Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second quarter revenue and earnings were at the high end of the guided range, indicating strong financial performance.
- Revenue from the domestic China market and customers supplying high bandwidth memory and equipment for AI applications showed significant growth.
- Ultra Clean Holdings Inc (UCTT, Financial) received the Outstanding Partner Award from Piotech China, highlighting strong industry recognition.
- The company has expanded and diversified its content, allowing it to engage in all stages of industry growth, from fab construction to equipment buildup.
- Investments in capacity expansion and operational efficiency are on track, supporting future growth and customer innovation roadmaps.
Negative Points
- Total gross margin for the second quarter decreased slightly to 17.7% from 17.9% in the previous quarter.
- Product gross margin also saw a slight decline from 15.8% to 15.6%, indicating some pressure on profitability.
- Operating expenses increased to $55.8 million from $54.5 million in the prior quarter, although they decreased as a percentage of revenue.
- The tax rate increased from 19.7% to 24.7%, impacting net income and earnings per share.
- Guidance for the third quarter projects flat revenue growth, indicating potential challenges in maintaining the current growth momentum.
Q & A Highlights
Q: On the domestic China strength, is it still kind of low-single-digits of revenue? Do you expect that to continue increasing as we go forward?
A: It used to be low-single-digits, but now we're looking at $40 million to $50 million of order coming out of that site for those customers. (Jim Scholhamer, CEO)
Q: The strength in HBM, is that mainly you're seeing on the plating side or how do you get the color into where the end application is?
A: Definitely, plating is the biggest piece, but we've also seen it trickle through in other applications like ALD and other areas. (Jim Scholhamer, CEO)
Q: Where are your cycle times and lead times today compared to like three months ago? Are they still the same?
A: Cycle times are very short these days. There's still a lot of inventory in the pipeline, but our ability to turn things around quickly has been an enabler for us. (Jim Scholhamer, CEO)
Q: How is the China business going to trend in the second half of this year? Do you see more consistent half-over-half growth or any chance to see any inflection?
A: We expect this high level of business to continue in China through the rest of the year. We're also seeing strength in other parts of our diversified business. (Jim Scholhamer, CEO)
Q: How much more upside do you see from HBM and advanced packaging side going into the AI related packaging?
A: We see the levels we're operating at continuing through this year and only see upside into next year. (Jim Scholhamer, CEO)
Q: Do you see any sign of pickup for the litho business yet?
A: We have made nice share gains in the new equipment going out and see an uptick through the third and fourth quarter. (Jim Scholhamer, CEO)
A: We are seeing things slowly translate into more firm orders going forward, so we expect that to be a solid business for us. (Cheryl Knepfler, Marketing Expert)
Q: Given the WFE growth expectations, is there any reason you wouldn't be approaching 2022 revenue type of numbers potentially in 2025?
A: If the market grows as expected, we have confidence that we could meet and potentially significantly exceed the numbers we had in 2022. (Jim Scholhamer, CEO)
Q: Are you expecting some pickup in Q4?
A: We are seeing early indications that Q4 could be better. We've done a lot of work to bring up our capacity to take advantage of when the market starts to go up. (Jim Scholhamer, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
