Earnings call transcript: Ultra Clean’s Q2 2025 revenue surpasses expectations

Ultra Clean Holdings Inc (UCTT) reported its second-quarter earnings for 2025, revealing an EPS of $0.27, meeting analysts’ expectations. The company exceeded revenue forecasts, reporting $518.8 million against a projected $500.83 million. Following the earnings announcement, Ultra Clean’s stock saw a 3.21% increase in after-hours trading, closing at $24.73. According to InvestingPro analysis, the stock appears undervalued compared to its Fair Value, presenting a potential opportunity for investors. InvestingPro subscribers have access to 10+ additional insights about UCTT’s valuation and growth prospects.

Key Takeaways

• Ultra Clean matched EPS forecasts while exceeding revenue expectations.
• After-hours stock price rose by 3.21%, reflecting positive market sentiment.
• The company is optimistic about Q4 2025, with potential revenue growth from new business wins.
• Operational efficiencies and strategic alignments are underway to enhance performance.
• The semiconductor industry trends, particularly AI investments, are expected to boost future growth.

Company Performance

Ultra Clean’s Q2 2025 performance showed resilience despite industry challenges. The company reported a slight increase in total revenue to $518.8 million from $518.6 million in Q1. While product revenue saw a minor decline, services revenue increased, demonstrating the company’s diversified income streams. Operational improvements, such as workforce reductions and site consolidations, are expected to enhance efficiency.

Financial Highlights

• Revenue: $518.8 million, up slightly from Q1 2025.
• Earnings per share: $0.27, consistent with forecasts.
• Gross margin: 16.3%, a decrease from 16.7% in Q1 2025.
• Operating expenses: $56.1 million, down from $59.4 million in Q1.
• Cash and cash equivalents: $327.4 million.

Earnings vs. Forecast

Ultra Clean met EPS expectations with $0.27, aligning with forecasts. The company surprised positively on revenue, surpassing the expected $500.83 million by 3.59%. This performance indicates a strong alignment with market predictions and highlights effective management strategies.

Market Reaction

Following the earnings release, Ultra Clean’s stock experienced a 3.21% increase in after-hours trading, closing at $24.73. This positive reaction reflects investor confidence in the company’s ability to meet earnings expectations and exceed revenue forecasts. The stock remains within its 52-week range, suggesting room for growth amid favorable industry conditions.

Outlook & Guidance

Ultra Clean is cautiously optimistic about Q4 2025, projecting total revenue between $480 million and $530 million and EPS between $0.14 and $0.34. The company anticipates revenue growth from new business wins, particularly in its Czech Republic facility. The ongoing integration of acquisitions and operational efficiencies are expected to contribute to future performance improvements.

Executive Commentary

Interim CEO Clarence Granger stated, "We are cautiously optimistic that the fourth quarter will get better." This sentiment is echoed by market analyst Cheryl, who noted, "We do see the opportunity for 2026 to have incremental growth from 2025." Granger also emphasized the importance of meeting customer specifications, stating, "We are supplying what’s specified by the customer."

Risks and Challenges

• Tariff reimbursement challenges with large customers could impact profitability.
• The semiconductor market’s volatility may pose risks to sustained growth.
• Workforce reductions and site consolidations may disrupt operations if not managed carefully.
• Global economic uncertainties and potential supply chain disruptions could affect future performance.
• The company’s ability to capitalize on AI-related opportunities remains a key factor for future success.

Q&A

During the earnings call, analysts inquired about the company’s revenue from China, which amounted to $35 million in Q2. Ultra Clean expects this to stabilize between $40 million and $50 million quarterly. Additionally, questions regarding tariff situations and inventory levels were addressed, with the company noting nearly normalized inventory levels and ongoing tariff reimbursement challenges.

Full transcript - Ultra Clean Holdings Inc (UCTT) Q2 2025:

Conference Operator: Good afternoon, ladies and gentlemen, and welcome to the Ultra Clean Technology Reports q two two thousand twenty five 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. This call is being recorded on Monday, 07/28/2025. Would I now like to turn the conference over to miss Rhonda Bonetto, investor relations.

Thank you. Please go ahead.

Rhonda Bonetto, Investor Relations, Ultra Clean Technology: 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 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. And with that, I’d like to turn the call over to Clarence.

