

Repurchase of shares — ( 23.7 )

Net cash used in financing activities ( 4.5 ) ( 36.2 )

Net cash provided by (used in) financing activities 12.5 ( 56.9 )

Effect of exchange rate changes on cash and cash equivalents ( 2.1 ) 1.0

Net decrease in cash and cash equivalents ( 14.0 ) ( 36.7 )

Net increase (decrease) in cash and cash equivalents 12.5 ( 38.0 )

Cash and cash equivalents at beginning of period 307.0 358.8

9 unchanged sentences

Three Months Ended

March 29, 2024

June 28, 2024

Common Stock Treasury shares

7 unchanged sentences

(In millions)

Balance March 29, 2024 44.6 $ 0.1 $ 545.0 1.5 $ ( 45.0 ) $ 337.3 $ ( 6.5 ) $ 830.9 $ 58.2 $ 889.1

Issuance under employee stock plans 0.5 — 0.9 — — — — 0.9 — 0.9

Employees' taxes paid upon vesting of restricted stock units ( 0.1 ) — ( 2.2 ) — — — — ( 2.2 ) — ( 2.2 )

Stock-based compensation expense — — 4.5 — — — — 4.5 — 4.5

Net income — — — — — 19.1 — 19.1 2.4 21.5

Dividend payments to a joint venture shareholder — — — — — — — — ( 0.1 ) ( 0.1 )

Other comprehensive loss — — — — — — ( 0.9 ) ( 0.9 ) ( 1.1 ) ( 2.0 )

Balance June 28, 2024 45.0 $ 0.1 $ 548.2 1.5 $ ( 45.0 ) $ 356.4 $ ( 7.4 ) $ 852.3 $ 59.4 $ 911.7

Six Months Ended

June 28, 2024

Common Stock Treasury shares

Amount Additional

Shares Amount

Comprehensive

Income (Loss)

Stockholders’

Equity of UCT

Noncontrolling

(In millions)

Balance December 29, 2023 44.6 $ 0.1 $ 541.5 1.5 $ ( 45.0 ) $ 346.7 $ ( 4.4 ) $ 838.9 $ 58.3 $ 897.2

Issuance under employee stock plans 0.5 — 0.9 — — — — 0.9 — 0.9

Employees' taxes paid upon vesting of restricted stock units ( 0.1 ) — ( 2.2 ) — — — — ( 2.2 ) — ( 2.2 )

Stock-based compensation expense — — 8.0 — — — — 8.0 — 8.0

Net income (loss) — — — — — ( 9.4 ) — ( 9.4 ) 2.2 ( 7.2 )

Net income — — — — — 9.7 — 9.7 4.5 14.2

Dividend payments to a joint venture shareholder — — — — — — — — ( 0.1 ) ( 0.1 )

Other comprehensive loss — — — — — — ( 3.0 ) ( 3.0 ) ( 3.3 ) ( 6.3 )

Balance March 29, 2024 44.6 $ 0.1 $ 545.0 1.5 $ ( 45.0 ) $ 337.3 $ ( 6.5 ) $ 830.9 $ 58.2 $ 889.1

Balance June 28, 2024 45.0 $ 0.1 $ 548.2 1.5 $ ( 45.0 ) $ 356.4 $ ( 7.4 ) $ 852.3 $ 59.4 $ 911.7

Three Months Ended

March 31, 2023

June 30, 2023

Common Stock Treasury shares

7 unchanged sentences

(In millions)

Balance March 31, 2023 44.8 $ 0.1 $ 534.3 1.4 $ ( 29.6 ) $ 374.4 $ ( 8.5 ) $ 870.7 $ 54.3 $ 925.0

Issuance under employee stock plans 0.4 — — — — — — — — —

Employees' taxes paid upon vesting of restricted stock units ( 0.1 ) — ( 2.0 ) — — — — ( 2.0 ) — ( 2.0 )

Repurchase shares ( 0.3 ) — — 0.3 ( 9.5 ) — — ( 9.5 ) — ( 9.5 )

Stock-based compensation expense — — 1.0 — — — — 1.0 — 1.0

Net income (loss) — — — — — ( 9.4 ) — ( 9.4 ) 1.2 ( 8.2 )

Dividend payments to a joint venture shareholder — — — — — — — — ( 0.1 ) ( 0.1 )

Other comprehensive income (loss) — — — — — — ( 1.0 ) ( 1.0 ) 1.0 —

Balance June 30, 2023 44.8 $ 0.1 $ 533.3 1.7 $ ( 39.1 ) $ 365.0 $ ( 9.5 ) $ 849.8 $ 56.4 $ 906.2

Six Months Ended

June 30, 2023

Common Stock Treasury shares

Amount Additional

Shares Amount

Comprehensive

Income (Loss)

Stockholders’

Equity of UCT

Noncontrolling

(In millions)

Balance December 31, 2022 45.2 $ 0.1 $ 530.8 0.9 $ ( 15.4 ) $ 377.8 $ ( 5.4 ) $ 887.9 $ 49.1 $ 937.0