Clarence?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Thank you, Rhonda, and good afternoon, everyone. We appreciate you joining our second quarter twenty twenty five 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 $500,000,000 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 $4,000,000,000 run rate to support this. Unfortunately, given market conditions, we are currently operating at a $2,000,000,000 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 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. And a quick word on tariffs. While they remain technically paused on semiconductors, uncertainty persists and we have seen some cost increases throughout our supply chain. While our customers have all said they will assume responsibility for the tariffs that are incurred from components they have specified, most of them have not yet paid us for these additional costs.

As such, we continue to take a cautious stance and have accounted for some additional risk in our outlook. So far, we have not seen changes in customer demand relating to tariffs. And lastly, our CEO search is nearing completion on schedule. We anticipate making an announcement in the coming weeks. In summary, before I turn the call over to Sherry, while near term business conditions remain fluid, UCT maintains strong confidence in the long term fundamentals of the semiconductor industry supported by increasing manufacturing complexity and sustained capital investment in AI.

Recent months have seen a notable acceleration in AI related investment fueled by a surge in venture capital funding, heightened corporate and institutional interest and a positive market sentiment. Although the trickle down effects of these investments will vary across the equipment manufacturing supply chain, UCT is well positioned to capitalize as industry momentum builds, particularly through our deep customer partnerships, proven execution and expanding portfolio of vertically integrated solutions. These strengths reinforce our competitive position and enable us to support our customers’ evolving technology roadmaps with agility and precision. With that, I’ll turn the call over to Sherry.

Sherry Savage, CFO, Ultra Clean Technology: Thanks, Clarence, and good afternoon, everyone. Thanks for joining us. In today’s discussion, I will be referring to non GAAP numbers only. UCT’s second quarter results reflect the challenges and complexity of navigating a dynamic environment spanning a broad range of customers and product offerings. Amid shifting demand trends, our ability to remain agile, meeting delivery commitments while reducing operating expenses demonstrates the meaningful progress we’re making on our cost efficiency initiatives.

For the second quarter, total revenue came in at $518,800,000 compared to $518,600,000 in the prior quarter. Revenue from products was $454,900,000 compared to $457,000,000 last quarter. Our services business had a solid quarter with revenues increasing from $61,600,000 in Q1 to $63,900,000 in Q2. Total gross margin for the second quarter was 16.3% compared to 16.7% last quarter. Product gross margin was 14.4% compared to 14.9% in Q1 and services was 29.9 compared to 29.8% last quarter.

Margins continue to be influenced by fluctuations in volume, mix, manufacturing region and related tariffs, as well as material and transportation costs. So there will be variances quarter to quarter. Operating expense for the quarter was $56,100,000 compared with $59,400,000 in Q1. As a percentage of revenue, operating expenses were 10.8% versus 11.5% in Q1. This decrease reflects the positive impacts of our cost reduction initiatives in the quarter, as well as a return to normal operating level following higher year end costs seen in Q1.

As Clarence noted, we have incremental SAP go live costs flowing into Q3. However, we will continue to implement broader cost saving actions that will further reduce OpEx incrementally over the long term. Total operating margin for the quarter came in at 5.5% compared to 5.2% last quarter. Margin from our Products division was 4.8% compared to 4.6% and services margin was 10.5% compared to 10.2% in the prior quarter. Our second quarter tax rate remained flat at 20%.

Our mix of earnings between higher and lower tax jurisdictions can cause our rate to fluctuate throughout the year. For 2025, we expect the tax rate to be in the low to mid-20s. Based on 45,300,000 shares outstanding, earnings per share for the quarter were $0.27 on net income of $12,100,000 compared to $0.28 on net income of $12,700,000 in the prior quarter. Turning to the balance sheet. Our cash and cash equivalents were $327,400,000 compared to $317,600,000 at the end of last quarter.

Cash flow from operations was $29,200,000 compared to $28,200,000 last quarter, mostly due to working capital efficiency. Earlier this quarter, we repurchased 182,000 shares at a cost of $3,400,000 as part of our repurchase program. The tariff situation for semiconductors remain unchanged, but we are seeing some impact throughout our supply chain. We will continue to monitor the landscape and make the necessary adjustments to our business to maximize efficiency and protect profitability. Given the heightened uncertainty and limited visibility within the semiconductor market at this time, we project total revenue for the 2025 to be between $480,000,000 and $530,000,000 We expect EPS in the range of $0.14 to $0.34 And with that, I’d like to turn the call over to the operator for questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press 5521 on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press 552.

If you’re using a speakerphone, please lift the handset before pressing any keys. Thank you. And your first question comes from the line of Charles Sheikh from Needham. Please go ahead.