Issuance under employee stock plans 0.5 — — — — — — — — —

Employees' taxes paid upon vesting of restricted stock units ( 0.1 ) — ( 2.2 ) — — — — ( 2.2 ) — ( 2.2 )

Repurchase shares ( 0.8 ) — — 0.8 ( 23.7 ) — — ( 23.7 ) — ( 23.7 )

1 unchanged sentence

Net income (loss) — — — — — ( 12.8 ) — ( 12.8 ) 5.0 ( 7.8 )

Other comprehensive loss — — — — — — ( 3.1 ) ( 3.1 ) 1.4 ( 1.7 )

Balance March 31, 2023 44.8 $ 0.1 $ 534.3 1.4 $ ( 29.6 ) $ 374.4 $ ( 8.5 ) $ 870.7 $ 54.3 $ 925.0

Dividend payments to a joint venture shareholder — — — — — — — — ( 0.1 ) ( 0.1 )

Other comprehensive income (loss) — — — — — — ( 4.1 ) ( 4.1 ) 2.4 ( 1.7 )

Balance June 30, 2023 44.8 $ 0.1 $ 533.3 1.7 $ ( 39.1 ) $ 365.0 $ ( 9.5 ) $ 849.8 $ 56.4 $ 906.2

ULTRA CLEAN HOLDINGS, INC.

10 unchanged sentences

Revenue Recognition

Net Loss P er Share

Net Income ( Loss ) Per Share

Reportable Segments

Subsequent Events

Index to Notes

10 unchanged sentences

generally accepted accounting principles (“GAAP”).

This financial information reflects all adjustments which are, in the opinion of the Company, normal, recurring and necessary for the fair financial statement presentation for the dates and periods presented.

This financial information reflects all adjustments which are, in the opinion of the Company, normal, recurring and necessary for a fair statement of the results of operations, financial position, and cash flows for the interim periods presented.

Certain information and footnote disclosures normally included in our annual financial statements, prepared in accordance with GAAP, have been condensed or omitted from the interim financial statements in this Quarterly Report on Form 10-Q.

4 unchanged sentences

Significant Accounting Policies — There were no changes to the accounting policies disclosed in Note 1, Organization and Significant Accounting Polices of the Company’s Annual Report on Form 10-K for the year ended December 29, 2023 that had a material impact on the Company's condensed consolidated financial statements and related notes.

Impairment Testing of Long-Lived Assets and Goodwill — In the second quarter of 2024, the Company conducted an interim impairment test of its long-lived assets and goodwill associated with its HIS Innovations Group (“HIS”) reporting unit due to the presence of an indicator of potential impairment.

This indicator included lower-than-expected financial performance.

The Company reviewed the HIS asset group’s long-lived assets for impairment by comparing the carrying value to the estimated undiscounted future cash flows expected to be generated by the assets.

Based on this assessment, the Company determined that the estimated undiscounted future cash flows exceeded the carrying values of the long-lived assets.

Consequently, no impairment loss was recognized in the period.

The Company performed a quantitative assessment of goodwill for the HIS reporting unit using the income approach.

The income approach involves estimating the future cash flows attributable and discounting these cash flows to their present value using an appropriate discount rate.

The fair value of the reporting unit was then compared to its carrying amount, including goodwill.

The results of this quantitative assessment indicated that the fair value of the reporting unit exceeded its carrying amount.

As a result, the Company concluded that no impairment of goodwill was necessary.

Accounting Standards Recently Adopted

The Company did not adopt any new accounting standards during the first quarter of fiscal year 2024 that had a significant impact on the Company’s condensed consolidated financial statements.

The Company has not adopted any new accounting standards during the six months ended June 28, 2024 that have a material impact on the Company’s condensed consolidated financial statements.

Index to Notes

Accounting Standards Not Yet Adopted

8 unchanged sentences

Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes.

2023-09 is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in

Index to Notes

the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

2023-09 is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

2 unchanged sentences

BUSINESS COMBINATIONS

On October 25, 2023, the Company acquired 100 % of the shares of HIS Innovations Group (“HIS”), a privately held company based in Hillsboro, Oregon.

On October 25, 2023, the Company acquired 100 % of the shares of HIS, a privately held company based in Hillsboro, Oregon.

HIS is a leading supplier to the semiconductor sub-fab segment including the design, manufacturing, and integration of components, process solutions, and fully integrated sub-systems.

41 unchanged sentences

The results of operations for HIS have been included in the Company's condensed consolidated financial statements since the date of the acquisition.

In addition, acquisition-related costs of $ 0.3 million were included in the results of operations for the three months ended March 29, 2024.

In addition, acquisition-related costs of $ 0.3 million were included in the results of operations for the six months ended June 28, 2024.

Acquisition-related costs for the three months ended June 28, 2024 and for the three and six months ended June 30, 2023 were immaterial .

Acquisition costs are included in general and administrative expenses in the Company’s condensed consolidated results of operations.

1 unchanged sentence

Inventories consisted of the following:

(In millions) March 29,

(In millions) June 28,

2024 December 29,

5 unchanged sentences

Property, plant and equipment, net, consisted of the following:

(In millions) March 29,

(In millions) June 28,

2024 December 29,

8 unchanged sentences

Total $ 326.6 $ 328.3

Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by the asset are less than the asset’s carrying value.

Refer to Note 1, “Organization and Significant Accounting Policies” for additional information regarding impairment testing of long-lived assets.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

2 unchanged sentences

Reporting Date Using

Description March 29, 2024 Quoted Prices in

Description June 28, 2024 Quoted Prices in

Active Markets for

23 unchanged sentences

Contingent earn-out $ 29.1 $ — $ — $ 29.1

The estimated fair value of foreign currency forward contracts is based upon quoted market prices obtained from independent pricing services for similar derivative contracts and these financial instruments are characterized as Level 2 assets in the fair value hierarchy.

Index to Notes

The estimated fair value of pension obligation is based on expected years of service and average compensation.

1 unchanged sentence

These assumptions are routinely made in the appraisal process by the independent actuary resulting in a Level 3 classification.

As of March 29, 2024, the Company's aggregate pension benefit obligations was $ 12.0 million and the fair value of the pension plan assets was $ 11.4 million.

The underfunded pension benefit obligations was $ 0.6 million as of March 29, 2024.

As of June 28, 2024, the Company's aggregate pension benefit obligations was $ 11.6 million and the fair value of the pension plan assets was $ 10.8 million.

The underfunded pension benefit obligations was $ 0.8 million as of June 28, 2024.

The Company recognizes the overfunded or underfunded status of defined benefit pension plans, measured as the difference between the fair value of the plan assets and the benefit obligation.

6 unchanged sentences

Any amount paid in excess of the contingent earn-out liability on the acquisition date will be reflected as cash used in operating activities in the consolidated statements of cash flows.

For the three months ended March 29, 2024, the Company recorded $ 1.3 million of loss from change in the fair value of contingent earn-out related to the acquisition of HIS.

This loss from change in the fair value was recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

For the three and six months ended June 28, 2024, the Company recorded $ 24.1 million and $ 22.8 million, respectively of gain from change in the fair value of contingent earn-out related to the acquisition of HIS.

This gain from change in the fair value was recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

There were no transfers from Level 1 or Level 2.

12 unchanged sentences

The Company regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends and lower projections of profitability that may impact future operating results.

During the three months ended March 29, 2024, there were no changes to the Company's reporting units, and the Company did not recognize any impairment charges or additions to goodwill.

Index to Notes

During the three and six months ended June 28, 2024, there were no changes to the Company's reporting units, and the Company did not recognize any impairment charges or additions to goodwill.

Refer to Note 1, “Organization and Significant Accounting Policies” for additional information regarding impairment testing of goodwill.

Details of aggregate goodwill of the Company are as follows:

(In millions) Products Services Total

Balance at March 29, 2024 $ 191.7 $ 73.5 $ 265.2

Balance at June 28, 2024 $ 191.7 $ 73.5 $ 265.2

Intangible Assets

2 unchanged sentences

In addition, the Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable and evaluates indefinite-lived intangible asset for impairment annually, or more frequently if indicators of potential impairment exist.

Management considers such

Index to Notes

indicators as significant differences in product demand from the estimates, changes in the competitive and economic environment, technological advances, and changes in cost structure.

Management considers such indicators as significant differences in product demand from the estimates, changes in the competitive and economic environment, technological advances, and changes in cost structure.

Refer to Note 1, “Organization and Significant Accounting Policies” for additional information regarding impairment testing of intangible assets.

Details of intangible assets were as follows:

As of March 29, 2024 As of December 29, 2023

As of June 28, 2024 As of December 29, 2023

(Dollars in millions) Useful Life

17 unchanged sentences

The Company amortizes its intangible assets on a straight-line or accelerated basis over the estimated economic life of the assets.

Amortization expense was approximately $ 7.7 million and $ 5.8 million for the three months ended March 29, 2024 and March 31, 2023, respectively.

Amortization expense was approximately $ 7.6 million and $ 15.3 million for the three and six months ended June 28, 2024, respectively, and $ 5.5 million and $ 11.4 million for the three and six months ended June 30, 2023, respectively.

Amortization expense related to recipes, standard operating procedures, developed technology and certain intellectual property/know-how is charged to cost of revenues and the remainder is charged to general and administrative expense.

As of March 29, 2024, future estimated amortization expense is expected to be as follows:

As of June 28, 2024, future estimated amortization expense is expected to be as follows:

(In millions) Amortization

3 unchanged sentences

BORROWING ARRANGEMENTS

The Company's Term Loan with Barclays Bank has a maturity date of August 27, 2025.

The Company pays monthly interest payments in arrears and quarterly principal payments of 0.625 % of the outstanding principal balance since March 31, 2021, with the remaining principal paid upon maturity.

The revolving credit facility has an available commitment of $ 150.0 million and a maturity date of February 27, 2025.

Index to Notes

2023 (the “Existing Credit Agreement”), and the Existing Credit Agreement as further amended by the Sixth Amendment, the “Credit Agreement”).