Charles Sheikh, Analyst, Needham: Hi. Thanks for taking my questions. Clarence and Sherry, maybe the first one, I think you probably didn’t address the Q2 revenue went a little bit above the midpoint of your Q2 guidance. Mind if you kind of walk us through what’s the upside there in Q2?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Well, we had a little bit of upside from China. That was helpful. Trying to think of what other areas. We did have some general increase in shipments from one of our U. S.

Sites, our Austin site. We also had an increase in our services revenue. I think those are the major areas where we had increases.

Charles Sheikh, Analyst, Needham: Got it. So just follow-up on the China business. So I think expectation a quarter ago was China revenue probably come would come off the bottom in Q1, a little bit better in Q2 and the second half going to be better than first half. Is that still the case?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Yes. Again, this is Clarence. Yes, that is true. But we do want to make sure we characterize this appropriately. I know I brought up the China revenue because I know it’s a common question.

But the China revenue represents about 7% of total UCT revenue. So it’s not huge, but I will give you the numbers. The numbers in Q1 were about 21,000,000 and in Q2 they were about $35,000,000 So it’s a significant increase. And we’ve said that we expect on an ongoing basis in China and our China for China strategy to be running about 40,000,000 to $50,000,000

Krish Sankar, Analyst, TD Cowen: a

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: quarter with revenue out of our Chinese based customers. And so it feels like we’re pretty close to being where we thought we would be at this time.

Charles Sheikh, Analyst, Needham: Thanks, Clarin, for the extra color there. Maybe I’ll ask my last question. So you said at the beginning, you’re it sounds like you’re still expecting 500,000,000 per quarter run rate through the rest of the year, but I think you also mentioned that some new wins from your check sites is going to contribute a little bit into Q4. Not sure if you are alluding to maybe Q4 revenue numbers may grow sequentially from Q3 or maybe I over read that. Thank you.

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Yes, you didn’t necessarily over read that. We’re not in a position where we’re ready to commit the Q4 numbers, but it certainly feels like there’s an upward bias in Q4. We’re kind of feeling pretty good about our directionality towards the end of the year, not that the revenue is going to increase that dramatically, but we think by that time we’ll see the impacts of a lot of the cost reductions that we’ve implemented and some of the new business opportunities and some of the further integration of Fluid Solutions. So we’re cautiously optimistic that the fourth quarter will get better.

Charles Sheikh, Analyst, Needham: Thanks. That’s all for me. Thank

Conference Operator: you. And your next question comes from the line of Krish Sankar from TD Cowen. Please go ahead.

Krish Sankar, Analyst, TD Cowen: Yeah. Hi. Thanks for

Christian Schwab, Analyst, Craig Hallum Capital Group: taking my question. Krish, I had a

Krish Sankar, Analyst, TD Cowen: couple of questions. Number one, you thanks for the color on China. You said it might run rate at about 35 to 40,000,000, just under 10% of your revenues. I’m kind of curious, last week, there were some AI rules which said that they might look into components of semi caps that are selling into China. So I’m kind of curious, have you looked into that?

And do you think there’s a risk that this revenue that you’re selling into Chinese semi caps could go to zero?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Yes, I’m going to let our analyst market analyst, Sheryl Schmiffler answer that one. Cheryl?

Rhonda Bonetto, Investor Relations, Ultra Clean Technology: So yeah, I mean obviously there’s always a risk that it could go forward at a different level. But at this point we do see that the areas that we’re selling to are being supported broadly for multiple parts of the industry and so do expect to be able to continue to sell for the the upcoming period.

Krish Sankar, Analyst, TD Cowen: Got you. So just to clarify, and Clarence, 35,000,000 last quarter, you think it’s going be 35,000,000 to $40,000,000 You think that run rate so far is sustainable and you haven’t heard anything from the government or anybody about potential caps on that?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: That’s correct. We have not heard anything about potential caps. We’re pretty optimistic. Don’t forget we’ve been there for twenty years. So it’s not like we’re newbies to the country and our customers, our major customers, some of them have actually been customers of ours for twenty years.

So we’re very confident in our relationship there and so far we’re very confident in what’s going on with the government situation relative to us.

Krish Sankar, Analyst, TD Cowen: Got it. Got it. And then I had another question. You kind of said that I think China revenues are marginally better in the second half. I’m kind of curious, like when you look into comparing your earnings call three months ago, did the commentary from China get marginally better?