Pursuant to the Sixth Amendment, the Existing Credit Agreement was amended to, among other things, (i) extend the final maturity date of the term loan and revolving credit facilities under the Credit Agreement by 30 months;

(ii) reduce the interest rate applicable to the term loan facility under the Credit Agreement by 0.25 % per annum;

and (iii) increase the outstanding amount under the Term Loan of $ 475.4 million to $ 500 million.

The Sixth Amendment resulted in the receipts of an additional $ 67.7 million of debt, net of $ 1.1 million related lender fees from new or existing syndicate lenders which was offset by syndicate lenders who reduced their positions by $ 44.2 million.

The Company capitalized additional $ 2.5 million of costs related to this amendment and continued to defer previously capitalized costs of $ 5.2 million.

The Company expensed the third party transaction costs and the previously capitalized costs of extinguished debt of $ 3.6 million which was included in the other income (expense), net in the Condensed Consolidated Statements of Operations for the three and six month period ended June 28, 2024.

The Company pays monthly interest payments in arrears and quarterly principal payments of 0.625 % of the outstanding principal balance since April 4, 2024, with the remaining principal paid upon maturity.

The revolving credit facility has an available commitment of $ 150.0 million and a maturity date of August 27, 2027.

The Company pays a quarterly commitment fee in arrears equal to 0.25 % of the average daily available commitment outstanding.

Outstanding letters of credit reduce the availability of the revolving credit facility and, as of March 29, 2024, the Company had $ 146.1 million, net of $ 3.9 million of outstanding letters of credit, available under this revolving credit facility.

The letter of credit facility has an available commitment of $ 50.0 million and a maturity date of February 27, 2025.

Outstanding letters of credit reduce the availability of the revolving credit facility and, as of June 28, 2024, the Company had $ 146.1 million, net of $ 3.9 million of outstanding letters of credit, available under this revolving credit facility.

The letter of credit facility has an available commitment of $ 50.0 million and a maturity date of August 27, 2027.

The Company pays a quarterly fee in arrears equal to 2.5 % (subject to certain adjustments to the Term Loan) of the dollar equivalent of all outstanding letters of credit, and a fronting fee equal to 0.125 % of the undrawn and unexpired amount of each letter of credit.

As of March 29, 2024, the Company had $ 3.9 million of outstanding letters of credit and $ 46.1 million of available commitments remaining under the letter of credit facility.

As of June 28, 2024, the Company had $ 3.9 million of outstanding letters of credit and $ 46.1 million of available commitments remaining under the letter of credit facility.

On June 29, 2023, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement to replace the LIBOR-based reference interest rate option with a reference interest option based upon Term SOFR under the Credit Agreement.

Index to Notes

Under the Credit Facilities, the Company may elect that the Term Loan bear interest at a rate per annum equal to either (a) “ABR” (as defined in the Credit Agreement), plus the applicable margin or (b) the “Eurodollar Rate” (as defined in the Credit Agreement), based on SOFR, plus the applicable margin.

Under the Credit Agreement, the Company may elect that the Term Loan bear interest at a rate per annum equal to either (a) “ABR” (as defined in the Credit Agreement), plus the applicable margin or (b) the “Eurodollar Rate” (as defined in the Credit Agreement), based on SOFR, plus the applicable margin.

The applicable margin for the Term Loan is equal to a rate per annum to either (i) at any time that the Company’s corporate family rating is Ba3 (with a stable outlook) or higher from Moody’s and BB- (with a stable outlook) or higher from S&P, (x) 3.25 % for such Eurodollar term loans and (y) 2.25 % for such ABR term loans or (ii) at all other times, (x) 3.50 % for such Eurodollar term loans and (y) 2.50 % for such ABR term loans.

Interest on the Term Loan is payable on (1) in the case of such ABR term loans, the last day of each calendar quarter and (2) in the case of such Eurodollar term loans, the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period.

At March 29, 2024, the Company had an outstanding amount under the Term Loan of $ 475.4 million, gross of unamortized debt issuance costs of $ 5.5 million.

As of March 29, 2024, the interest rate on the outstanding Term Loan was 9.2 %.

The Credit Agreement requires the Company to maintain certain financial covenants including a consolidated fixed charge coverage ratio (as defined in the Credit Agreement) as of the last day of any fiscal quarter of at least 1.25 to 1.00, and a consolidated leverage ratio (as defined in the Credit Agreement) as of the last day of any fiscal quarter of no greater than 3.75 to 1.00.

On July 27, 2023, the Company entered into a Fifth Amendment (“Amended Credit Agreement”) which modified certain covenants described in the Amended Credit Agreement.

This modification is applicable only to the revolving credit facility portion of its credit facilities.

At June 28, 2024, the Company had an outstanding amount under the Term Loan of $ 496.9 million, gross of unamortized debt issuance costs of $ 8.3 million.

As of June 28, 2024, the interest rate on the outstanding Term Loan was 9.0 %.

The Credit Agreement requires the Company to maintain certain financial covenants including a consolidated fixed charge coverage ratio and a consolidated leverage ratio (as defined in the Credit Agreement) as of the last day of any fiscal quarter.

The Company currently has no revolving loans outstanding under the Credit Agreement.

As of March 29, 2024, the Company was in compliance with the financial covenants contained within the Amended Credit Agreement.

As of June 28, 2024, the Company was in compliance with the financial covenants contained within the Credit Agreement.

The Company has a credit agreement with a local bank in the Czech Republic that provides for a revolving credit facility in the aggregate of up to 7.0 million euros (approximately $ 7.5 million).

As of March 29, 2024, no debt was outstanding under this revolving credit facility.

As of June 28, 2024, no debt was outstanding under this revolving credit facility.

Fluid Solutions has credit facilities with various financial institutions in Israel that provides borrowing up to $ 11.0 million.

As of March 29, 2024, Fluid Solutions had a $ 5.3 million outstanding balance under these facilities with average interest rate ranges from 7.6 % to 7.8 %.

As of March 29, 2024, the Company’s total bank debt was $ 475.2 million, net of unamortized debt issuance costs of $ 5.5 million.

As of March 29, 2024, the Company had $ 146.1 million, $ 5.7 million, and $ 7.6 million available to draw from its credit facilities in the U.S., Israel and Czech Republic, respectively.

As of June 28, 2024, Fluid Solutions had a $ 6.0 million outstanding balance under these facilities with average interest rate ranges from 7.5 % to 7.8 %.

As of June 28, 2024, the Company’s total bank debt was $ 494.6 million, net of unamortized debt issuance costs of $ 8.3 million.

As of June 28, 2024, the Company had $ 146.1 million, $ 5.0 million, and $ 7.5 million available to draw from its credit facilities in the U.S., Israel and Czech Republic, respectively.

The fair value of the Company’s long-term debt was based on Level 2 inputs, and fair value was determined using quoted prices for similar liabilities in inactive markets.

The Company’s carrying value approximates fair value for the Company’s long-term debt.

The Company's effective tax rate was 366.7 % and 89.7 % for the three months ended March 29, 2024 and March 31, 2023, respectively.

The Company’s income tax provision was $ 9.9 million and $ 3.5 million for the three months ended March 29, 2024 and March 31, 2023, respectively.

The change in respective tax rates reflects, primarily, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates and the impact of losses in jurisdictions with full federal and state valuation allowances.

The increase also reflects the impact of the expiration of a reduced tax rate incentive on a portion of the Company's earnings in certain international subsidiaries and thus the Company is applying the local corporate statutory tax rate on those earnings.

The Company is in the process of renewing the international tax incentive and when renewed will make an adjustment to its effective tax rate in that period.

Company management continuously evaluates the need for a valuation allowance and, as of March 29, 2024, concluded that a full valuation allowance on its U.S.

Index to Notes

The Company's effective tax rate was 28.3 % and 8300.0 % for the three months ended June 28, 2024 and June 30, 2023, respectively, and 56.4 % and 295.0 % for the six months ended June 28, 2024 and June 30, 2023, respectively.

The Company’s income tax provision was $ 8.5 million and $ 8.3 million for the three months ended June 28, 2024 and June 30, 2023, respectively, and $ 18.4 million and $ 11.8 million for the six months ended June 28, 2024 and June 30, 2023, respectively.

Company management continuously evaluates the need for a valuation allowance and, as of June 28, 2024, concluded that a full valuation allowance on its U.S.

federal and state and certain of its foreign deferred tax assets was still appropriate.

As of March 29, 2024 and March 31, 2023, the Company’s gross liability for unrecognized tax benefits, excluding interest, was $ 2.9 million and $ 2.7 million, respectively.

During the three months ended June 28, 2024, the Company received final approval for the renewal of a reduced tax rate incentive on qualified earnings of one of the Company's subsidiaries in Singapore, effective beginning of the Company's 2024 fiscal year through December 31, 2028.

The reduced tax rate on the qualifying income was reflected in the effective tax rate and income tax provision for the three and six months ended June 28, 2024 and June 30, 2023.

As of June 28, 2024 and June 30, 2023, the Company’s gross liability for unrecognized tax benefits, excluding interest, was $ 3.1 million and $ 2.7 million, respectively.

Increases or decreases to interest and penalties on uncertain tax positions are included in the income tax provision in the Condensed Consolidated Statements of Operations.

Although it is possible that some of the unrecognized tax benefits could be settled within the next twelve months, the Company cannot reasonably estimate the outcome at this time.

Index to Notes

RETIREMENT PLANS

1 unchanged sentence

Cinos Korea has a noncontributory defined benefit pension plan covering substantially all of its employees upon their retirement.

The Company's entities in Israel do have noncontributory defined benefit pension plans covering their employees upon their retirement.

The Company's entities in Israel also have noncontributory defined benefit pension plans covering their employees upon their retirement.

The benefits for these plans are based on expected years of service and average compensation.

4 unchanged sentences

The Company believes that the assumptions utilized in recording its obligations under the plans are reasonable based on its experience and market conditions.

As of March 29, 2024, the benefit obligation of the plans was $ 12.0 million and the fair value of the benefit plan assets was $ 11.4 million which are invested in several fixed deposit accounts with financial institutions.

As of March 29, 2024, the underfunded balance of the plans of $ 0.6 million has been recorded by the Company and is included in other liabilities.