Or was it the same thing compared to three months ago in terms of China demand, either through AM as in Lam or through your China semi cap customers in the second half of this year?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: I think I mentioned this is Clarence again. I think I mentioned at one point at the end of Q1 that one of our customers was having some challenges with one of their customers and as a consequence weren’t taking at the same rate that they might normally have been taking at. We feel that those issues have been resolved and our customer is now taking at a rate that’s more in line with what we’ve traditionally been expecting from them.

Krish Sankar, Analyst, TD Cowen: And if you can squeeze in one follow-up to that, Clarence, I think last time you also mentioned, it is one Chinese customer and also there’s one European customer who had some delays, which many people assume to be ASMI. I’m kind of curious, does that European customer issue being resolved?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Yes. We shipped units to them as well in the quarter.

Edward Yang, Analyst, Oppenheimer: Thank you very much, guys. Really appreciate the color. You’re welcome.

Conference Operator: Thank you. And your next question comes from the line of Christian Schwab from Craig Hallum Capital Group. Please go ahead.

Christian Schwab, Analyst, Craig Hallum Capital Group: Great. Thanks for taking my question. You know, kinda given, you know, the tremendous strength in AI as well as, you know, rumors of, you know, what looks to be increased investment in Samsung and and and Austin, Texas, which I assume you’ll benefit from. Do you guys have an initial look or thought when market demand possibly returns as soon as calendar twenty six what WFE could look like yet?

Rhonda Bonetto, Investor Relations, Ultra Clean Technology: So this is Cheryl. As we look at WFE in 2026, there are a number of fabs that are expected to come online, some of which are being pulled in from 2027 into 2026. So we do see the opportunity for 2026 to have incremental growth from 2025 at this point not certain the level but certainly possible for high single digit, low double digit type of growth.

Christian Schwab, Analyst, Craig Hallum Capital Group: Okay, so kind of in line with some of the optimist third party research out there kind of 8% to 12%. And then my follow-up question regarding that. In a situation such as that, would you expect your company to be able to outgrow WFE in a double digit range like you have historically done in an upturn?

Rhonda Bonetto, Investor Relations, Ultra Clean Technology: We certainly see the mix of products and our share gains as supporting that opportunity. So definitely going forward, the balance, most of the companies have brought in EUV and so that that initial sort of disconnect that happens when a new segment brings in some of those technologies has passed for both DRAM and for Foundry. So we expect our segments to grow with WFE, and we should be able we expect to outperform them overall.

Christian Schwab, Analyst, Craig Hallum Capital Group: Excellent. No other questions. Thank you.

Conference Operator: Thank you. And your next question comes from the line of Edward Yang from Oppenheimer. Please go ahead.

Edward Yang, Analyst, Oppenheimer: Hi. Thanks for taking my question. Clarence, you mentioned being cautiously optimistic on the 4Q and you listed a number of different items. But if you were to rank order them, you talked about new business wins and qualifications. You talked about China a bit.

The prior questioner asked about AI strength. If you were to rank these items in order, how would they shake out and your level of visibility on each?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Well, the new business win is the most tangible one that we can tie to real near term market gains. We actually have orders going forward. So we’re confident in that. The China situation, I would say, we feel pretty confident, but that could change obviously. I guess probably the thing that still remains the most frustrating for me is the darn tariff situation.

It doesn’t feel like it’s going to be a huge cost to us. This last quarter, it looks like about $500,000 in the quarter. But our customers took about $3,000,000 or we incurred about $3,000,000 worth of tariff charges associated with the quarter. And we’ve been paid by the customers about $300,000 and they claim they’re going to pay us another $2,000,000 but we haven’t got it yet. And so I guess that causes us to be a little concerned, although we’ve gotten verbal commits from them.

I forgot what was the other one that you oh, AI. Honestly, Cheryl, AI is that’s a little distant from us. I mean, we certainly know about it and hear about it and it should have a favorable impact on us. But we don’t have specific orders tied to that right now.

Edward Yang, Analyst, Oppenheimer: And following up on the tariff reimbursement, is it your leading edge customers that haven’t paid you for the balance? Or is it I just like to understand where the disagreement might be or the

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: rate No, no, no, payment,

Conference Operator: I

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: There’s no disagreement. Don’t get me wrong. They’re just slow to pay. They’re our largest customers. So they want no, no, no.

There’s absolutely no credit risk. It’s just a matter of getting the documentation in the format that they’re comfortable with. I’m comfortable they will eventually pay us. But the other downside with the darn tariffs is the cost, right? We’re spending we’ll probably end up spending about 1,000,000 to $2,000,000 a year in administrative costs to deal with it.