Amounts recognized in accumulated other comprehensive loss and contributed for the three months ended March 29, 2024 were negligible.

During the three months ended March 31, 2023, the Company contributed $ 0.1 million and recognized $ 0.2 million in accumulated other comprehensive loss.

As of March 29, 2024, the Company's future estimated payment obligations for the respective fiscal years are as follows:

As of June 28, 2024, the benefit obligation of the plans was $ 11.6 million and the fair value of the benefit plan assets was $ 10.8 million which are invested in several fixed deposit accounts with financial institutions.

As of June 28, 2024, the underfunded balance of the plans of $ 0.8 million has been recorded by the Company and is included in other liabilities.

Amounts recognized in accumulated other comprehensive loss and contributed for the three and six months ended June 28, 2024 were negligible.

The Company and its subsidiaries contributed $ 0.1 million during the three and six months ended June 30, 2023 and recognized $ 0.4 million and $ 0.2 million in accumulated other comprehensive loss for the three and six months ended June 30, 2023.

As of June 28, 2024, the Company's future estimated payment obligations for the respective fiscal years are as follows:

Index to Notes

(In millions)

5 unchanged sentences

The Company matches 50.0 % of each employee's contribution, up to a maximum of 6 % of the employee's eligible earnings.

The Company made $ 1.0 million and $ 0.9 million discretionary employer contributions to the 401(k) Plan for the three months ended March 29, 2024 and March 31, 2023, respectively.

The Company made $ 0.9 million and $ 1.9 million discretionary employer contributions to the 401(k) Plan for the three and six months ended June 28, 2024 and $ 0.8 million and $ 1.6 million for the three and six months ended June 30, 2023.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Although the outcome of the various legal proceedings and claims individually or in the aggregate cannot be predicted with certainty, the Company has not had a history of outcomes to date that have been material to the Condensed Consolidated Statements of Operations and does not believe that any of these proceedings or other claims will have a material adverse effect on its consolidated financial condition, results of operations or cash flows.

Index to Notes

STOCKHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS

1 unchanged sentence

On October 20, 2022, the Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $ 150 million of the Company’s common stock over a three-year period.

No shares were repurchased under this program for the three months ended March 29, 2024.

No shares were repurchased under this program for the three and six months ended June 28, 2024.

For the three and six months ended June 30, 2023, approximately 0.3 million and 0.8 million shares were repurchased under this program with an aggregate cost of $ 9.5 million and $ 23.7 million, respectively.

The Company may reissue these treasury shares as part of its stock-based compensation programs.

6 unchanged sentences

Employee Stock Plans

Index to Notes

The Company grants stock awards in the form of restricted stock units (“RSUs”) and performance stock units (“PSUs”) to its employees as part of the Company’s long-term equity compensation plan.

4 unchanged sentences

The following table shows the Company’s stock-based compensation expense included in the Condensed Consolidated Statements of Operations:

Three Months Ended

(In millions) March 29,

2024 March 31,

Three Months Ended Six Months Ended

(In millions) June 28,

2024 June 30,

2023 June 28,

2024 June 30,

Cost of revenues (1) $ 0.4 $ 0.3 $ 0.8 $ 0.6

3 unchanged sentences

Total stock-based compensation $ 4.5 $ 1.0 $ 8.0 $ 4.7

(1) Stock-based compensation expense capitalized in inventory for the three months ended March 29, 2024 and March 31, 2023 were immaterial.

For the three months ended March 29, 2024, 24,000 RSUs were granted with a weighted average fair value of $ 44.21 per share.

No RSU's were granted for the three months ended March 31, 2023.

No PSUs and RSA's were granted for the three months ended March 29, 2024 and March 31, 2023.

Index to Notes

The following table summarizes the Company’s combined RSU, PSU and RSA activity for the three months ended March 29, 2024:

(1) Stock-based compensation expense capitalized in inventory for the three and six months ended June 28, 2024 and June 30, 2023 were immaterial.

For the three and six months ended June 28, 2024, 451 thousand and 475 thousand RSUs were granted with a weighted average fair value of $ 41.32 and $ 41.47 per share, respectively.

For the three and six months ended June 30, 2023, 551 thousand and 553 thousand RSUs were granted with a weighted average fair value of $ 28.29 and $ 28.31 per share, respectively.

For the three and six months ended June 28, 2024, 125 thousand PSUs were granted and 145 thousand PSUs were granted for the three and six months ended June 30, 2023.

For the three and six months ended June 28, 2024, 26 thousand RSAs were granted and 37 thousand RSAs were granted for the three and six months ended June 30, 2023.

The following table summarizes the Company’s combined RSU, PSU and RSA activity for the six months ended June 28, 2024:

(In millions) Number of

Shares Aggregate

Unvested restricted stock units and restricted stock awards at December 29, 2023 1.4 $ 46.1

Outstanding at December 29, 2023 1.4 $ 46.1

Vested ( 0.4 )

Forfeited ( 0.2 )

Unvested restricted stock units and restricted stock awards at March 29, 2024 1.2 57.0

Vested and expected to vest restricted stock units and restricted stock awards 1.2 $ 56.0

As of March 29, 2024, approximately $ 19.1 million of unrecognized stock-based compensation cost related to employee and director awards remains to be amortized on a straight-line basis over a weighted average period of 1.7 years, and will be adjusted for subsequent changes in future grants.

The total unamortized expense of the Company’s unvested RSAs as of March 29, 2024 was $ 0.1 million.

Under the current PSU program, which was effective beginning fiscal 2021, performance goals are set at the time of grant and performance is reviewed at the end of a three-year period.

Outstanding at June 28, 2024 1.4 70.4

Expected to vest at June 28, 2024 1.4 $ 69.8

As of June 28, 2024, approximately $ 33.0 million of unrecognized stock-based compensation cost related to employee and director awards remains to be amortized on a straight-line basis over a weighted average period of 2.1 years, and will be adjusted for subsequent changes in future grants.

The total unamortized expense of the Company’s unvested RSAs as of June 28, 2024 was $ 1.1 million.

Under the current PSU program, performance goals are set at the time of grant and performance is reviewed at the end of a three-year period.

The percentage to be applied to each participant’s target award ranges from zero to 200 %, based upon the extent to which the financial performance goals are achieved.

If specific performance threshold levels for the financial goals are met on an annual basis, the amount earned for that element will be applied to one-third of the participant’s PSU award granted to determine the number of total units earned.

Index to Notes

Recipients of PSU awards generally must remain employed by the Company on a continuous basis through the end of the three-year performance period in order to receive any amount of the PSUs covered by that award.

4 unchanged sentences

The purchase price is 85 % of the fair market value of the common stock at the end of the purchase period and is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.

No shares were issued under the ESPP during the three months ended March 29, 2024 and March 31, 2023.

The Company recorded $ 0.2 million of expense related to ESPP for the three months ended March 29, 2024.

No ESPP related expense was recorded for the three months ended March 31, 2023 .

During the three and six months ended June 28, 2024, 42 thousand shares were issued under the ESPP.

The Company recorded $ 0.2 million and $ 0.3 million of expense related to ESPP for the three and six months ended June 28, 2024.

No shares were issued under the ESPP during the three and six months ended June 30, 2023.

The Company recorded $ 0.1 million of expense related to ESPP for the three and six months ended June 30, 2023.

REVENUE RECOGNITION

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Revenue is recognized when performance obligations under the terms of an agreement with a customer are satisfied;

generally, this occurs with the transfer of control

Index to Notes

of the products or when the Company provides the services.

generally, this occurs with the transfer of control of the products or when the Company provides the services.

Based on the enforceable rights included in our agreements or prevailing terms and conditions, products produced by the Company without an alternative use are not protected by an enforceable right of payment that includes a reasonable profit throughout the duration of the agreement.

4 unchanged sentences

We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized.

Accruals for unpaid customer rebates of $ 1.0 million and $ 2.0 million as of March 29, 2024 and December 29, 2023, respectively, were netted against accounts receivable.

Accruals for unpaid customer rebates of $ 1.2 million and $ 2.0 million as of June 28, 2024 and December 29, 2023, respectively, were netted against accounts receivable.

The Company's disaggregated revenues are apportioned by segments within the Company’s Condensed Consolidated Statement of Operations.

The Company’s principal markets include America, Asia Pacific and EMEA.

The Company's foreign operations are conducted primarily through its subsidiaries in China, Malaysia, Singapore, Israel, Taiwan, South Korea, United Kingdom and the Czech Republic.

The Company's foreign operations are conducted primarily through its subsidiaries in China, Malaysia, Singapore, Israel, Taiwan, South Korea, United Kingdom

Index to Notes

and the Czech Republic.

Revenues by geographic area are categorized based on the customer’s location to which the products were shipped or services were performed.

The following table sets forth revenue by geographic area:

Three Months Ended

(In millions) March 29,

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

Singapore $ 168.9 $ 138.9 $ 326.1 $ 291.1

4 unchanged sentences

Taiwan 21.6 21.6 37.1 40.5

Malaysia 7.2 2.7

Israel 4.3 5.1

Others 49.9 42.0 98.0 89.4

1 unchanged sentence

The Company’s most significant customers (having individually accounted for 10% or more of revenues) and their related revenues as a percentage of total revenues were as follows:

Three Months Ended

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

Lam Research Corporation 31.7 % 33.8 % 31.6 % 35.2 %

Applied Materials, Inc.

22.8 23.2 22.8 21.5

Total 54.5 % 57.0 % 54.4 % 56.7 %

Three customers’ accounts receivable balances, Lam Research Corporation, ASML Holding NV and Advanced Micro-Fabrication Equipment Inc., were individually greater than 10% of accounts receivable as of March 29, 2024, in the aggregate approximately 33.4 % of the Company's total accounts receivable.

Four customers’ accounts receivable balances, Lam Research Corporation, ASML Holding NV, Advanced Micro-Fabrication Equipment Inc., and Applied Materials, Inc., were individually greater than 10% of accounts receivable as of June 28, 2024, in the aggregate approximately 42.5 % of the Company's total accounts receivable.

Two customers’ accounts receivable balances, Lam Research Corporation and Applied Materials, Inc., were individually greater than 10% of accounts receivable as of December 29, 2023, in the aggregate approximately 26.8 % of total accounts receivable.