So my guess is over the time, I mean, it’s not overwhelming, but my guess is that over on an annualized basis, we’ll probably spend about 2,000,000 to $3,000,000 a year dealing with tariff costs. And so what does that work out to be about $06 a year. So we could be ending up a $1.00 5 each quarter that we have to deal with that we’re frustrated about.

Edward Yang, Analyst, Oppenheimer: Okay, that’s helpful. And final question for me. I’d just like to better understand the goodwill impairment charge, what was driving that?

Sherry Savage, CFO, Ultra Clean Technology: Yes. This is Sherry, Ed. The key thing is our stock price has had gone down with the overall market uncertainty. And unfortunately, with that happening, our carrying value of those that goodwill on our books was lower than the market cap of the company. So that’s what basically triggered the accounting of that.

It’s purely a noncash charge, obviously. But that doesn’t mean that we’re not very bullish about those businesses on a go forward basis in terms of what we think that they can do. It’s just more of our assumptions now are a little more conservative than when we initially bought the business when we put our goodwill calculation in place. So it’s just it’s really a factor of our market cap at this point.

Edward Yang, Analyst, Oppenheimer: Alright. Thank you for that clarification.

Sherry Savage, CFO, Ultra Clean Technology: Thank you.

Conference Operator: Thank you. And your next question comes from the line of Krish Sankar from TD Cowen. Please go ahead.

Krish Sankar, Analyst, TD Cowen: Yeah. Hi. Thanks for taking my follow-up. So I’ve got two questions. And first, I do appreciate the candidness about China and tariffs.

I’m kinda curious. I understand China tariffs is on top of your mind. I’m just really honestly curious if the 35,000,000 to $40,000,000 in revenue you get from China’s semi caps, do you worry that, that could ever go to zero? Or do you think realistically that is not a possibility?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Well, first of all, I want to make clear, we don’t have China tariffs because all of the stuff that we make in China stays in China and all the stuff that we make outside of China does not go into China. So we really don’t have a China tariff issue. There would only be an issue if for some reason something happened to our long stream revenue from China. I don’t think there’s any jeopardy whatsoever. As I said, we have strong relationships with our existing customers and we can’t see them leaving us.

Obviously, there’s always some political potential political ramifications. But we are not typically we are supplying what’s specified by the customer. We’re not supplying them technology that they don’t have available to them already. So I don’t think we’re a real threat from a technological standpoint. So I don’t think there’s much danger of us having an issue with China.

Krish Sankar, Analyst, TD Cowen: I apologize, I mean China tariff in general. Let me repeat the question. Do you worry about the 35,000,000 to $40,000,000 that you sell into China semi cap going to zero?

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: I worry about every single one of our customers, every single place in the world. But I don’t worry about them anymore than I worry about our other customers and focus on our growth with other customers.

Krish Sankar, Analyst, TD Cowen: Fair enough. Thanks for that, Terence. And then one quick question. I’m just curious, Are you in a broad based among all your customer base, US, China, whatever it is? How do you think the inventory situation is of your gas balance components, etcetera, is, do you think they are, like, drawn it down enough that they’re to start buying it more?

Or do you think there’s still like a little bit of a lag effect purely because it’s some inventory of your components on their balance sheet?

Rhonda Bonetto, Investor Relations, Ultra Clean Technology: So this is Cheryl. I think there’s probably a little bit left but I don’t think that it’s significant at this point. I think our largest customer was the one that we had the most exposure with. They are continuing to work down that inventory in part by sending it back to us to be reconfigured, so we do see that happening. So I think they are now getting to a point where they don’t have very much and it may not align with what some of their current shipment demand is.

So we do see that certainly cleaning up a lot more but you know obviously everyone you know will periodically find a series of things stuck in a corner. So I think I think that’s kind of where we are now versus, you know, a broad amount of inventory that’s sitting.

Krish Sankar, Analyst, TD Cowen: Got it. Thanks, Rochelle. Thanks, Quell.

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Welcome.

Conference Operator: Thank you. There are no further questions at this time. I will now hand the call back to Clarence Gringer for any closing remarks.

Clarence Granger, Chairman and Interim CEO, Ultra Clean Technology: Thank you everyone for joining us on our call today. And we look forward to seeing you again in October. Thank you.

Conference Operator: This concludes today’s call. Thank you for participating. You may all disconnect.

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