The Company leases offices, facilities and equipment in locations throughout the United States, Asia Pacific and EMEA.

In the three month period ended March 29, 2024, the Company commenced a 10-year lease of manufacturing space in Austin, Texas, with a single 7-year renewal option at lease end.

There have been no material changes to the Company's operating lease commitments during the three months ended June 28, 2024.

In the six month period ended June 28, 2024, the Company commenced a 10-year lease of manufacturing space in Austin, Texas, with a single 7-year renewal option at lease end.

Additionally, the Company’s subsidiary in Czech Republic entered into 8-year lease of additional manufacturing and office space.

As a result, $ 16.8 million additions were made to

As a result, $ 16.8 million additions were made at commencement date to the operating lease right-of-use assets and to the operating lease liabilities in the Company’s Condensed Consolidated Balance Sheet.

Index to Notes

the operating lease right-of-use assets and to the operating lease liabilities in the Company’s Condensed Consolidated Balance Sheet.

Except as described above, there have been no material changes to the Company's operating lease commitments during the three months ended March 29, 2024.

NET LOSS PER SHARE

The following is a reconciliation of the numerators and denominators used in computing basic and diluted net loss per share:

Three Months Ended

(In millions, except share amounts) March 29,

2024 March 31,

Net loss attributable to UCT $ ( 9.4 ) $ ( 3.4 )

NET INCOME (LOSS) PER SHARE

The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income (loss) per share:

Three Months Ended Six Months Ended

(In millions, except share amounts) June 28,

2024 June 30,

2023 June 28,

2024 June 30,

Net income (loss) attributable to UCT $ 19.1 $ ( 9.4 ) $ 9.7 $ ( 12.8 )

Shares used in computation — basic:

4 unchanged sentences

Employee stock plans 0.5 — 0.6 —

Shares used in computing diluted net loss per share 44.6 44.8

Net loss per share attributable to UCT — basic $ ( 0.21 ) $ ( 0.08 )

Net loss per share attributable to UCT — diluted $ ( 0.21 ) $ ( 0.08 )

Shares used in computing diluted net income (loss) per share 45.4 44.7 45.3 44.8

Net income (loss) per share attributable to UCT — basic $ 0.43 $ ( 0.21 ) $ 0.22 $ ( 0.29 )

Net income (loss) per share attributable to UCT — diluted $ 0.42 $ ( 0.21 ) $ 0.21 $ ( 0.29 )

REPORTABLE SEGMENTS

1 unchanged sentence

The Products and HIS operating segments have been aggregated into the Products reportable segment based upon consistency of economic characteristics, nature of products, similarity of production process, and class of customers.

The Company’s Chief Executive Officer (chief operating decision maker) views and evaluates operations based on the results of each of the reportable segments.

The following table describes each segment:

The Company’s Chief Executive Officer (chief operating decision maker) views and evaluates operations based on the results of each of the operating segments.

The following table describes each reportable segment:

Segment Product or Services Primary Markets Served Geographic Areas

8 unchanged sentences

Index to Notes

Three Months Ended

(In millions) March 29,

2024 March 31,

Three Months Ended Six Months Ended

(In millions) June 28,

2024 June 30,

2023 June 28,

2024 June 30,

Products $ 452.7 $ 362.5 $ 871.2 $ 731.1

9 unchanged sentences

Total segment income from operations $ 22.9 $ 12.6 $ 40.2 $ 25.0

(In millions) March 29,

(In millions) June 28,

2024 December 29,

3 unchanged sentences

Long-lived assets comprised of operating lease right-of-use assets and property, plant and equipment, net, reported based on the location of the asset.

The carrying amount of long-lived assets in United States, Malaysia, Israel, South Korea and other foreign countries were $ 178.4 million, $ 85.9 million, $ 74.8 million, $ 50.8 million and $ 102.7 million, respectively as of March 29, 2024, and $ 165.4 million, $ 84.3 million, $ 74.3 million, $ 54.3 million and $ 101.7 million, respectively as of December 29, 2023.

SUBSEQUENT EVENTS

On April 4, 2024, the Company entered into a Sixth Amendment (the “Sixth Amendment”) to the Credit Agreement dated as of August 27, 2018 (as amended as of October 1, 2018, March 31, 2021, August 19, 2022, June 29, 2023 and July 27, 2023 (the “Existing Credit Agreement”), and the Existing Credit Agreement as further amended by the Sixth Amendment, the “Credit Agreement”).

(ii) reduce the interest rate applicable to the term loan facility under the Credit Agreement by 0.25 % per annum;

and (iii) replace the outstanding amount under the Term Loan of $ 475.4 million to $ 500 million.

The carrying amount of long-lived assets in United States, Malaysia, Israel, South Korea and other foreign countries were $ 177.5 million, $ 84.0 million, $ 75.4 million, $ 49.0 million and $ 101.9 million, respectively as of June 28, 2024, and $ 165.4 million, $ 84.3 million, $ 74.3 million, $ 54.3 million and $ 101.7 million, respectively as of December 29, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements